Assets and Income Declaration Scheme

 

 

President Muhammadu Buhari on usatimes.cc Wednesday signed an executive order directing Nigerian taxpayers to voluntarily declare and pay tax on their offshore assets.

The new executive order No. 8 is tagged usanews.cc Voluntary Offshore Assets Regularisation Scheme (VOARS) and went into effect same day the president signed it.

It is still being debated if such a major tax reform should come in form of an executive order or a proper law, but g news overnment says the scheme was set up to help Nigerians to regularise income made outside the country, regularise their offshore assets and tax status, and also ascertain their outstanding tax liability.

It is similar to the Voluntary Assets and Income Declaration Scheme (VAIDS) backed by an executive order signed by Vice-President Yemi Osinbajo in June 2017—with the offshore assets component marking the only difference between both schemes.

Here are some highlights of the new VOARS.

DEFAULTING TAXPAYERS TO BE PROSECUTED

According to the executive order, defaulters who fail to take advantage of the scheme will be investigated, prosecuted and charged to court, accordingly.

Defaulters would be liable to “pay in full, the principal sum due” on all taxable offshore assets after the grace period expires.

As against a 35 per cent one-time levy that complying taxpayers would enjoy, defaulters will be obligated to pay 100 per cent of all interest and penalties arising from the principal sum that has accrued over the 30-year assessment period.

The order says: “Failure of any defaulting taxpayer to truthfully and promptly take advantage of this Scheme shall at the expiration of the Scheme result in… investigation, charges and enforcement procedures concerning offshore assets anywhere in the world pursuant to information now readily available through automatic exchange of information between Nigeria and foreign countries; loss of right to plea bargain; liability to pay in full, the principal sum due; liability to pay 100% of all interest and penalties arising therefrom; liability to be prosecuted in accordance with relevant existent laws for tax offences; withdrawal of any reliefs, which may have been granted to the participant and liability to undergo comprehensive tax audit.”

It also says “any sum paid in relation to the Scheme may be counted as part payment of any further outstanding tax in respect of undisclosed information”.

NO HIDING PLACE FOR TAX DEFAULTERS

Defaulters will be “easily fished out” for assessment, since there is now an automatic exchange of information between Nigeria and foreign countries, according to VOARS.

A number of criteria for participation in the programme were listed.

For example, the defaulter must not be “under investigation by law enforcement agencies in Nigeria or any other country and have not been charged with any crimes including then of public funds or obtaining offshore assets through corrupt practices”.

The defaulter may have ownership of offshore assets but are yet to declare them with the relevant authorities or may earn income on offshore assets but has not yet declared such income to relevant tax authorities.

“The scheme is open to those who are under a process of tax audit or investigation with the relevant Tax Authority, those who are engaged in a tax dispute with the relevant Tax Authority but are prepared to settle the tax dispute out of court, those who have received FGN Special Clearance to access the Scheme, and those who have been determined to be innocent after investigations or legal proceedings,” the order says.