VAIDS: Frequently asked questions

This will provide tax authorities with greater transparency into the scale of multinational company operations, and enable increased detection of profit shifting and other tax evasion strategies. In addition, Nigeria has signed up for the establishment of the Beneficial Ownership Register at the Anti-Corruption Summit in London in 2016. The will give us access to true owners of properties in the UK and other participating countries.

Within Nigeria, recent reforms provide additional information to the tax authorities. There is now increased interagency cooperation providing information from BVN, NFIU, State Land Registries, CAC, and other agencies to create an accurate financial picture of Nigeria’s tax payers. In addition, the asset tracing team of the Ministry of Finance has engaged international asset tracing professionals who have been gathering information on individuals and companies which suggests that the level of non-compliance is significant; therefore VAIDS is offering an opportunity for tax payers to voluntarily regularize their tax status.

Why does government not simply prosecute tax evaders according to the law?

Even though ignorance of the law is not an excuse, Government has decided to take the pragmatic approach of offering an amnesty window to allow Nigerians, who may have evaded tax, whether ignorantly or deliberately, the opportunity to do their civic duty and pay the correct taxes whilst providing much needed revenue for Nigeria’s infrastructure. A number of countries, including Indonesia, Italy and Argentina, who have seen their tax revenues illegally moved to other nations have undertaken similar programmes to fund their national development. This will reduce the amount that Government will need to borrow for essential projects and will enable Nigeria to make a concerted effort to upgrade essential infrastructure and spur development.

Upon expiration of the Voluntary Asset and Income Declaration programme, Government will commence criminal prosecution of those who have evaded taxes and yet failed to take advantage of the scheme.

VAIDS essentials

How long will VAIDS last?

The Scheme is expected to last for 9 months only from 1st July, 2017 to 31st March, 2018. There will be no renewal or extension, once the scheme period has expired all remaining tax defaulters who have not taken advantage of its will face the full force of the law.

What are the benefits of participating in the scheme?

Tax evasion is a crime punishable, upon conviction, by imprisonment of up to 5 years, while the taxpayer will still be required to pay the tax due along with the associated interest and penalties. Typically, a penalty of 10% of the tax due is assessed, along with related interest charges that accrue at 21% per annum, commencing from the due date of the related tax charge. In some cases, the penalty assessed is 100% of the tax due and further, the related assets are liable to be forfeited. Those taking advantage of the Scheme by declaring honestly and fully will be free from prosecution and will qualify for the forgiveness of penalties and interest.

Another benefit of participating in the Scheme, is that tax payers will be able to transfer assets that they had previously held by nominees into their own name. It should be remembered that many Nigerians have lost assets in the course of trying to conceal them from the authorities. Such losses typically occur in the event of death or an urgent need to liquidate assets when required documentation and proof of ownership cannot be provided. The global focus on illicit financial flows is such that global regulations will only become tighter with time, thus this opportunity to regularise should be seized. Declaration allows assets to be legally and formally held by the true owner.

What types of Taxes will be covered?

The Scheme will cover all Federal and State taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax.

Which period of default will be covered by the scheme?

While the statute of limitations for a tax investigation for honest returns is limited to six years, there is no limit where a fraudulent return has been submitted. A condition of VAIDS is that tax payers will declare fully and honestly.

Who is entitled to participate in the scheme?

VAIDS is open to all persons who are in default on their tax liabilities. The Scheme is specifically targeted at taxpayers who: have not been fully declaring their taxable income/assets; have not been paying the tax due at all and or have been underpaying or under remitting.

It does not matter whether the relevant tax default arose from undeclared assets within or outside the country. If tax should have been paid, VAIDS is providing a once in a lifetime opportunity to declare the tax outstanding and resolve it definitively.

Are individual taxpayers the only participants in the Scheme? Can companies make declarations as well?

The Scheme covers all taxable persons and entities including individuals, trusts, executors, registered companies and statutory companies.

Where can one get information about VAIDS?

Further information can be obtained from the information unit of the Federal Inland Revenue Service (FIRS), various State Boards Internal Revenue Services (SBIRS) and the dedicated website of the Scheme www.vaids.gov.ng.

VAIDS participation

How do I pay the tax due under the Scheme?

All taxes paid under the Scheme are to be collected by the relevant tax authori