Economy
VAIDS Aimed to Correct Nigeria’s Poor Tax to GDP Ratio—Finance Minister
By Dipo Olowookere
Minister of Finance, Mrs Kemi Adeosun, has disclosed that the Voluntary Asset and Income Declaration Scheme (VAIDS), which was launched recently in Abuja by the Federal Government, is a credible platform put in place for defaulting Nigerian taxpayers to work out a flexible way to pay their outstanding tax liabilities due from them relating to the last six relevant tax years, regularize their tax transactions and obtain genuine tax clearance certificate for all the relevant years without fear of criminal prosecution for tax offences and with the benefit of forgiveness of interest and penalties.
According to the Minister, the scheme offers a 9-month window to allow Nigerians, who may have evaded tax, whether ignorantly or deliberately, in the past six years, the opportunity to do their civic duty and pay the correct taxes, thereby avoiding criminal prosecution at the expiration of the scheme.
Speaking in Abuja shortly after the VAIDS was launched by the Acting President, Professor Yemi Osinbajo, last week, Mrs Adeosun stated that the policy embraces all federal and state taxes such as Companies Income Tax, Personal Income Tax, Petroleum Profits Tax, Capital Gains Tax, Stamp Duties, Tertiary Education Tax, Technology Tax, Tenement Rates, and Property Taxes.
It also covers all back taxes for the last six years in line with the statutory periods of limitation under the relevant tax statutes, she added.
“VAIDS is specifically targeted at taxpayers who have not been fully declaring their taxable income/assets; have not been paying the tax due at all; have been underpaying or under remitting; are under a process of tax audits or investigations with the Relevant Tax Authority; are engaged in tax disputes with the relevant tax authority but are prepared to settle the tax dispute out of court; are new taxpayers who are yet to register with the tax authorities; and are existing registered taxpayers who have new disclosures to make.
“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,” the Minister said.
She further disclosed that one great benefit of participating in the scheme is that taxpayers would be free to transfer assets that they had previously held in nominee and other names into their own name.
“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 ownership of assets should be seized as proper declaration allows assets to be legally and formally held by the true owner.
“Those taking advantage of the scheme by declaring honestly and fully will be free from prosecution and will qualify for forgiveness of penalties and interest,” Mrs Adeosun explained.
Upon expiration of the VAIDS programme in March 2018, government will concentrate criminal prosecution efforts on those who have evaded taxes and yet failed to take advantage of the scheme.
Under the various relevant laws, tax evasion is a crime, which is punishable upon conviction by imprisonment of up to 5 years, while the tax payer is still liable to pay the tax due with interest and penalties.
In most cases, defaulters are subject to a penalty of 10 percent of the tax due and interest at 21 percent per annum. In some cases the penalty is 100 percent of the tax due and the defaulters’ assets are liable to be forfeited.
“Those who fail to take advantage of the scheme and are later found to have under declared their taxes or assets will be treated as wilful tax evaders and will therefore face the full force of the law and will not be shielded by anonymity,” Mrs Adeosun stated.
The Minister also clarified that VAIDS was not restricted to overseas income and assets, as it also covers income derived from part-time businesses, vocations, professions and economic activities other than the main or principal sources of incomes accruing to taxpayers.
These include annuities, yields, and other incidental incomes derived from investments such as rentals on residential and commercial properties, cash and non-cash investments and investments in other asset classes.
“The idea of the scheme is that it is a voluntary programme, the decision to participate should therefore be left to the taxpayers.
“The FIRS and other relevant federal and states tax authorities shall give effective publicity to the program and encourage as many people as possible to take advantage of it.
“This will also be complemented by the Community Tax Liaison Officers. Intending participants in the scheme are advised to confirm the extent of their Nigerian tax liabilities with their professional advisers,” she stated.
Mrs Adeosun, who decried Nigeria’s low tax revenues which, according to her, are at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world, said there has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations.
These include but are not limited to, transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names.
“Nigeria’s tax to GDP ratio, at just 6 percent, is one of the lowest in the world (compared to India’s of 16 percent, Ghana’s of 15.9 percent, and South Africa’s of 27 percent).
