By Obinna Chima
The federal government is currently working on modalities to implement the common reporting standards (CRS) in the country, which would enable it to obtain every taxpayersâ€™ information directly from the commercial banks.
The CRS is a standard for automatic exchange of bank accounts information on individuals and certain types of entities. All countries that have implemented the standard will be required to automatically exchange this information on an annual basis.
In August 2017, Nigeria took a step towards implementing the standard by signing the Multilateral Competent Authority Agreement (MCAA) on the CRS.
Implementing the CRS will allow Nigeria to automatically receive information on the bank accounts held in other countries by Nigeria tax residents.
Partner, Tax and Regulatory Services Unit with PricewaterhouseCoopers (PwC), Nigeria, Esiri Agbeyi, disclosed this at the weekend while making a presentation at an event organised by the Securities, Wealth and Asset Management unit of Ecobank in Lagos.
Esiri explained that when the CRS is fully implemented in the country, all banks would have to submit information about their taxpayersâ€™ information, identity numbers and bank verification numbers (BVN), among others to the tax authorities.
With this, the tax authorities can then share such information with any other country that has signed up to the CRS.
She added: â€œAnd if they share that information with that country, automatically, that country has to share that information with Nigeria.
â€œSo, it is exchange of information across borders. Nigeria signed up to it in August 2017 because they would need a lot of information to drive the Voluntary Assets and Income Declaration Scheme (VAIDS).â€
She explained that the next step required under this arrangement was for Nigerian banks to acquire the technology to drive the CRS for easy collection of data as well as for the tax authorities to have similar technology that they can use to submit such data.
â€œOne of the key requirements is security. So, Nigeria is not there yet. It will take some time to get there, because not all the banks are aware of CRS.
â€œSo, maybe in the next two years, we might have Nigeria fully take on the CRS. Ghana was among the first African countries to sign up to this. So, Ghana will be submitting information already to the authorities this year.
â€œThere is going to be that free flow of information and on the back of that, the tax authorities will come after those who have not taken advantage of the amnesty period provided by VAIDS to prosecute them.â€
She pointed out that the countryâ€™s low tax base was a major reason for the high interest rate in the country.
â€œGovernment is looking to raise taxes from six per cent tax to GDP ratio, to about 15 per cent, because ours is abysmally low when compared with other countries.
â€œOne of the ways they have thought of doing this is through VAIDS.Â Â We donâ€™t have much people as we should have in the tax base. There are a lot of high net worth individuals who do not pay taxes.
â€œThat is the key target of the government and as we progress, it is going to go around to the entire informal sector,â€ she added.