Acting President Yemi Osinbajo on Thursday signed an executive order offering nine months grace period to tax payers to regularise their tax status or face criminal prosecution for tax offences.
Osinbajo signed the executive order after the inauguration of Voluntary Assets and Income Declaration Scheme (VAIDs) in Abuja.
He said the scheme was specially targeted at tax payers, who had not declared their taxable incomes and assets, as well as those who don’t pay at all, and those who had been underpaying or under-remitting.
Osinbajo said the scheme would cover all federal and state taxes such as companies’ income tax, personal income tax, petroleum profit tax, capital gains tax, stamp duties and tertiary education tax.
“The scheme will be operated from July 1, 2017 to March 31, 2018.
“In exchange for full and honest declaration, tax evaders will receive immunity from prosecution, forgiveness of penalty and interest that is due on unpaid taxes.
“They will also get the full assurance that all information provided will remain confidential.
“In addition, participants in the scheme will not be selected for audit investigation for the period.
“We understand that some tax payers may have problems raising cash and for that reason, we have built in a system that will allow those owing to pay over a period of time.”
According to the acting president this is subject to conditions.
Osinbajo said that those who failed to take advantage of the nine months grace period would face criminal investigation and if found guilty may face up to five-year jail term.
He said that the government would immediately commence a nationwide sensitisation of Nigerians on the scheme and tax in general to ensure compliance.
“To this end, we have agreed that every Thursday starting from today and for the next one year will be declared Tax Thursday.
“We expect the Federal Inland Revenue Service (FIRS) and every state government to organise sensitisation events that would raise awareness of the tax system to ensure massive enrolment of new tax payers.
“We must enroll at least four million tax payers and increase the level of payment among the 14 million already registered tax payers.
“We expect that all state governors will personally lead this initiative and support the work of the 7,500 community tax liaison officers that would be employed shortly.”
The acting president said that a high level team working with the Federal Ministry of Finance was set up 15 months ago to research on tax evasion and illicit financial flows.
He said the report of the team, which was tagged ‘Light House Project’ searched various data bases such as banks, Corporate Affairs Commission, vehicle registration numbers and immigration to fish out tax evaders.
On the international front, Osinbajo said, “Nigeria is now a party to the automatic exchange of information which comes into effect in January, 2018’’.
“This means that Nigeria will automatically have all the information to successfully pursue tax evaders across the world.
“Specifically, we will have information on beneficial owners of assets held abroad, including those in tax havens,” he said.
Meanwhile, the Minister of Finance, Kemi Adeosun, said that with the scheme, Nigeria hoped to increase tax to Gross Domestic Product (GDP) of the country from six percent to 30 percent.
“If we pass this test, the future of Nigeria is assured,” she said.
In his remarks, John Enoh of Cross River Central, who represented the President of the Senate, assured of legislative backing to the scheme.
He said the Senate would pass whatever legislation needed to improve tax compliance in the country.
Similarly, the Chairman of Nigeria Governors’ Forum, Abudulaziz Yari, pledged the state governments’ support and commitment toward the new initiative.
Yari, who is also the governor of Zamfara, said that state governments would be the biggest beneficiary of revenues derived from the scheme as they would give the FIRS necessary support.
A recent report of the Joint Tax Board showed that only 14 million people out of the estimated 69.9 million Nigerians, who are economically active, are paying taxes.
Accordingly, 96 percent of the 14 million have their taxes deducted at source; this shows that they are government workers.
Also, only 214 Nigerians pay taxes of about N20 million annually and about 900 Nigerians pay N10 million as tax every year.