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At the same meeting , Nigeria’s minister of finance, Kemi Adeosun informed the National Economic Council that only 214 rich Nigerians pay income taxes.

This is why the federal government of Nigeria is taking a big step in May by introducing “Nigeria Voluntary Asset and Income Declaration Scheme (VAIDS) which aims at encouraging voluntary declaration of assets and income with the  Federal Inland Revenue  Service (FIRS)

Nigeria Voluntary Asset and Income Declaration Scheme (VAIDS)

The Federal Government aims at generating  an estimated revenue of $1 billion from the proposed Nigeria Voluntary Asset and Income Declaration Scheme (VAIDS).

The scheme takes off on May 1  and will offer a window for those who, before now, have not complied with extant tax regulations to remedy their positions by the provision of limited amnesty to enable voluntary declaration and payment of liabilities.

READ ALSO: UNDERSTANDING WITH-HOLDING TAX IN NIGERIA

The scheme will also have incentives in place to encourage early participation. Under the scheme, taxpayers will be allowed up to three years to settle their liabilities.

The National Economic Council (NEC) approved the scheme following a briefing by the Minister of Finance, Kemi Adesoun, at the meeting where she stated that the underpayment of tax via the use of tax havens and other evasion strategies, have not been helpful to Nigeria.

ONLY 14M NIGERIANS PAY TAX – FIRS

TARGETED TAX CONTRIBUTION TO GDP

In the same meeting the Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, disclosed at the post-NEC briefing that the FIRS is targeting an increase in tax contribution to the Gross Domestic Product (GDP) to 18 per cent by 2020.

He said this will be done through VAIDS which was approved by NEC on Thursday. The scheme is expected to simultaneously generate revenue and encourage investment and economic activity as only 214 individuals in the entire country pay N20 million or more in tax annually.

He said, “VAIDS scheme targets to increase the tax to GDP ratios to 18 per cent from just six per cent by 2020,” adding that the FIRS can surpass NEC’s projected 15 per cent.

35% of Eligible Nigerian Tax payers pay tax:

The FIRS boss said only 14 million Nigerians out of 40 million eligible taxpayers currently pay tax. Fowler said a conservative revenue of $1 billion is expected to be generated from the scheme, adding that the VAIDS will embrace all federal and states’ taxes including companies income tax, personal income tax, petroleum profits tax, capital gains tax, stamp duties, tertiary education tax and technology tax.

ONLY 14M NIGERIANS PAY TAX – FIRS

“It is anticipated that at least 50 per cent of the funds recovered will belong to states that are the ultimate collectors of personal income taxes. A Memorandum of Understanding (MoU) will be gazetted and signed with each state government,” Fowler, who briefed alongside the Abia State Governor, Okezie Ikpeazu, and Kaduna State Deputy Governor, Bala Bantex, said.

READ ALSO: TAX INCENTIVES IN NIGERIA

Under-payment of Tax by Multinationals:

According to him, under-payment of tax has been principally perpetrated by multinational companies and high net worth individuals, keeping Nigeria as a country with the lowest non-oil tax to GDP at six per cent.

“The proposed VAIDS will capitalise on the international goodwill built by President Muhammadu Buhari in his mission to rebuild Nigeria,” he said.

The scheme is also expected to capitalise on the current global movement against tax evasion and illicit financial flows and offer a window for those who have not complied with extant tax regulations to remedy their position by the provision of limited amnesty to enable voluntary declaration and payment of liabilities.

Ane

Deacon Anekperechi Nworgu, a seasoned economist who transitioned into a chartered accountant, auditor, tax practitioner, and business consultant, brings with him a wealth of industry expertise spanning over 37 years.