Just recently, the Federal Government promised to grant amnesty to offshore assets owners and tax defaulters should they embrace the newly introduced VOARS initiative. KEHINDE OSASONA writes.
The Attorney General of the Federation and Minister of Justice, Abubakar Malami, SAN, at the unveiling ceremony of the Voluntary Offshore Assets Regularization Scheme, VOARS, last week, in Abuja, disclosed that the federal government has resolved to shield offshore assets owners from tax offences, penalties and interests, only if they are ready to embrace the new Voluntary Offshore Assets Regularization Scheme (VOARS).
The AGF added that the said VOARS was initiated by the Swiss Consortium with a view to facilitating the regularization of offshore assets owned by Nigerians.
According to him, President Muhammadu Buhari had signed Executive Order 8 on the Voluntary Offshore Assets Regularization Scheme.
He said, “It is expected that those funds owned by Nigerians that are not in the system will be voluntarily declared by the owners,” he said.
“When funds are voluntarily declared by the owners, the Federal Government of Nigeria will deduce thirty-five per cent (35%) recoveries.
“Two and half per cent (2 1/2%) will be charged as administrative fees for purpose of assessing the funds while sixty-three percent (63%) will be registered in the system to become taxable in Nigeria.”
A throw back
In 2018, the former minister of Finance, Kemi Adeosun was quoted to have said “Federal government would strictly adhere to the confidentiality clause in the Automatic Exchange of Financial Account Information in tax matters.
She said, “The Federal Government has the political will and data to go after tax evaders who fail to take advantage of the tax amnesty programme. Many Nigerians cannot explain their lifestyles or match their lifestyles, assets and incomes with their tax payment.
On data sharing with foreign countries, the minister noted that the information sourced would be strictly used for tax purposes.
“The guidelines require that the automatic exchange of financial account information must be specifically designed with residence jurisdictions’ tax compliance in mind rather than being a by-product of domestic reporting for it to be effective,” Adeosun added.
She noted that the automatic exchange of information had become necessary to combat tax evasion and protect the integrity of tax systems.
The VAIDS, according to her, has been strengthened by the data on financial accounts, property and trusts shared by other countries.
Adeosun advised offshore asset owners to utilise the VAIDS window to regularise their taxes before the end of the amnesty programme.
“The offshore tax shelter system is basically over. Those who have hidden money overseas are being exposed and while Nigerians can legally keep their money anywhere in the world, they must first pay any taxes due to the Nigerian government so that we can fund the needs of the masses and create jobs and wealth for our people,” she added.
About the initiative
Explaining further, the AGF attested to the fact that the executive order 8 serves as legal basis for the Swiss consortium to approach third party holders of the fund with the view of assessing information of the owners.
According to him, the third party included banks, estate managers, auditors, accountants amongst others.
He added, “Let me start on the history of how VOARS came into existence. In exercising its recovery mandate, following rigorous negotiations, the office of Attorney General of the federation and minister of justice on behalf of the federal government of Nigeria signed a mandate agreement with the Swiss Consortium under an initiative called “Voluntary Offshore Asset Regularization Scheme”.
Pursuant to the agreement, a Nigeria infrastructure fund in Switzerland was proposed with the aim of imploring and encouraging Nigerians with offshore assets holdings to invest in the infrastructure with a view to increasing Nigeria tax base, bridging deficit and inviting direct foreign investment for the development of infrastructure in Nigeria.
“I wish to solicit the cooperation of all Nigerians to key into this initiative just like the VAIDS initiative. The rationale for the VOARS initiative is to provide an opportunity for taxpayers or amnesty for tax defaulters to voluntarily declare their offshore assets and income from sources outside Nigeria relating to the preceding thirty (30) years of assessment and in return obtain benefits,” he added.
Some of the benefits, according to him, range from permanent waiver of criminal prosecution for vtax offences and offences related to the offshore assets, penalties and interest concerning such declared offshore assets, immunity from tax audit of the declared and regularized offshore assets, waiver of interest and penalties on the declared, regularized offshore assets and receiving from the federal government of Nigeria an offshore assets regularization compliance certificate on the declared and regularized offshore assets and to be free to use or invest their duly regularized residual offshore assets in any manner in Nigeria or overseas, and be subject only to annual tax to federal government of Nigeria on the income earned on such residual offshore assets.
Finance Minister sheds more light
In her comments, Zainab Ahmed, lamented that for too long, tax evasion has been a strong narrative and the federal government has been very committed to working towards achieving better tax compliance amongst its citizens.
According to the minister, the VOAR scheme would serve as an additional opportunity and mechanism for Nigerian citizens to continue to fulfil their tax obligations by extending the scope to offshore assets and foreign-sourced income.
She said, “In 2017 and 2018, the establishment and implementation of the voluntary assets declaration scheme (VAIDS) gave tax payers the opportunity to regularize their tax status by honestly declaring any undisclosed assets and income to authorities without the fear of criminal prosecution.
Continued, she said, “Through the implementation of the VAIDS amnesty programme, the government has been able to increase the number of taxpayers from 14 million to 19 million and as a result, a total of N30 billion was realized from taxpayers during the one year grace period of july 1st 2017 to june 30th, 2018.
Shedding more lights on VOARS windows, she explained that the scheme also provides a one year window commencing from the 8th of october 2018 for affected taxpayers to declare all offshores assets and foreign –sourced income without the threat of criminal prosecution for tax offences related to undeclared offshore assets
PDP reacts
In the interim, while reacting on the proposed initiative, the Peoples Democratic Party, PDP, has requested for time to study the rationale behind the federal government’s plan to grant tax amnesty to offshore asset owners, before they can respond appropriately.
Going forward
While speaking at the unveiling ceremony, the former Attorney / General Geneva, Daniel Zappelli reiterated the Swiss consortium resolve to ensure that the initiative thrives in Nigeria.
As part of efforts at repatriating and channelling Nigeria’s funds outside the country, it would not be out of place to ask: Will it not be a futile effort after all?
