By Anthony Chukwuka
The Voluntary Assets and Income Declaration Scheme (VAIDS), an initiative of the Federal Ministry of Finance, has the potential halt Nigeria’s near-total dependence on oil revenue and push the country into the ranks of progressive societies.
VAIDS was conceived to encourage voluntary disclosure of previously undisclosed assets and income as well as the payment of all outstanding tax liabilities. The implementation of the scheme will expand the country’s Nigeria’s tax base by bringing more people into the tax net, thereby addressing the issue of the country’s unimpressive Tax-to-Gross Domestic Product (GDP) ratio, currently at about six per cent. In addition, it also seeks to curtail the practice of using tax havens for illicit financial flows, a major problem affecting many developing countries.
The scheme covers all taxes collectible by the three tiers of government. A major objective of the scheme is to arrest the rampancy of non-compliance. Official figures show that only 214 individuals in the country pay N20 million or more in tax annually and that out of the 70 million taxable adults in the country, only 14 million pay tax, with 96 per cent of them through the Pay-As-You-Earn (PAYE) system. What this implies is that only four per cent of the country’s tax-paying population exist outside the PAYE system.
With VAIDS offering incentives for voluntary declaration of income/assets and payment of tax liabilities, the potential for compliance is much greater. Among the incentives are waivers on penalties and interests, tax audits, option of spreading payment of tax liabilities over three years and freedom from prosecution. Failure to comply at the end of the window of opportunity, however, will attract prosecution and full payment of tax due, including penalty and interest.
 Increased tax payment will, naturally, ensure a huge growth in the capacity of government all at all levels to meet their obligations to Nigerians. To ensure successful implementation, government needs to simplify the payment process and ensure transparency in the use of resources to encourage compliance.