“Most developed nations have tax to GDP ratios of between 32 percent and 35 percent. Whilst considerable progress has been made with taxing those in formal employment, self-employed persons, professionals and companies are able to evade full tax payment due to the inability of the tax authorities to access and assess their true income.
“According to Federal Inland Revenue Service the total number of tax payers in Nigeria is just 12,649,654 [as at April 2017]. Of these, 96 percent have their taxes deducted at source under PAYE and just 4 percent comply with Direct Assessment,” she said.
By Adedapo Adesanya
The Vice President, Mr Kashim Shettima, inaugurated the Board of the Nigerian Consumer Credit Corporation (CREDICORP) and gave a 50 per cent access target for workers, saying consumer credit was critical to Nigeria’s ambition of becoming a one-trillion-dollar economy by 2030.
According to him, President Bola Tinubu established the CREDICORP to build a trusted credit infrastructure, provide catalytic capital to lower borrowing costs, and help Nigerians overcome long-standing cultural resistance to credit.
Speaking on Thursday in Abuja when he inaugurated the board on behalf of the President, the Vice President, in a statement by his spokesman, Mr Stanley Nkwocha, said that the quality of life of Nigerians cannot improve without closing the gap between access to capital and human dignity.
“A civil servant who earns honestly does not have to chase sudden wealth just to buy a vehicle, or save for ten years to buy one. A young professional should not remain in darkness simply because solar power must be paid for all at once,” the Vice President said.
VP Shettima disclosed that in just one year of operations, CREDICORP has disbursed over ₦37 billion in consumer credit to more than 200,000 Nigerians, with over half of them accessing formal credit for the first time.
The Vice President said the organisation was specifically tasked with building credit infrastructure to bridge the trust gap between lenders and borrowers, providing wholesale capital and credit guarantees through its portfolio company.
“Ultimately, these critical jobs of CREDICORP will enable access to consumer credit to at least 50 per cent of working Nigerians by 2030,” he said.
The Vice President explained that the new board’s role was not ceremonial as they are custodians of the organisation’s mission, adding that the long-term strength of the institution would depend on their “vigilance, integrity, sacrifice, and commitment.”
He directed Board members to uphold Public Service Rules, the Board Charter, and all applicable governance frameworks, warning that accountability and stewardship of public resources were non-negotiable.
The Chairman of CREDICORP, Mr Aderemi Abdul, expressed appreciation to President Tinubu for his vision behind the formation of CREDICORP and for the confidence reposed in them, noting that the establishment of the corporation marked an important step towards strengthening the nation’s financial architecture.
He assured President Tinubu that the board understands its responsibility and will guide the institution to deliver meaningful benefits to Nigerians.
For his part, Mr Uzoma Nwagba, Managing Director/CEO of CREDICORP, recalled watching President Tinubu say 20 years ago that consumer credit is one of the major tools that will improve the lives of Nigerians.
He noted that over the past 18 months, the institution has benefited more than 200,000 Nigerians, including students.
He assured that the presidential vision behind CREDICORP would not be taken lightly, as the team considers their appointments a unique, once-in-a-lifetime opportunity.
Other members of the board inaugurated include Mrs Olanike Kolawole, Executive Director, Operations; Mrs Aisha Abdullahi, Executive Director, Credit and Portfolio Management; Mr Armstrong Ume-Takang (MD, MoFI), Representative of MoFI; Mrs Bisoye Coke-Odusote (DG, NIMC), Representative of NIMC; and Mr Mohammed Naziru Abbas, Representative of FMITI.
Others are Mr Marvin Nadah, Representative of FCCPC; Mrs Chinonyelum Ndidi, Representative of the Federal Ministry of Finance; Mr Mohammed Abbas Jega, Independent Director; and Mrs Toyin Adeniji, Independent Director.
By Adedapo Adesanya
Six price gainers helped the NASD Over-the-Counter (OTC) Securities Exchange retain its stay in green territory after a 0.23 per cent appreciation on Thursday, February 26.
