FG woos owners of undeclared foreign assets with amnesty, waiver
James Emejo and Alex Enumah in Abuja
The Executive Chairman of Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, yesterday disclosed that the agency has set a target to realise about N750 billion from about 55,000 defaulting taxpayers.
This is coming as the federal government yesterday unveiled the Voluntary Offshore Assets Regularisation Scheme (VOARS) aimed at providing tax amnesty and permanent waiver of criminal prosecution to owners of offshore assets, who are willing to voluntarily declare those assets
Fowler made the disclosure while addressing the House of Representatives joint committees on Finance, Appropriations, Aids, Loans and Debt Management, Legislative Budget and Research and National Planning and Economic Development on the 2019/2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
According to a statement issued by FIRS spokesman, Mr. Wahab Gbadamosi, the FIRS chairman told members of the committees that the recent substitution exercise carried out by the service led to recovery of N23.25 billion.
According to him, “From the bank accounts substitution exercise, we used banking information to bring non-compliant taxpayers with N1 billion and above turnover to comply. It has so far resulted in the recovery of N23.35 billion.
“The exercise has been extended to cover those with turnover of N100 million and above.
“To date about 500 of them have come forward and they have paid and we have collected in the region of about N24 billion. We believe we should be able to go through the 55,000 before the middle of this year which will be the middle of this year.
“In terms of estimates, which we should be able to generate from this exercise alone, that will be about N750 billion.”
Fowler, who noted that the FIRS recorded an increase in Value Added Tax (VAT) collection between 2015 and 2018, also explained that his agency is broadening its VAT collection scope with the adoption of States Accountants-General (SAG) collection platform, VAT Auto-Collect, integration of the GIFMIS platform with Ministries, Departments and Agencies, (MDAs) and through e-Service payment options.
He was categorical that VAT is not targeted at poor Nigerians.
He said: “Out of about N5.3 trillion, a large percentage is shared between states and local governments. In VAT, there has been a growth of over 44 per cent between 2015 and 2018 and that is at the current rate of 5 per cent.
“Now when you look at Africa as a continent, Nigeria still has the lowest VAT rate. When we look at the items that are not VATable, basic food is not VATable, medicals, education. But if you decide and you have the ability to go to a restaurant to eat and drink the same thing you can buy in the open market, then you pay VAT. So, VAT basically is a consumption tax and those who choose not to go to the open market to buy their food and cook at home are subject to VAT. VAT is not a hardship on the low income earners because, normally, they don’t even go to hotels when their wives can cook at home and they can have something very nice.”
He noted that those complaining about an increase are the same ones who go to Ghana and pay triple the amount in VAT or London and pay a higher amount.
“Eighty-five per cent of VAT goes to state governments, which are supposed to be closer to the people. They can use that money as approved by their state houses of assembly. We had an increase of about 32 per cent from N4.02 trillion in 2017 to N5.3 trillion in 2018. At the federal level, clearly we can see all the projects that are being completed, based on the available funds at the federal level,” he said.
He added that the expectations of Nigerians cannot be different if progress in VAT collection is sustained.
Fowler also told the committees that through enforcement activities, tax offices, tax audit and investigation assessments, FIRS generated N28.51 billion, while $77.83 million has been recovered.
He noted that the FIRS and the Economic and Financial Crimes Commission (EFCC) Joint Tax Force (JTF) was introduced in 2018 to enhance the fight against tax-related economic fraud.
He disclosed that as at December 2018, the JTF had recovered N6. 94 billion and $278,430.
Fowler added that the FIRS initiated income tax on property owners in Abuja and Lagos as part of efforts to deepen tax revenue collection, expand the tax net and increase the revenue base.
Fowler said: “This project, which initially targeted property owners in Abuja and Lagos, has so far yielded N4.3 billion, and is being extended to other locations.
“In this regard, Oyo and Kaduna States have commenced.
“It is important to note that this is not a property tax, but the use of the provisions of the law to bring into the tax net companies that own properties but failed to file necessary tax returns and pay appropriate taxes due.’’
Speaking on the tax audit exercise, Fowler said it covers both the National Tax Audit (NTA) and the Pioneer Audit (PA). The NTA, he said, contributed N212.79 billion in 2018.
FG Woos Owners of Undeclared Foreign Assets with Amnesty, Waiver
Meanwhile, as part of efforts in repatriating and channeling Nigeria’s funds outside the country into developmental projects, the federal government yesterday unveiled the Voluntary Offshore Assets Regularisation Scheme (VOARS).
The scheme, which is an offshoot of the Executive Order 8 signed last year by President Muhammadu Buhari, is aimed at providing tax amnesty and permanent waiver of criminal prosecution to owners of offshore assets that are willing to voluntarily declare those assets.
Speaking at the unveiling ceremony in Abuja, the Attorney General of the Federation and Minister of Justice, Mr. Abubakar Malami (SAN), said the VOARS was a scheme that was initiated by the Swiss Consortium with a view to facilitating the regularisation of offshore assets owned by Nigerians.
According to Malami, the scheme provides the legal basis for the Swiss Consortium to approach third party holders of the fund with the view of assessing information of the owners.
The third party, he noted, include banks, estate managers, auditors, accountants, amongst others, adding that his office is collaborating with the Ministry of Finance, the Accountant General of the Federation (AGF), the Federal Inland Revenue Service (FIRS), Infrastructure Concession Regulatory Commission (ICRC), Nigeria Intelligence Agency (NIA), Nigeria Sovereign Investment Authority (NSIA), Central Bank of Nigeria (CBN), and Debt Management Office (DMO), to develop a road map for implementation of the Executive Order 8, as well as mechanism for taxation on funds to be declared by Nigerians as offshore assets.
He said, “It is expected that those funds owned by Nigerians that are not in the system will be voluntarily declared by the owners.”
He, however, explained that when funds are voluntarily declared by the owners, the Federal Government of Nigeria will deduce 35 per cent as recoveries while two and half per cent will be charged as administrative fees for purpose of assessing the funds, adding that 63 per cent will be registered in the system to become taxable in Nigeria.
He added, “The infrastructure funds will serve as a proposed investment facility, where the Federal Government of Nigeria will have minimal investment, with the matching investments from banks and prospective international investors as well as Nigerians, holders of the 63 per cent who are expected to invest into this fund with the view of financing Nigerians infrastructure and bridging the deficient all attracting Foreign Direct Investment (FDI).
“I wish to solicit the cooperation of all Nigerians to key into this initiative,” he explained.
The AGF further stated that the rationale for the VOARS is to provide an opportunity for taxpayers or amnesty for tax defaulters to voluntary declare their offshore assets and income from sources outside Nigeria relating to the preceding 30 years of assessment and in return obtain some benefits like: “Permanent waiver of criminal prosecution for tax offences and offences related to the offshore assets, penalties and interests concerning such declared offshore assets”.
In addition, he said the volunteers would receive from the “Federal Government of Nigeria an Offshore Assets Regularisation Compliance Certificate on the declared and regularised offshore assets; be free to use or invest their duly regularised residual offshore assets in any manner in Nigeria or overseas, and be subject only to annual tax to Federal Government of Nigeria on the income earned on such residual offshore assets”.