The National Economic Council (NEC), on Thursday gave approval in principle to a new Nigeria Voluntary Asset and Income Declaration Scheme (VAIDS), which would capitalize in part on the current global movement against tax evasion and illicit financial flows to encourage those who have not complied with tax regulations to remedy their position.
In a presentation to the council comprising governors of the 36 states of the federation, Minister of Finance, Mrs Kemi Adeosun, said the scheme, which begins on May 1, 2017, targets $1bn revenue conservatively.
The scheme provides for limited amnesty to enable voluntary declaration and payment of liabilities, while incentives will be put in place to encourage early participation.
Based on initial estimates, according to a statement by Laolu Akande, Senior Special Assistant on Media and Publicity in the Office of the Vice President, the Minister said the VAIDS scheme targets an increase in Nigeria’s tax-to-GDP ratio of 15% from just 6% by 2020.
“VAIDS scheme will simultaneously generate revenue and encourage investment and economic activity – as only 214 individuals in the entire country pay N20 million or more in tax annually
“VAIDS scheme will embrace all Federal and States’ taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, & Technology Tax,” Akande added.
Also, the governors were informed that while additional inputs are to be considered, “at least 50% of the funds recovered will belong to States who are the ultimate collectors of personal income taxes.”
The under-payment of tax via the use of Tax Havens and other evasion strategies which has not helped Nigeria in any way, the statement continued, involves multi-national companies and high net worth individuals.
The proposed scheme is also expected to capitalise on the considerable international goodwill built by President Buhari in his mission to rebuild Nigeria, to also raise Nigeria’s non-oil tax-to-GDP ratio from its current 6%, the lowest in the world.
The Minister also put balance in the Excess Crude Account (ECA) on March 15, 2017, at US$2.459bn, excluding the $250 million the council decided last month should be injected into the Sovereign Wealth Fund (SWF).
She also reported on the Stabilisation Fund Account, an account into which an equivalent to 0.5% of the Federation Account allocated is paid from where states “that suffers absolute decline in its revenue arising from factors outside its control, shall tap in, to augment the allocation to that State.”
Based on the above, the statement said Mrs. Adeosun “informed Council that the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) recently approved for disbursement (N39,613,282,870.69) to a number of States.”
She further informed Council that the balance in the SF (Stabilisation Fund) now stands at N25.793bn.