The Federal Government has launched the Voluntary Offshore Assets Regularization Scheme (VOARS or the Scheme). Reportedly, the Scheme is effective 8 October 2018, being the date the Executive Order 008 (Order) was signed by President Muhammadu Buhari. The Scheme, which is expected to last for 12 months, provides a platform for Nigerian taxpayers, who have defaulted in the payment of taxes, to voluntarily declare their offshore assets in exchange for a one-time levy of 35% on all offshore assets and immunity from prosecution for tax offences related to those offshore assets.


Although the Order is yet to be published, it is reported that it would require Nigerian taxpayers who hold offshore assets to voluntarily declare those assets and pay taxes on them within a period of 12 months in exchange for certain specified benefits.

Furthermore, taxpayers who honestly comply with the conditions of the Scheme will be required to pay a one-time levy of 35% on the total offshore assets and shall obtain immunity from prosecution for tax offences related to offshore assets, among others. The Order also states that failure of any defaulting taxpayer to take advantage of the VOARS will result in investigation and enforcement procedures concerning the offshore assets pursuant to information now readily available through the automatic exchange of information between Nigeria and other countries.

The Federal Government has clarified that the Scheme is open to all persons, entities and their intermediaries who hold offshore assets and are in default of their tax obligations in anyway, including those who are not under investigation by any law enforcement agency in Nigeria or abroad.


The signing of the Order, which will apply to all taxpayers who are resident in Nigeria for tax purposes, is consistent with the FIRS' recent aggressive tax drive. Similar to the recently concluded Voluntary Assets and Income Declaration Scheme, this Scheme provides some form of clemency to taxpayers who would take the opportunity to regularise their tax affairs.

However, there are concerns regarding the basis vis-à-vis legality of the one-time payment of 35% on assets in exchange for immunity for prosecution for tax offences. This is because the Nigerian tax laws specifically provide applicable tax rates on taxpayers' income and not on the value of their properties. Furthermore, although the FIRS Chairman had previously stated that the recent assessment of properties to tax is only a form of deemed turnover assessment for taxpayers that do not declare their income or file returns, the imposition of 35% on the value of assets differs significantly from the presently applicable rate of 6% in cases of turnover assessments.

Moreover, given that corporate taxpayers typically prepare, file comprehensive audited financial statements that capture their entire assets and pay appropriate taxes on the relevant tax bases, it is unlikely that this Order will apply to them. More so, computing 35% of asset value as a waiver appears to reflect a mismatch given that the amount would be significantly higher for individual taxpayers than the actual applicable tax rate (including interest and penalty) on the relevant income, except for cases of accumulated penalties and interests. Thus, the VOARS may not be sufficient incentive for taxpayers that fall within this category.

Besides, it is noteworthy that both the Companies Income Tax Act and the Personal Income Tax Act (PITA) provide for exemption of income derived from dividend, interest, rent and royalties, brought into Nigeria through government approved channels, from tax. Specifically, the PITA goes further to exempt fees and commission, received by a taxable person abroad, from tax, provided such fees and commission are brought into Nigeria through government approved channels.

It is also unclear if the VOARS is simply intended as an extension of VAIDS or as a means to clamp down on corrupt practices. However, all affected taxpayers should endeavour to engage their tax consultants and review their records to ascertain the benefits to be derived in taking advantage of the Scheme.

We will follow-up for developments and provide necessary updates in this regard.

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