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Compliance Impact of Voluntary Assets and Income Declaration Scheme (VAIDS) in Kano Nigeria

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Presentation by Lawan Bello at the second annual Nigerian Tax Research Network meeting which took place in Abuja on 24th and 25th November 2018.

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Compliance Impact of Voluntary Assets and Income Declaration Scheme (VAIDS) in Kano Nigeria

  1. 1. Compliance Impact of Voluntary Assets and Income Declaration Scheme (VAIDS) in Kano Nigeria Lawan Bello ACTI North-West Regional Debt Management Unit (NWRDMO) Federal Inland Revenue Service NTRN Second Annual Meeting 24-25 October, 2018
  2. 2. What is VAIDS • VAIDS stands for Voluntary Assets and Income Declaration Scheme • It’s a Federal Government tax compliance program which provide opportunity for taxpayers who are in default under all relevant statutes to voluntarily declare their Assets and Income and pay taxes due on them and in return obtain some benefits • Its also an avenue of inculcating in all citizens, the ethic of responsibility to the nation, accountability and honesty through voluntary reporting of tax base, correct computation of tax liability in the required format and payment of tax due
  3. 3. Objective of the Scheme • Increase tax to GDP ratio from the current 6% to 15% • Discourage illicit financial flows and tax evasion • Broaden the national tax base • Curb non-compliance with existing tax laws
  4. 4. Legal Basis for the Scheme • The legal basis for VAIDS is the Executive Order No 4 of 2017 signed by the acting President which commenced on 1st July 2017 and ended 30th June 2018, all persons and entities that are in default are expected to declare their assets and income from sources within and outside Nigeria relating to the preceding six (6) years of assessment
  5. 5. Benefits of the Scheme The scheme has provided benefits and reliefs for every taxpayer who truthfully and voluntarily declare his income and assets these are • Immunity from prosecution for tax offences • Immunity from tax audit • Waiver of penalty • Waiver of Interest and • Option of spreading payment of outstanding tax liabilities over a maximum period of three years as may be agreed with relevant tax authority
  6. 6. Consequences of Non-compliance with the Scheme As stipulated in the VAIDS executive Order, any defaulting taxpayer who fail to truthfully and promptly take advantage of the scheme shall at expiration of the scheme be liable to 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 a comprehensive tax audit; and • Any sum paid in relation to the scheme may be counted as part payment of any outstanding tax in respect of undisclosed information.
  7. 7. VAIDS Compliance in Kano, Nigeria Like any other state government in Nigeria, Kano state has witness a proactive VAIDS campaign and a series of training workshop organized by the state and Federal government, and to some extend the exercise has increased • Tax base • Taxpayer awareness and • Tax revenue
  8. 8. VAIDS Compliance Impact Information available at Federal Inland Revenue service and that of State board of Internal Revenue in Kano reveal that number of VAIDS returns filed is less than 0.3% of total number of registered cases • Does that mean more than 99% have no undeclared income and or assets???
  9. 9. Potential reasons for Non- Compliance • Equity – Is the taxpayer treated fairly? – Does the government make good use of the tax revenue • Opportunity for non-compliance – Cash based businesses – Large Informal Sector businesses • Poor tax administration – Uneasy compliance strategy – Unprofessional conduct of tax officials • Social norms – Everybody does it ….. – No body sent to jail for tax evasion • Political reasons
  10. 10. The link to improving compliance Government • Political will • Accountability and transparency in the use of public funds • More social services • Ease of doing business Taxpayers • Honesty •Trust Tax Authority • Professional service delivery • Application of modern technology Tax Compliance
  11. 11. Quality ofLife StandardofLiving Work Housing Recreation/ Sport Safety and Security Pension funds Infrastructure Education Health HUMAN NEEDS Transport Welfare The link to improving compliance Make our taxpayers understand why tax compliance is necessary Understanding the needs and reasons of taxation
  12. 12. The link to improving compliance Continuous Design and Implementation of Tax compliance program • Using data and business intelligence to build compliance improvement plans • Understanding taxpayer behavior • Employing the right people • Exploring new ways of work
  13. 13. The link to improving compliance Making taxpayers aware of Tax Authority plans and results • Communication of the plan is key • You must act according to the plan • Deliver what you said you would and communicate it – fraud identified , imprisonment etc.
  14. 14. The link to improving compliance Continues Evaluation Evaluating compliance trends is difficult, but …. what gets measured gets done! Input Activities Output Outcomes
  15. 15. Remember: The ultimate goal is not to find non-compliance, it is to prevent non-compliance
  16. 16. Thank you for listening.

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