The Nigerian Government's relentless drive to boost non-oil revenue is clearly evident with intensified audits, increase in treaty networks, promulgation of new Transfer Pricing Regulations and the launch of tax amnesty schemes. While the already concluded Voluntary Assets and Income Declaration Scheme (VAIDS) was applauded by various stakeholders, including taxpayers and tax authorities alike, the recently introduced Voluntary Offshore Assets Regularization Scheme (VOARS or the scheme) has not received similar accolades. The VOARS, which was introduced by the Presidential Executive Order 008 (VOARS Order) on 8 October 2018, provides a platform for 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 and other offences related to those offshore assets.

The VOARS Order has generated varied mix of reactions as many stakeholders are unclear about its modality of operation and whether it is of any beneficial interest to the average Nigerian taxpayer. In this newsletter, we analyse the provisions of the VOARS Order and its impact on taxpayers.

Overview of VOARS

VOARS is a Scheme that gives taxpayers, who have defaulted in the payment of their taxes, a platform to voluntarily declare all offshore assets and foreign- sourced income relating to the preceding 30 years of assessment in exchange for a one-time levy of 35% on all offshore assets in lieu of payment of default taxes amongst other benefits. The Scheme is scheduled to run for a 12-month period commencing 8 October 2018.

Similar to the recently concluded VAIDS, this Scheme provides some form of clemency to taxpayers who would take the opportunity to regularize their tax affairs. The benefits being offered by the VOARS are:

  • Permanent waiver of criminal prosecution for tax offences and other offences relating to the offshore assets;
  • Immunity from tax audit of the declared and regularized offshore assets;
  • Waiver of interest and penalties on the declared and regularized offshore assets;
  • Receipt of Offshore Assets Regularization Compliance Certificate on the declared and regularized offshore assets;
  • Freedom to use and invest duly regularized offshore asset in any manner in Nigeria or overseas.

The VOARS Order mandates the Attorney General of the Federation and Minister of Justice to set up the VOARS in Switzerland. Taxpayers who wish to take advantage of the Scheme are required to access the VOARS facility in Switzerland by paying a 2% facility access fee and making all necessary disclosures there.

In addition to payment of tax liability in full, including interest and penalty, any defaulting taxpayer who fails to take advantage of the Scheme would be liable to investigation, charges and enforcement procedures concerning offshore assets held anywhere in the world.

Furthermore, such defaulting taxpayer would lose the right to plea bargain and any relief which may have been granted to such person would be withdrawn. The defaulting taxpayer would also be made to undergo comprehensive audit. In respect of partial or dishonest disclosure, any sum, which has been paid in relation to the Scheme, may be counted as part payment of any further outstanding tax liability arising from other undisclosed information.

Specific Provisions of the VOARS Order and Our Views

Persons Covered under the Scheme

The Order provides that the Scheme is targeted at "all persons, entities and their intermediaries, who are holding offshore assets and are in default of their tax liabilities in any way whatsoever", including persons who:

  • are not already under investigation by law enforcement agencies for theft of public funds or obtaining offshore assets through corrupt practices;
  • own offshore assets but are yet to declare them with the relevant authorities;
  • earn income on offshore assets but are yet to declare such income to relevant tax authorities;
  • are registered taxpayers but have not been filing returns or have additional disclosures to make;
  • have been underpaying or under remitting tax;
  • are under a process of tax audit, investigation or dispute and are prepared to settle out of court;
  • have applied for and received a Special Clearance from the Federal Government to participate in the Scheme;
  • have been determined to be innocent after investigations or legal proceedings.

Although the Order does not specify the taxes covered under VOARS, the Order specifically refers to tax defaults under relevant statutes in its recital. Hence, it is expected that VOARS covers all tax defaults under Nigerian tax laws including Personal Income Tax (PIT), Companies Income Tax (CIT), Capital Gains Tax (CGT) and so on. In addition, given that VOARS is targeted at tax defaulters, individuals, including expatriates, who have been tax compliant, should not be required to participate in the Scheme.

The VOARS is silent on the impact on taxpayers who have already participated in the VAIDS. However, based on the provisions of the VAIDS, it would appear that taxpayers who took advantage of the VAIDS would not be required to participate in the VOARS. This is because taxpayers that honestly participated in the VAIDS should have already been granted amnesty for tax related offences.