The price gainers were led by Nipco Plc, which added N25.00 to close at N278.00 per share compared with the previous day’s N253.00 per share, NASD Plc rose by N5.13 to N56.41 per unit versus N51.28 per unit, FrieslandCampina Wamco Nigeria Plc expanded by N2.24 to N102.44 per share from N100.00 per share, Afriland Properties Plc grew by 88 Kobo to N18.88 per unit from N18.00 per unit, 11 Plc increased by 35 Kobo to N277.00 per share from N276.65 per share, and Lagos Building Investment Company (LBIC) Plc gained 27 Kobo to close at N3.75 per unit versus N3.48 per unit.
On the flip side, Central Securities Clearing System (CSCS) Plc lost N1.75 to sell at N68.25 per share versus N70.00 per share, and Geo-Fluids Plc depreciated by 2 Kobo to N3.25 per unit from N3.27 per unit.
The weight of the advancers fortified the NASD Unlisted Security Index (NSI) by 9.21 points to 4,034.46 points from 4,025.25 points, and the market capitalisation soared by N5.51 billion to N2.413 trillion from Wednesday’s N2.408 trillion.
Yesterday, the transaction value jumped by 18.8 per cent to N102.8 million from N80.7 million, and the number of deals surged by 18,8 per cent to 38 deals from 32 deals, while the transaction volume went down by 84.9 per cent to 1.3 million units from 8.7 million units.
At the close of business, CSCS Plc was the most traded stock by value (year-to-date) with 34.2 million units worth N2.04 billion, followed by Okitipupa Plc with 6.3 million units sold for N1.1 billion, and Geo-Fluids Plc with 122.1 million units valued at N478.2 million.
Resourcery Plc remained as the most traded stock by volume (year-to-date) with 1.05 billion units exchanged for N408.7 million, trailed by Geo-Fluids Plc with 122.1 million worth N478.2 million, and CSCS Plc with 34.2 million units traded for N2.04 billion.
By Adedapo Adesanya
The Naira further weakened against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) for the fourth straight session this week on Thursday, February 26.
At the official market yesterday, the Nigerian Naira lost N3.71 or 0.27 per cent to trade at N1,359.82/$1 compared with the previous session’s N1,356.11/$1.
In the same vein, the local currency depreciated against the Pound Sterling in the same market window on Thursday by N8.27 to close at N1,843.23/£1 versus Wednesday’s closing price of N1,834.96/£1, and against the Euro, it crashed by N8.30 to quote at N1,606.89/€1, in contrast to the midweek’s closing price of N1,598.59/€1.
But at the GTBank forex desk, the exchange rate of the Naira to the Dollar remained unchanged at N1,367/$1, and also at the parallel market, it maintained stability at N1,365/$1.
The continuation of the decline of the Nigerian currency is attributed to a surge in foreign payments that have outpaced the available Dollars in the FX market.
In a move to address the ongoing shortfall at the official window, the Central Bank of Nigeria (CBN) intervened by selling $100 million to banks and dealers on Tuesday.
However, the FX support failed to reverse the trend, though analysts see no cause for alarm, given that the authority recently mopped up foreign currency to achieve balance and it is still within the expected trading range of N1,350 and N1,450/$1.
As for the cryptocurrency market, major tokens posted losses over the last 24 hours as traders continued to de-risk alongside equities following Nvidia’s earnings-driven pullback, with Ripple (XRP) down by 2.7 per cent to $1.40, and Dogecoin (DOGE) down by 1.6 per cent to $0.0098.
Further, Litecoin (LTC) declined by 1.3 per cent to $55.87, Ethereum (ETH) slipped by 0.9 per cent to $2,036.89, Bitcoin (BTC) tumbled by 0.7 per cent to $67,708.21, Cardano (ADA) slumped by 0.6 per cent to $0.2924, and Solana (SOL) depreciated by 0.4 per cent to $87.22, while Binance Coin (BNB) gained 0.4 per cent to sell for $629.95, with the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closing flat at $1.00 each.
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