The Federal Government on Thursday launched a Voluntary Asset and Income Declaration Scheme that would provide an opportunity for taxpayers to regularise their status relating to previous taxes within a period of nine months.
The scheme, which will commence on July 1 this year and will last till March 31, 2018, will enable tax defaulters to benefit from the forgiveness of overdue interest, penalties and the assurance that they will not face criminal prosecution or be subjected to investigations.
Acting President Yemi Osinbajo, who launched the new tax initiative at the Banquet Hall of the State House in Abuja, also signed an Executive Order to back the Voluntary Asset and Income Declaration Scheme.
The signing of the Executive Order was witnessed by the Minister of Finance, Mrs. Kemi Adeosun, and governors of Ogun, Kaduna, Kogi and Zamfara states, among other top government officials.
Osinbajo said the new initiative was targeted at increasing tax awareness and compliance, as well as grant taxpayers a time-limited opportunity to regularise their status without penalty.
He said the scheme, to be jointly executed by the federal and state governments, would concentrate on the obligations of all Nigerian companies and citizens to pay their taxes wherever their income was earned, wherever they resided and no matter how rich they were.
He, however, warned that while the scheme would usher in an opportunity to increase the nation’s general tax awareness and compliance, any defaulter who failed to take advantage of the nine months’ period of grace would face the full wrath of the law.
Osinbajo added that while considerable progress had been made with taxing those in formal employment, the self-employed as well as some companies were able to evade full tax payment due to the inability of the tax authorities to assess their true income and thereby tax them accurately.
Quoting statistics from the Federal Inland Revenue Service, Osinbajo stated that out of a total economically active population of 70 million people, the country had only 14 million taxpayers.
He lamented that out of the 14 million taxpayers, only 214 were paying taxes of N20m and above each year, with all of them residing in Lagos.
The acting President said that the number of those paying taxes of N20m and above was low when considered from the fact that the country boasts of a huge number of wealthy people who owned assets all over the world.
Providing further insights into the payment structure of taxpayers in the country, Osinbajo said that only about 914 people pay between N10m and N20m, with 912 of them residing in Lagos, while the remaining two reside in Ogun State.
He regretted that while there was equal spread of high net worth individuals in Nigeria, their level of tax compliance had not been encouraging owing to tax evasion.
Osinbajo stated, “Those who earn salaries that are known in a formal setting are those we know that pay taxes. Outside of that group of people, there are many high net worth individuals, self-employed persons and some companies that are able to evade full tax payment due to the limited knowledge of the tax authorities to assess their true income.
“According to the FIRS, the total number of taxpayers in Nigeria is just 14 million; of this number, 96 per cent of them have their taxes deducted at source from their salaries under the Pay-As-You-Earn system, while just four per cent are under direct assessment.
“So, the vast majority of Nigerians do not pay taxes. This is at variance with our economy where almost 70 million Nigerians are economically active. The statistic of those paying taxes are quite alarming. Despite having some of Africa’s wealthy people, whose lifestyles are the subject of global admiration, only 214 Nigerian pay taxes of N20m or more each year.”
The acting President added, “A personal tax of N20m implies that the person is earning personal income of N80m a year. That group of 214 excludes many names who can pay well over N20m.”
