Voluntary Assets and Income Declaration Scheme (VAIDS)

On the 29th of June 2017, the Vice President (who was the acting president at that time) formally started the Voluntary Assets and Income Declaration Scheme (VAIDS) which has since commenced on the 1st of July 2017 to end after 9 months.

What is VAIDS all about?

The VAIDS was designed to facilitate the voluntary disclosure of undisclosed revenue and assets so as to be captured within the tax net of the government. This will enable the tax authorities audit accounts properly in the hope that all outstanding tax liabilities will be paid.

The VAIDS scheme is initiated by the Federal Ministry of Finance in collaboration with Federal Inland Revenue Service (FIRS), and the state tax authorities to give tax payers a window to come out and declare all their assets. It is also created for tax payers to regularize their tax status in compliance and conformity with the tax laws.

What is the legal basis and framework for VAIDS?

Prof. Osinbajo signed an executive order back then in June and a Memorandum of Understanding between the FIRS and the State Inland Revenue Service.

Incentives of VAIDS to taxpayers?

• This is to encourage tax payers to come out and voluntarily and honestly declare their assets.
• The taxpayers who do this will enjoy waiver of interest and penalty, and will not be prosecuted by law.
• Also these tax payers will be exempted from tax audits covering the period in consideration.
• Tax payers that willingly declared their assets and make reasonable attempt to regularize their tax position with the tax authorities will also have the opportunity to spread the payment of their outstanding tax liability over three years

Why did the Federal Government come up with VAIDS?

• VAIDS was brought about as a result of the fact that there is the need to increase Nigeria’s tax to GDP ratio from the 6% it is currently to 15%
• Stop tax evasion
• Widen the national tax base
• Stop the non-compliance to existing tax laws
• Abolish illegal financial cash flows

Are you eligible to declare under VAIDS? Find out below:

The VAIDS is applicable to all persons/ entities who are liable to tax in the country. These include:

• Persons who earn income or own assets but failed to register with the relevant and appropriate tax authorities
• Persons who registered with the relevant tax authorities but have additional disclosures or did not make proper tax disclosures to the relevant tax authorities
• Persons that are registered with the relevant tax authorities but have been evading tax due to failure in filing tax returns
• Persons that failed to declare their income and assets
• Persons presently undergoing tax audit with the relevant tax authorities
• Persons that are evading tax payments by underpaying or under remitting to tax authorities
• Persons that are currently in dispute with the tax authorities and are presently undergoing reconciliation

What if you fail to declare?

The the full weight of the law will come on you. Taxpayers who fail to voluntarily declare their assets will be investigated and prosecuted criminally. The Ministry will also publish the list of tax defaulters and evaders in what is termed as A ‘name and shame’ list.

 

Remember that these VAIDS covers all form of taxes like the Capital Gains Tax, Companies Income Tax, Tertiary Education Tax, Petroleum Profits Tax, Personal Income Tax, Value Added Tax, Stamp Duties to the NITDA levy.

How will tax payers declare income and assets?

There are declaration forms that can be found on the VAIDS website, or tax payers can walk in to any of the VAIDS offices set up across the Nigeria. Tax payers can also obtain the asset declaration forms are also obtainable at the various Tax revenue offices like the FIRS where VAIDS desk has been created to handle these requests.

Please note that information presented and declared by on the form will be checked for accuracy and correctness. It is important to declare all that is worth declaring. Don’t leave anything out! Additional information may also be requested by the tax officials. The law permits them to.

What is next for tax payers?

Before you can pick up the declaration forms, then you need to ask yourselves these questions:

• Has my returns been filed with the period of 2011 to 2016?
• Was full disclosure made on my incomes in the returns so filed?
• Do I have assets outside the country that generated revenue for me, and did I disclose such foreign income
• Have I been providing limited information to the tax authorities so as to reduce my tax liabilities?
• Can I defend with proper documents the income displayed in my tax clearance certificate in the last years?
• Do I enjoy personal benefits from my employment in which tax has not been paid?
• Do I own assets by proxy and would like to declare these assets?
• Is my company currently undergoing back and forth with respect delay in tax audit conclusion?

If you are at a cross road on the questions above, then the VAIDS is just for you.

See a typical case of a tax payment defaulter hereas stated from the VAIDS website:

FULL TIME EMPLOYEE WITH MULTIPLE INCOME SOURCES

TAX PAYER PROFILE:

Mrs Soso is an employee of XYZ Bank, which deducts tax from her salary under PAYEE. She has tax clearance certificates for each year showing tax payments of N500,000 per annum.

AVAILABLE DATA ON MRS SOSO

Land registry documents show her to be the owner of an inherited property in Port­ Harcourt and properties in Lagos and Abuja, purchased in 2012 and 2014 respectively. These are rented at N4 Million per annum.

• A former client has reported Mrs Soso under the Whistleblower Policy, giving details of her business interests and providing Instagram photos of the gold jewelry offered to her for sale with a total value of US$200,000.
• BVN details indicate a fixed bank deposit balance of N25 Million.

Conclusion: Target is only paying tax on her main income but clearly has additional sources.

Case Status: Investigation approved.

VAIDS solution:

• Take advantage of  the VAIDS by completing form VA1. Declare all properties  and income sources under VAIDS.
• Inheritance of a property is not a taxable event but rent received is taxable income.
• The non-inherited properties may have an associated tax liability. This will depend on whether or not they were purchased with funds that had already been subjected to tax. The rent on non-inherited properties are taxable and the income should be declared.
• Consider applying for deferred payment if cash is not currently available.

Check out other scenarios:

Based on these scenarios, you can see that the Federal Government is in a ‘NO SMILING’ state, and they are ready to pounce on anyone within the ambit of the law. Therefore, review and regularize your tax positions now while you still have time.

Now that you have read this, do your family and friends a favour by clicking the SHARE button and SHARING with THEM!

Do you have the declaration form already and you need my help in getting it sorted out? Then hit the Contact me and shoot me an email. Let’s get it done together.

 

 

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