Experts laud FIRS new tax amnesty

FELIX OLOYEDE |

Tax experts have commended the ingenuity of Federal Government in the introduction of the Voluntary Assets and Income Declaration Scheme (VAIDS), saying it has to mobilize the citizenry and engage stakeholders to get the best of the initiative.
The government last week launched VAIDS backed by a presidential order signed by the Acting President, Professor Yemi Osinbajo with the aim of raising $1 billion. Mrs. Kemi Adeosun, Minister for Finance,  had recently stated only 20 percent of 70 million taxable adults in Nigeria pay tax and majority is Pay As You Earn (PAYE).
Ms. Gladys Olajumoke Simplice, former chairman, West Africa Union of Tax Institutes (WAUTI) told BusinessHallmark in a telephone chat that with proper mobilization and enforcement the government would in no time surpass its $1 billion target.
“A lot of us are not doing our civic duties by paying our taxes and those who pay, how sincere are they in the amount they declare,” she quizzed. “Some of us have houses all over the places; we collect rents from them and don’t declare them as part of our income. We are not paying taxes on them”.
She noted the scheme if properly implemented, would help address the problem of tax evasion in the country. Ms Simplice believed the amnesty provision in VAIDS would encourage many to embrace the scheme. Those who regularize their taxes between July 1, 2017 and March 31, 2018 when VAIDS would be operational would be exempted from paying penalties and interest for the period they defaulted.
“Government also has to be sincere about it. It should go after people who have investments abroad, who fail to declare their income from these investments,” the former WAUTI boss opined.
Mr Chinedu Ezomike, Senior Manager, Tax Division, KPMG Nigeria reasoned that the VAIDS Scheme was a step in the right direction as it aims to address tax evasion and illicit financial flows, adding that  such schemes have been successfully implemented in other countries like India, so it is in line with global best practice.
“It provides a very good opportunity for eligible taxpayers to regularize their tax compliance status. The Government should be commended for instituting such a wide ranging scheme to expand the tax net and improve the country’s tax to GDP ratio. All eligible taxpayers are encouraged to take the advantage and participate in the Scheme,” he stated.
He argued that it was debatable if the $1 billion the Federal Government is targeting from the Scheme would be realized.
“A similar tax amnesty program initiated by the FIRS in October 2016 for corporate tax payers raised about US$89million. It should be noted though that the FIRS scheme was not as extensive as VAIDS, so we will wait and see if the target is achieved.
“The level of impact that VAIDS will have depends on whether the targeted tax payers are willing to take advantage of the opportunity. Interestingly, their willingness will usually depend on what the consequence of not taking up the amnesty will be. Although there are severe consequences for tax defaulters in law, the FIRS will have to demonstrate the capacity to indeed identify and investigate defaulting tax payers and individuals living above their declared income bracket.  If the defaulters are convinced of the potential consequence, then they will be encouraged to take up the amnesty scheme,” he explained.
He noted that there were concerns whether the Federal Government can initiate a scheme which grants beneficiaries tax exemptions and immunity that will be respected by State Boards of Internal Revenues, SBIRs. Ezomike also worried about “the additional issue of the competent tax authority to issue assessments under the Scheme on individuals, whether this should be the FIRS or the SBIRs. But hopefully, this will be resolved as the scheme progresses.
“Since the scheme was approved by the National Executive Council (NEC), which comprises State Governors, before the enabling Order was issued, it is hoped that the Scheme should provide effective amnesty for its beneficiaries.”
Mr Taiwo Oyedele, partner/head of Tax and Regulatory Services, PwC explained that recovery programme put in place by FIRS only covered three tax years and limited tax areas, but VAIDS was far-reaching and a lot more comprehensive as it covers up to six tax years, asset declaration and foreign assets.
“The government should be able to raise over $10 billion through this scheme. All the government need to do is to engage more stakeholders and go into different segments,” he mentioned.