By Dipo Olowookere
Deposit Money Banks operating in Nigeria have been directed by Federal Government to release information of their customers to tax officials in a bid to punish those fail to pay the appropriate taxes to government’s coffers.
The details will include income and assets of their customers, especially those of over 12,000 high net worth individuals, who are either not paying taxes or have been underpaying.
The information would be made available to tax authorities under the Common Reporting Standard (CRS) scheme Nigeria signed up to in August 2017.
The CRS is similar to the United States Foreign Account Tax Compliance Act, which promotes sharing of information across borders.
It is an automatic exchange of information programme driven by the Organisation for Economic Co-operation and Development, an intergovernmental body with 35 member countries.
Nigeria also signed up to the Beneficial Ownership Register with the United Kingdom for the purpose of driving the Voluntary Asset and Income Declaration Scheme (VAIDS), a 9-month tax amnesty launched in July 2017 and expires March 2018.
It is meant to allow individuals and companies regularise their tax books and avoid punishment. Government embarked on this to boost its tax base and revenue so as to provide basis amenities to the citizenry.
Minister of Finance, Mrs Kemi Adeosun, speaking last week when she received progress report on tax laws reform in Abuja, said government has also commenced Automatic Exchange of Tax Information (AETI) on overseas assets held by Nigerians.
According to her, “The data received in Nigeria with regard to overseas assets held by Nigerians has been impressive and will underpin a long term improvement in the nation’s tax to Gross Domestic Product (GDP) ratio, which in turn will improve life for the masses.
“The data on bank accounts, property and trusts, which has come automatically from a number of countries is being used to support the VAIDS by allowing the tax authorities to check the accuracy of declarations received.
“The Federal Government is also using the data to generate ‘nudge’ letters, which are being sent to those identified as being potential tax defaulters.”
Speaking further, Mrs Adeosun lamented that, “Nigeria’s tax to GDP is currently at six per cent and the government is committed to taking it to 15 percent.”
She said, “Statistics have shown that not so many people are in the tax base and many of the HNIs are not paying taxes or are paying less.
“The Federal Government has therefore directed that every taxpayer’s information must be collected by the banks and submitted to the tax authority.”
The Minister noted that Nigeria has at least 12,000 high net worth individuals, the second highest in Africa, coming after South Africa, which has 40,000.
Of the over 12,000 high net worth individuals in Nigeria, over 6,800 are resident in Lagos, 4,000 in Abuja, while the remaining can be found in Port Harcourt and other states of the federation.
Mrs Adeosun said the Federal Government was targeting about $1 billion from the VAIDS before the March 31 deadline.
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