Acting President, Prof Yemi Osinbajo has revealed that Nigerians spend £320 million (N129.6billion, at current official exchange rate) to pay school fees in the United Kingdom alone annually.
This is as Minister of Finance, Mrs Kemi Adeosun says Federal Government will rely on technology to increase tax compliance under the recently launched Voluntary Asset and Income Declaration Scheme (VAIDS).
According to Osinbajo in a State House document made available to Tribune Online, despite this and in addition to the fact that Nigerians are some of Africa’s wealthiest people whose lifestyles are the subject of global admiration, only 214 Nigerians pay taxes of N20 million or more each year.
“For the non-mathematicians amongst us, a personal tax bill of N20 million implies a personal income of 80 million.
Another worrying observation is that the 214 who shall remain nameless are all based in Lagos State. There’s another figure that talks about those who pay over N10 million and that comes to 914 or so, but that number, all except 2 are from Lagos State, the other two are from Ogun State.
To be honest about this, what we are to believe is that nobody is earning over 80 million in a year or even less than that in other States. Don’t forget that these are people who are directly assessed.
“There must always be a correlation between personal income taxes and personal lifestyle. Personal assets can only be financed by income that has been subjected to tax. No company’s expenses should account for the cost of a jet set lifestyle or luxury personal apartments. Neither can any company account for the estimated £320 million that Nigerians pay in oversees school fees in the United Kingdom alone annually. Such expenses are “non-allowable deductions for company income tax purposes.”
Osinbajo admitted that tax evasion is not a uniquely Nigerian practice as some multinationals have used profit shifting to rob the country of its share of the revenues generated from within this nation.
The Acting President said because some tax payers will have challenges in raising cash, government built in a system that will allow those owning taxes to pay over a period of time subject to conditions.
“Upon expiry of the scheme, we will consider those who have failed to take advantage of this offer or who have declared falsely to be willful tax defaulters and economic saboteurs.
“We will then proceed with aggressive investigation with a view to criminal prosecution.
“We will also publish a tax defaulters list, to name and shame those refusing to do the right thing. To support the VAIDS programme, we will create mass awareness, we will be conducting extensive sensitization workshops for professionals in Law, Accounting and Taxation, to enable them provide advice to the truly patriotic Nigerians who want to take advantage of this olive branch which is an offer of amnesty.
Osinbajo will also highlight that fact that punishment for tax evasion is severe with punishment including imprisonment of up to five years
They may also be subjected to paying up to 100 percent of the outstanding tax due at compound interest at 21 percent per annum and forfeiture of assets.
And while answering questions on a television programmes Monday morning, Adeosun explained that the signing of an Executive Order by the Acting President, Professor Yemi Osinbajo on assets declaration, underlines the seriousness attached to the scheme, which would be vigorously implemented.
The Minister stated that at six percent, Nigeria’s tax compliance rate was low when compared with developed nations where the rate is between 30-32 percent.
“Prosperous nations have high levels of tax compliance whilst poor nations have low rates. Nigeria aspires to be a prosperous nation, so this problem must be solved.”
“Technology has been key in enabling us to build an accurate financial profile for Nigerians and based on the information we gathered, we saw that the level of non-compliance was very high and we knew we had to do something about it.
“In the past, tracking true income and assets would have been difficult but now, it is at the touch of a button.”
More detailed information would become available in 2018 under the Automatic Exchange of Information, to which Nigeria is a party as the country will automatically get information through tax authorities of various countries.
“The Community Tax Liaison Officers, who are graduates recruited through the N-Power programme, would go into their communities, schools and other public places to raise awareness and help increase tax enrolment. We are recruiting a total of 7,500 CTLOs through this scheme.”
On the ‘Tax Thursdays’ programme, which will operate for the next one year, as announced by the Acting President, Adeosun said it would see tax awareness activities at State and Federal Government level to improve tax education and increase the number of tax payers from the current 14 million out of 69.5 million who are economically active.
She gave assurance that “all information collected would be treated as strictly confidential and our doors are open. We understand that some people have significant declarations and people can walk in to speak with me. We have already started receiving enquiries.”
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