TheCable

Kemi Adeosun, minister of finance, says operating businesses in offshore tax havens is illegal only if all applicable taxes have not been up to date by the investing entities.

Speaking at a media interactive session on Tuesday in Abuja, she said while the use of tax avoidance schemes is legal, tax evasion is not.

Avoidance is when taxpayers arrange finances in a way that some incomes will not be taxable, but evasion is when they fail to pay their due taxes.

The use of tax havens is usually to avoid paying taxes that would have accrued if the same businesses were conducted in a different jurisdiction.

Reports from the #ParadisePapers allege that some prominent Nigerians, including Senate President Bukola Saraki, Jim Ovia, chairman of Zenith Bank, and Godwin Emefiele, governor of the Central Bank of Nigeria (CBN) who was CEO of Zenith Bank, operated shell companies in offshore tax havens.

They have all denied any wrongdoing.

Adeosun said operating such tax schemes is illegal only if taxes have not been paid prior to the transfer of funds on such businesses in tax havens.

She also said with the increasing global focus on illicit financial flows and tax evasion, offshore tax shelters no longer offer robust protection against tax authorities.

“The critical question to be asked of all Nigerian tax payers using offshore tax shelters will be whether all applicable taxes have been paid prior to the transfer of funds or assets to a tax shelter,” she said.

“If all taxes had been paid, then there will be no additional liability except tax payable on further income earned on those funds. However, if taxes had not been paid, then the use of such schemes is illegal.”

She said the ministry of finance intends to use data provided on Nigerians from new findings on businesses in offshore tax havens to crosscheck their tax declarations.

Adeosun, however, advised Nigerians to review existing tax schemes, including those in offshore tax havens, so as to take advantage of the voluntary assets and income declaration scheme (VAIDS) to regularize their tax status.

She added: “VAIDS ushers in an opportunity to increase the nation’s general tax awareness and compliance. It is a time-limited opportunity for taxpayers to regularise their tax status relating to previous tax periods.

“In exchange for fully and honestly declaring previously undisclosed assets and income, taxpayers will benefit from forgiveness of overdue interest and penalties, and with further assurance that they will not face criminal prosecution for tax offences or be subject to tax investigations.”