The Voluntary Asset and Income Declaration Scheme (VAIDS) boat sets afloat

Nigeria’s Acting President, Prof. Yemi Osinbajo, signed a new Executive Order that provides legal backing to a new tax amnesty regime in Nigeria on Thursday, 29 June 2017. VAIDS offers Nigerian taxpayers (individuals and corporate organisations) who have not been compliant with their tax obligations to regularise their tax affairs by providing a soft-landing, which includes a waiver of penalties and interest as well as immunity from tax audit and prosecution. It also provides protection of confidential information.

VAIDS comes on the back of a renewed global movement to tackle the problem of illicit financial flows which include tax evasion. Nigeria has joined the list countries that have signed up to the automatic inclusion of information which comes into effect in 2018. This means that Nigeria will automatically have the information required to successfully pursue tax evaders across the world. As part of this process, Nigeria will have access to details of the beneficial owners of assets held abroad including those in tax havens. The first exchange of information is expected in 2018. The new tax amnesty is a critical pillar to support the global exchange of information initiative as many of those that may require tax regularisation could do so with the full assurance of confidentiality, protection and immunity from penalties that intentional or unintentional previous tax positions could ordinarily have attracted.

Ahead of the launch of VAIDS, the Federal Ministry of Finance has done some level of background work, combing through available databases to profile individual taxpayers. The Ministry was able to search various databases including Bank Verification Numbers, Corporate Affairs Commission, Nigerian Financial Intelligence Unit, Land Registry Records, Vehicle Registration Records, Immigration and Travel Records as well as leveraging the recently launched Whistle Blower Policy of the Government to track financial outflows. Services of asset tracing firms with global connections were also said to have been contracted. This provides sufficient fallback position for a crackdown in case the opportunity provided by the tax amnesty is jettisoned by defaulters.

VAIDS covers all categories of existing and potential taxpayers that are liable to tax in Nigeria (i.e. individuals, companies, partnerships). It will be jointly executed by the Federal and State Governments through their respective Tax Bodies. While Federal Inland Revenue Service (FIRS) is taking an expected lead role at the Federal level, the various State Boards of Internal Revenue Services (SBIRs) are equally supportive of this Scheme.

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