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Echoes Of VAIDS

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In this article, MARK ITSIBOR presents up to date picture of the operational framework and gains of federal government’s Voluntary Assets and Income Declaration Scheme

Why tax amnesty? Was it well thought out? How will the Scheme help to restore lost confidence on the government and who really benefits from the Scheme? Those were some of the questions that trailed the launch of the Voluntary Assets and Income Declaration Scheme (VAIDS) on June 29, 2017 by Vice President Professor Yemi Osinbajo on behalf of the federal government.

The popular opinion then was that the call to voluntarily pay tax was a ploy to further raise and divert public funds. That notion that dominated public mind was understandable. Despite the huge funds that were available to past governments, Nigeria and majority of Nigerians were still overwhelmed by hunger, unemployment, lack of infrastructure, epileptic power supply and a host of other social issues that took public confidence away from government.

That explains why many were quick to wish aside the introduction of a revolutionary and bold reform initiative – VAIDS, with a label, as one of some government policies without benefit on the economy. But events have proven that the initiative that allows tax payers to regularise their tax status relating to previous tax periods, without incurring penalties is one of the most outstanding steps taken so far by the current administration.

VAIDS came as a rescue force for the government to move her economy from a mono economy to a literally diversified and revenue guaranteed one.

Prior to introduction of the policy, Nigeria’s tax compliance record was very poor with only about 14 million out of an estimated 70 million economically active Nigerians paying their taxes. This has become more compelling, given Nigeria’s Tax Revenue-to-GDP ratio of 6 per cent, which has remained one of the lowest in the world in comparison with countries in Nigeria’s peer group.

The robust implementation of VAIDS has seen an increase in the number of tax payers from 13 million before the assumption of Office by the incumbent Administration to 14 million in 2016 and 19.3 million in 2018. It is instructive to note that some local and foreign companies are now disposed to the VAIDS initiative, and have started to regularise their tax status.

The VAIDS policy has indeed helped to increase monthly non oil revenue by about 20 per cent in recent time. The sum of N83.401 billion was generated from Value Added Tax (VAT) in last month of April alone. Apart from the rising oil price, VAIDS accounts for a chunk of the sum of N24.5 billion that was removed from the total revenue received for the month of April and saved in the Excess Crude Account (ECA), bringing the balance in the ECA to $1.911 billion.

The Federal Ministry of Finance is strongly convinced that the overall objective to increase compliance and open up a sustainable Chanel of revenue inflow are being attained. Based on that conviction and appeals of professional bodies and individual taxpayers, the amnesty period was extended at the expiration of its initial nine months period for the defaulting taxpayers to regularize their tax with the Federal Inland Revenue Service (FIRS). The amnesty time was extended to June 30th this year, after which the federal government has vowed to drag defaulters to the noose.

FIRS Chairman, Babatunde Fowler who said “VAIDS is for all Nigerians old enough to pay tax. It will speed up development of the country,” has the support of President Muhammadu Buhari who said, while announcing extension of the amnesty period that a Fresh Executive Order would be made to give legal backing to the new timeline. That alone is a signal that the federal government means business.

For the President, “Nigeria’s growth needs are such that every Nigerian must do his duty to his nation, to his neighbour, and to himself.” And “For a nation of people who are competitive and driven, it is not a pride that we are the lowest performer in tax to GDP, not just in Africa, but in the world.”

The message to those who have the knack for hiding monies overseas, evading taxes by manipulation, and other unwholesome practices is that, it has “never developed a country, and for Nigeria to attain her true potential, these must stop,’’ President Buhari was quoted as saying in the statement.”

A detail review of the entire system of taxation in Nigeria today using the scope of VAIDS would show that FIRS and the tax authorities are doing a lot of enforcement based on reports of properties and businesses being sealed for non-payment of tax apart from the continues campaign on tax awareness. For instance, Vice President Osinbajo on 6th of July, 2017 flagged off “Tax Thursday” campaign to educate and enlighten the general populace on their tax responsibilities.

In the eyes of the Minister of Finance, Mrs Kemi Adeosun, those who believe that the Federal Government needs to be more daring in implementing the rules on taxation, also need to consider the other side of the coin. “If we allow them (tax officials) to just go and be sealing and destroying properties, it will discourage business. There must be a process. In some cases, the tax officials get it wrong and may have to retrieve. And some cases they get it write. In some cases when you see a property sealed up and later unsealed, it’s because they’ve paid. So, it doesn’t necessarily means there is soft peddling. I think the FIRS are doing quite an excellent job of driving the enforcement narrative.

In her midterm media dialogue recently, the Minister acknowledged that government softened a little during the amnesty period; but now, “we are actively preparing cases for prosecution. Once the VAIDS window expires, there will definitely be an increase in enforcement action… We did have to slow down a little but from June you will see a mighty increase in enforcement action on tax matters. We are very serious. With the tax to GDP of 6 per cent, we can’t go anywhere – it’s just not possible.

We are deluding ourselves if we think we are going to grow with that kind of tax to GDP. No country has done. We have to drive up compliance. We’ve gotten a lot of salaried workers are paying their taxes. But a lot of self-employed people who run businesses are able to evade. A lot of high network people are able to evade. We have to get them into the tax net. Everybody has to pay their fair share,” she said.



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