Voluntary Assets and Income Declaration Scheme (VAIDS)
An initiative designed to encourage voluntary disclosure of previously undisclosed assets and income for the purpose of payment of all outstanding tax liabilities, tagged ‘the Voluntary Assets and Income Declaration Scheme (VAIDS)’ was on June 29 2017, formally launched by Professor Yemi Osinbajo, the Acting President.
VAIDS is a time-limited opportunity for tax payers to voluntarily regularise and remediate their tax status with respect to previous tax periods that the tax payer had been in default by now making a full, fair, complete, honest and verifiable declaration of their assets and income
The Executive Order signed into law by the Acting President and a Memorandum of Understanding signed between the federal and state governments which put into place the structure which will ensure that the Scheme would be implemented by the Federal Inland Revenue Service (FIRS) in collaboration with all 36 States Internal Revenue Services and the FCT IRS, stands as the legal framework or basis for VAIDS.
The Scheme which commenced on 1 July 2017 for a period of 9 months to end on 31 March 2018, is applicable to all taxable persons, that is, individuals, companies, executors, trustees, partnerships etc., that are liable to tax in Nigeria. Taxes covered by this scheme include Companies Income Tax, Personal Income Tax, Withholding tax, Petroleum Profits Tax, Capital Gains Tax, Value Added Tax, Stamp Duties, Tertiary Education Tax and NITDA levy.
The scheme is to encourage and provide opportunity for eligible taxpayers to:
- Regularise their tax status for all the relevant years
- Pay all outstanding taxes
- Prevent and stop tax evasion
- Ensure full tax compliance
The taxpayers that are eligible to participate in this scheme are all persons and entities that are in default of their tax liabilities in any way whatsoever, including those who:
- Earn an income or own assets but are yet to register with the relevant tax authorities
- Are registered taxpayers who have additional disclosures to make or need to amend prior disclosures and /or are registered but have not been filing returns
- Have not been fully declaring their taxable income and assets
- Have been underpaying or under remitting
- Are under a process of tax audit or investigation with the relevant Tax Authority and /or
- Are engaged in a tax dispute with the relevant Tax Authority but are prepared to settle the tax dispute out of court.
The under-listed must be fulfilled if the application to the scheme is to be considered valid.
- The disclosure by the taxpayer should be voluntary
- The disclosure must be full, frank, complete and verifiable in all material respects
- The disclosure must be made using the Voluntary Asset and Income Declaration Scheme Forms or in any other form or manner as may be prescribed under the Scheme and
- The assessment of tax payable must be carried out by relevant tax authority.
Reliefs and benefits available to any taxpayer who truthfully and voluntarily declares his assets and income, complies with the regulations and guidelines and pays all outstanding taxes are as highlighted below:
- Immunity from prosecution for tax offences
- Immunity from tax audit
- Waiver of interest
- Waiver of penalties
- Option of spreading payment of outstanding liabilities over a maximum period of three years as may be agreed with the relevant tax authority.
At the expiration of the scheme, any defaulting taxpayer who had failed to truthfully and promptly take advantage of this period will face the following consequences:
- Liability to pay in full, the principal sum due
- Liability to pay all interest and penalties arising therefrom
- Liability to be prosecuted in accordance with relevant extant laws for tax offences
- Withdrawal of any reliefs which may have been granted to the participant
- Liability to undergo comprehensive tax audit
- Any sum paid in relation to the scheme may be counted as part payment of any further outstanding tax in respect of undisclosed information
In view of the fact that the Nigerian Constitution imposes a duty on every citizen to declare his/her income fully and honestly to appropriate and lawful agencies and pays taxes promptly and every taxable person is under obligation to voluntarily declare his/her income from all sources within and outside Nigeria by filing annual tax returns, computing same and paying the tax due to the tax authority, we encourage all our clients to take advantage of this opportunity to identify areas of non-compliance with their tax obligations and take necessary steps for remedial action within the time frame stipulated by the Executive Order.
Where necessary, please contact any of our Partners in Baker Tilly for more clarification on this scheme.