Nigerian President signs executive order mandating Nigerian taxpayers to declare and pay tax on their offshore assets.
The Nigerian President, Mohammadu Buhari on the 8th of October signed the Executive Order 8 of 2018 (EO8) on Voluntary Offshore Asset Regularization Scheme, (VOARS).
This is part of the ongoing anti-graft drive by the Federal Government to combat money laundering, tax evasion and broadly corruption in Nigeria.
According to a statement issued by the President's spokesperson, "the scheme will help to facilitate the expedient regularisation of offshore assets connected to Nigeria" and lead to "a new expanded tax base for the Federal Government, and also fund the Nigeria Infrastructure Fund in Switzerland."
The VOARS strengthens the legal obligation on every citizen to declare their assets and incomes and pay tax on same.
HIGHLIGHTS OF THE ORDER
Nigerians who have offshore asset and income must within a period of twelve (12) months, declare voluntarily those assets and pay taxes on them. The disclosure of asset owned and income earned outside the country, and the payment of taxes is a legal obligation on Nigerians.
A taxpayer that complies with the Order and the conditions therein will be entitled to pay a (one-time) levy of 35% on the total offshore assets or pay all outstanding taxes, "penalties and interest after forensic audit of their offshore assets and income and shall obtain immunity from prosecution for tax offences and offences related to offshore assets, among others."
Nigerians falling under the ambit of VOARS are expected to take advantage of the scheme before its expiration. Defaulters who fail to comply within the window allowed, will be subjected to investigation and prosecution "in line with the enforcement procedure on offshore asset anywhere in the world pursuant to information now
available through automatic exchange of information between Nigeria and other foreign countries."
The order provides for the establishment of VOARS in Switzerland by the office of the Attorney-General of the Federation and the Minister of Justice. The VOARS in Switzerland is set-up for "all categories of taxpayers who have defaulted in the declaration of their offshore assets, payment of taxes due and collectible subject to the fulfillment of the terms and conditions as stipulated in the order, or any other subsequent complementary regulations that follow."
The scheme is open to all category of persons, entities and their intermediaries holding offshore assets who are in default of their tax obligations.
The scheme excludes persons or entities who are under investigation by law enforcement agencies in Nigeria and other countries for for tax evasion and failure to declare asset.
The Federal Government of Nigeria had previously signed Executive Order 4 in June 2017 on Voluntary Assets and Income Declaration Scheme Executive (VAIDS), the order gave defaulting tax payers the opportunity to pay their outstanding tax obligations in return for waiver of penalty, interest and criminal prosecution. The Executive Order recorded a huge success as many taxpayers complied with the scheme.
The Executive Order 8 of 2018 (EO8) on Voluntary Offshore Asset Regularization Scheme (VOARS) has similitude with VAIDS, but, applies to payment of tax on income and offshore asset. The Federal Government has resorted to international collaboration with other countries to combat corruption by signing agreement on return of illegally acquired assets. In 2016, Nigeria signed an agreement with the United Arab Emirates on recovery of stolen funds. Further In 2017, the country signed multilateral agreement to tackle international tax avoidance and erosion.
The signing of the Executive order by the President is commendable and continues the trend by the Federal Government to stem corruption menacing the nation. It is believed the order will stem the tide of tax offences and money laundering and also bring more Nigerians under the government's tax net.
Finally, persons, entities and intermediary offshore will have to comply with the order or risk being penalized.
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