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 value of the Naira weakened against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 20 amid FX pressures associated with this period.
Most people who came into the country for Christmas and New Year holidays are already going back and are in need of forex, putting pressure on the local currency.
Also, the poor performance of the domestic currency could be attributed to end to the 42-day access granted by the Central Bank of Nigeria (CBN) to Bureaux de Change (BDC) operators to buy forex at official price.
According to data from the FMDQ Securities Exchange, the Nigerian Naira lost 0.16 per cent or N2.47 on the greeback yesterday to sell at N1,550.05/$1, in contrast to last Friday’s rate of N1,547.58/$1.
Similarly, the Naira slumped against the Pound Sterling in the spot market on Monday by N23.39 to trade at N1,906.98/£1 versus N1,883.59/£1 and depreciated against the Euro by N23.14 to sell for N1,613.48/€1 compared with last Friday’s N1,590.34/€1.
However, in the parallel market, the Nigerian currency improved its value against the Dollar during the session by N5 to quote at N1,665/$1 compared with the previous session’s N1,670/$1.
As for the cryptocurrency market, it turned red yesterday as the US President, Mr Donald Trump, didn’t bring up the much-expected subject of crypto in his inauguration speech on Monday afternoon.
Mr Trump had promised a far more friendly crypto policy stance than the previous administration but in the long speech that announced his plans in the coming days, he didn’t make mention of Bitcoin or crypto.
Just over the weekend, the President ignited a speculative frenzy with the Friday evening launch of the Trump meme coin, which was shortly followed by a meme coin associated with his wife, Melania.
Dogecoin (DOGE) crumbled yesterday by 6.3 per cent to $0.3419, Solana (SOL) slumped by 4.7 per cent to $235.32, Cardano (ADA) fell by 3.6 per cent to $0.9777, and Litecoin (LTC) moderated by 1.9 per cent to $114.98.
Further, Ethereum (ETH) went down by 1.7 per cent to $3,241.36, Binance Coin (BNB) retreated by 1.4 per cent to $693.30, Ripple (XRP) depreciated by 1.2 per cent to $3.06, and Bitcoin (BTC) tumbled by 0.8 per cent to $101,746.99, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices settled lower on Monday after Mr Donald Trump was sworn in for a second time as President of the United States.
On assumption of office, Mr Trump declared a national energy emergency immediately, promising to replenish strategic reserves and export American energy worldwide.
Consequently, Brent crude futures went down by 64 cents or 0.8 per cent to settle at $80.15 per barrel and the US West Texas Intermediate crude futures depreciated by $1.30 or 1.7 per cent to trade at $76.58 per barrel.
Mr Trump and his allies have signalled they would use the authority to rapidly approve new oil, gas, and electricity projects that typically take years to permit, and during his speech said he plans to unleash new oil and gas development on federal lands while reversing the Biden-Harris administration’s de-growth climate regulations.
Market analysts noted that while many of the executive actions will simply kick off a lengthy regulatory process, they extend by a large degree to the US energy industry, from oil fields to car dealerships.
These also underscore Mr Trump’s determination to reorient federal government policy behind oil and gas production, a sharp pivot from Biden’s efforts to curb fossil fuels.
He also said in his inaugural speech that he would impose tariffs and tax countries and promised an overhaul of the trade system.
Last week, prices rose for a fourth-consecutive weekly gain after the Biden administration imposed sanctions on more than 100 tankers and two Russian oil producers. This led to a scramble by top buyers China and India for prompt oil cargoes and a rush for ship supply.
Meanwhile, dealers of Russian and Iranian oil sought tankers not under sanctions for oil shipment.
While the new sanctions could cut supply from Russia by nearly 1 million barrels per day, market analysts noted that recent price gains could be short-lived depending on Trump’s actions as the new American president promised to help end the Russia-Ukraine war quickly.
Russian President Vladimir Putin congratulated Mr Trump on taking office hours, saying he was open to dialogue with the new US administration on Ukraine and nuclear arms.
Pressure was reduced based on easing tension in the Middle East after Hamas and Israel exchanged hostages and prisoners on Sunday which marked the first day of a ceasefire after 15 months of war.
By Dipo Olowookere
The first trading session of the new week on the floor of the Nigerian Exchange (NGX) Limited ended on a bullish note on Monday after a marginal 0.02 per cent growth.
This was influenced by bargain-hunting activities in the financial and industrial goods ecosystems.
According to data obtained from Customs Street, the insurance space grew by 2.12 per cent, the industrial goods sector appreciated by 0.17 per cent and the banking space expanded by 0.12 per cent.
However, due to profit-taking, the consumer goods index went down yesterday by 0.46 per cent and the energy counter decreased by 0.11 per cent.
When the bourse ended for the session, the bulls were in charge after dealing with the bears, leaving the All-Share Index (ASI) higher by 16.68 points to 102,370.36 points from 102,353.68 points and the market capitalisation increased by N10 billion to N62.861 trillion from N62.851 trillion.
Investor sentiment was strong during the session after the stock exchange finished with 32 price gainers and 26 price losers, indicating a positive market breadth index.
Caverton gained 10.00 per cent to close at N2.42, Coronation Insurance improved by 9.91 per cent to N2.44, SCOA Nigeria expanded by 9.68 per cent to N2.72, UPDC jumped by 9.52 per cent to N1.84, and Universal Insurance also rose by 9.52 per cent to 69 Kobo.
On the flip side, Eunisell declined by 9.99 per cent to N14.06, John Holt lost 9.63 per cent to trade at N9.20, Secure Electronic Technology shed 8.99 per cent to quote at 81 Kobo, Honeywell Flour dropped 7.58 per cent to settle at N9.15, and PZ Cussons weakened by 6.00 per cent to N23.50.
Yesterday, a total of 1.3 billion shares worth N17.7 billion exchanged hands in 13,891 deals compared with the 327.8 million shares valued at N11.8 billion traded in 11,905 deals last Friday, implying an increase in the trading volume, value, and number of deals by 304.48 per cent, 50.00 per cent, and 16.68 per cent, respectively.
The busiest stock was Wema Bank with a turnover of 980.0 million units worth N9.8 billion, Universal Insurance sold 31.3 million units for N21.2 million, AIICO Insurance traded 22.2 million units valued at N36.9 million, Oando transacted 19.8 million units for N1.5 billion, and Zenith Bank exchanged 19.7 million units worth N926.0 million.
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