Tax Base

The Order defines offshore assets to include liquid assets (bank balances), stocks and bonds held in portfolios, insurance policies, shares in listed or unlisted offshore companies, property assets and all manners of assets held directly or indirectly through corporate entities, trust structure and non-Nigerian resident companies and intermediaries.

Considering that the Order requires the declaration to be in respect of all assets and income derived within the past 30 years, there are concerns regarding the availability and accessibility of certain information required by the Scheme. For example, there may be challenges accessing bank balances for the past 30 years given that the Prudential Guidelines for Deposit Money Banks in Nigeria requires banks to retain their transaction records for a maximum period of 5 years (except as otherwise stated). Similarly, some other foreign jurisdictions like Switzerland have a limitation period of 10 years for retention of banking records. Thus, taxpayers may be constrained by paucity of information on their offshore assets.

On another note, although the PIT Act and the CIT Act state that a taxable person is to be taxed based on his/her income received inside or outside Nigeria, it is instructive to note that both Acts expressly exempt income derived from dividend, interest, rent and royalties, brought into Nigeria through government approved channels, from tax.

Specifically, the PIT Act 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.

Thus, it would appear that the VOARS would not apply to taxpayers, whose foreign income falls within the specified exemptions under the PIT Act and CIT Act and who have consistently repatriated the income to Nigeria through government approved channels.

Tax Rate

Although the 35% levy offered by the VOARS is not, in effect, a tax rate, there are certain concerns with respect to the basis for the imposition of 35% levy on assets and income derived within the past 30 years.

Given that CGT is charged at 10% of gains from disposal of assets and the effective income tax rate for individuals is about 19%, and that of companies is 30%, a rate of 35% may be significantly higher in certain instances and may not be an incentive for taxpayers. However, in cases of compounded interest and penalties (which might have accrued over a period of time, e.g. 5 years) in addition to the actual tax payable at 19% or 30% for individuals and companies respectively, the actual tax liability of the taxpayer may be significantly higher than the 35% tax rate imposed on the asset value under the VOARS. Thus, depending on the nature of assets and the period within which the tax default arose, the VOARS may or may not be a viable option for a taxpayer.

In addition, the Order does not state the modality for determining the value of the assets. It remains unclear whether the market value or historic value of the asset would be used in calculating the levy of 35%.

It is expected that the government would issue further guidelines or regulations to provide additional clarity on the modality for the implementation of the VOARS.


Taxpayers who wish to take advantage of the VOARS are required to access the VOARS facility in Switzerland by paying a 2% facility access fee. Also, taxpayers would need to comply with procedures required by the Swiss authorities or Regulations governing the Scheme in order to obtain an Eligibility Certificate to declare offshore assets through the Scheme. In addition, the Scheme would provide an opportunity for taxpayers to establish a Swiss nexus for their offshore assets held anywhere in the world for such taxpayers to access the VOARS.

In order to benefit from the VOARS, the Order requires taxpayers to make their disclosures through the VOARS facility in Switzerland, which is the qualified intermediary for this purpose.

Although the base of the additional 2% facility access fee is not stated, it is important to note that it constitutes additional pecuniary burden on the taxpayer, which may be a disincentive to certain taxpayers. Although it is reported that the VOARS is expected to fund the Nigeria Infrastructure Fund in Switzerland, taxpayers who do not own properties in Switzerland and other European countries may not have the required convenience in accessing the Scheme.

Nevertheless, the provisions of the Order suggest that certain Regulations would be issued pursuant to this Order. Hopefully, the expected Regulations would provide additional clarity on the modality for accessing the VOARS facility in Switzerland.

Consequences for failure to comply

In addition to the withdrawal of reliefs, the consequences for failure to take advantage of the Scheme are largely the same measures that the relevant authorities will impose on defaulters under the relevant laws. In effect, taxpayers who are not in default of their tax obligations do not need to participate in the VOARS as it is targeted at tax defaulters.

However, given that the rate of tax compliance in Nigeria is still low, the success of the VOARS cannot be predetermined.


It is expected that the government will issue further clarifications in form of guidelines or regulations to address certain grey areas in the Executive Order. Given the peculiar nature of this Order, it is important for taxpayers to engage their tax consultants regularly to ascertain how they would be impacted by the Order and to evaluate the benefits of taking advantage of VOARS.

We will continue to monitor developments and provide necessary updates in this regard.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.