Adeosun: Offshore Tax Havens, Avoidance Schemes Not Illegal
- Says FG to crosscheck declarations by Nigerian users of tax shelters
- Jersey Island gives condition for repatriation of $300m Abacha loot
Ndubuisi Francis and Paul Obi in Abuja
As revelations from the Paradise Papers continue to make waves globally, the Minister of Finance, Mrs. Kemi Adeosun, has clarified that offshore tax havens are not illegal insofar as Nigerian taxpayers using such shelters have paid the applicable taxes locally before the transfer of funds or assets to the tax shelters.
She equally stated that while the use of tax avoidance schemes was legal, tax evasion is not.
The minister, who provided clarity on the issue of offshore tax havens Tuesday at an interactive session with journalists in Abuja, however, revealed that the federal government would henceforth crosscheck tax declarations by Nigerian operators of offshore tax havens.
In this regard, she advised Nigerians to review any existing tax planning schemes, including those in offshore tax havens, in order to take advantage of the Voluntary Assets and Income Declaration Scheme (VAIDS) and regularise their tax status, where necessary.
According to a statement issued by her media aide, Mr. Oluyinka Akintunde, she was responding to a question about the legality or otherwise of the use of offshore tax shelters.
â€œThe critical question to be asked of all Nigerian tax payers using offshore tax shelters will be whether all applicable taxes have been paid prior to the transfer of funds or assets to a tax shelter.
â€œIf all taxes had been paid, then there will be no additional liability except tax payable on further income earned on those funds. However, if taxes had not been paid, then the use of such schemes is illegal,â€ the minister said.
Adeosun counselled users of such structures to seek professional advice, explaining further that her ministry was offering free training to professional advisers on VAIDS to enable them support their clients.
She urged users of offshore tax shelters to promptly embrace the VAIDS scheme to regularise their tax status, adding that Nigeriaâ€™s low tax revenues were at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world.
She added: â€œVAIDS ushers in an opportunity to increase the nationâ€™s general tax awareness and compliance. It is a time-limited opportunity for taxpayers to regularise their tax status relating to previous tax periods.
â€œIn exchange for fully and honestly declaring previously undisclosed assets and income, taxpayers will benefit from forgiveness of overdue interest and penalties, and with further assurance that they will not face criminal prosecution for tax offences or be subject to tax investigations.â€
The minister explained that with the increasing global focus on illicit financial flows and tax evasion, offshore tax shelters no longer offer robust protection against tax authorities.
The continued use of such schemes, she stressed, poses enormous risks for the users.
On the recent leaks by the Panana and Paradise Papers, the minister noted that the leaks were just the beginning of what was likely to be a systematic unravelling of the offshore tax haven system.
According to her, the Ministry of Financeâ€™s data mining project would use data provided on Nigerians from such leaks to crosscheck tax declarations.
She urged Nigerians to cooperate with the government by paying the right taxes to both the federal and state governments in order to provide the much needed funds that will improve the lives of Nigerians.
The minister maintained that sanctions await defaulters who refuse the federal governmentâ€™s offer of tax amnesty, including the full payment of outstanding tax liabilities and criminal prosecution.
She further stated that businesses, which untruthfully comply, would be liable as whatever was paid on the declared liabilities may be considered as part-payment of the outstanding sum later discovered by the authorities.
On impetuous defaulters who fail to utilise the VAIDS window, Adeosun said such offenders would face criminal prosecution by the federal government.
VAIDS was established on June 29, 2017 via an Executive Order signed by Vice-President Yemi Osinbajo (the then acting president) as a broad-spectrum solution to the defects in the countryâ€™s tax system, including negativity towards taxation.
The first phase of VAIDS runs from July 1, 2017 while the second phase ends on March 31, 2018.
Job creation is one of the spin-offs of the VAIDS initiative, with the scheme expected to create 7,500 opportunities for Nigerians as Community Tax Liaison Officers (CTLOs) through the N-Power scheme of the federal government.
In a related development, the Government of Jersey Island made it clear Tuesday that the $300 million illegally stashed away on the Island by the late military leader, Gen. Sani Abacha, will not be released to the Nigerian government should there be a third party involved in the repatriation of the stolen wealth.
According to the Economic and Financial Crimes Commission (EFCC), the Government of Jersey Island was sceptical of the involvement of a third party in the repatriation of the looted funds, given past complaints by some Western governments on Nigeriaâ€™s sincerity in the handling of recovered funds stolen by the Abacha family.
Making this known, the EFCC Head of Media and Publicity, Wilson Uwujaren, explained that â€œthe Government of Jersey Island has insisted that the Abacha loot would not be released to Nigeria if a third party representation is brought into the pictureâ€.
â€œThe Minister and Attorney General of Jersey Island, Robert J. MacRae QC disclosed this today (yesterday) during the on going 7th Session of Conference of State Parties to the United Nations Convention Against Corruption, holding in Vienna, Austria.
â€œMacRae spoke on the sidelines of the conference with the Nigeria delegation led by the acting chairman of the EFCC, Ibrahim Magu.
â€œThe Jersey Attorney General expressly stated that negotiations in respect of repatriation of the $300 million, being part of the Abacha loot, between Nigeria and Jersey Island, involving the United States of America, must be on the basis of government to government co-operation.
â€œThe EFCC was accompanied to the meeting by four members of the Nigeria delegation,â€ Uwajaren said.