How VAIDS grows Nigeria’s tax revenue – VAIDS form and website relates to VAIDS executive order in connection with N-Power VAIDS. It’s the acronym for Voluntary Assets and Income Declaration Scheme. In fact, it’s aimed at encouraging tax evaders to begin to pay taxes accurately and sufficiently, in exchange for forgiveness of their past tax offences. Therefore, here are How VAIDS grows Nigeria’s tax revenue
How does this affect the national gross domestic income (GDP)? How does it generate the required revenue for massive national growth and development. And, would it promote tax compliance?
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How VAIDS grows Nigeria’s tax revenue
Table of Contents
This write-up addresses how VAIDS will promote tax payment compliance. And by that cause the generation of more revenue for massive economic activities. As a matter of fact, this post is good for all taxpayers, tax professionals, accountants and auditors. To benefit also include business consultants, and students of these professional bodies.
How would VAID Help generate more revenue for Nigeria?
In fact, that is the thrust of this post. The underlisted are certainly the ways VAIDS will help generate more tax revenue for Nigeria.
(1) Compliance with Progressive Tax System:
Furthermore, VAIDS will promote tax payment compliance and reduce cost of compliance on the part of the government. Nigeria’s tax system is based on global best practice. In fact, it is a progressive system that ensures fairness. Horizontal Fairness ensure that every tax payer in similar situations are treated similarly. While Vertical fairness ensures that those who earn higher should also pay higher.
On the other hand, tax policy is said to be unfair if it becomes regressive. In this situation, taxpayers don’t pay proportionately in relation to their income. It’s a situation where tax payment takes a declining proportion as the value of the tax base rises. In this case, the average rate of tax gets greater than the marginal rate of tax.
In summary, it’s fair that those with the highest income levels should shoulder the greatest proportion of the tax burden. If this happens under VAIDS, government will be generating more revenue.
(2) VAIDS will promote tax payment complains all round – how?
As a matter of fact, in Nigeria PAYE is accurate but CIT and PIT are not. VAIDS will correct this. Considerable progress are always made with taxing those in formal employment through the Pay As You Earn scheme. Such personal income taxes (PIT) are deducted at source.
However, this is not so of those self-employed persons, and professionals. Inclusive are, some companies who are able to evade full tax payment due to the inability of the tax authorities to assess their true income and thereby tax them accurately.More-so, because the tax regime in place is the self assessment regime, where tax payers assess themselves and pay accordingly. But the question is; how many of you (taxpayers) assess yourselves or companies/operations honestly and accurately?
If VAIDS is to be able to take care of the following tax evasion practices, tax revenue will increase:
Manipulating accounting records:
Use of complex structures in transactions to evade taxes.
Non registration for VAT,
Charging of VAT without remitting to FIRS.
Business operating without TIN
Operating with unregistered business names
Operating with unincorporated company names.
Non payment of Capital Gains Tax (CGT) on asset disposals – many are not aware of this.
On the other hand, many states (SBIRS) lack the machinery to accurately track the true income of their residents.
(4) Assets Declaration:
VAIDS is expected to enable assets owners to honestly declare for their ownership and true value and pay commensurable tax on them. This again will make VAIDS generate more revenue to alter the current poor tax-GDP ratio.
(5) VAIDS will fight the current Strategic Tax Evasion Methods:
Money laundry complex systems include transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names. In fact, certain complex family transactions promote money laundry.As a matter of fact, money laundering involves three steps: Placement, layering and integration. This defines a complex system of introducing cash or its equivalent into the financial system, and using other complex transactions approaches to circulate the fund and finally legitimising it by doing genuine businesses with it.
These have led to a systemic breakdown of compliance with the tax system with these strategies used by Nigerians to evade tax obligations.