Ahead of tomorrow’s flag off of Nigeria’s proposed tax amnesty, which is expected to account for $1 billion to be utilized for public spending, analysts are already worried that the project could be jeopardized by non-compliance, corruption and leakages.
Taxation experts say that unless the relevant authorities conduct far reaching changes in its tax laws and administration, it will be difficult to realize the intents and purposes of the voluntary asset and income declaration scheme (VAIDS) project.
They however see the newly launched VAIDS as part of effort aimed at widening the nation’s tax net and making it more efficient.
Under the tax amnesty programme, companies, which have been evading tax, are allowed to willingly submit themselves for proper assessment and subsequent filling of their tax returns without fear of prosecution.
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Tax analysts say the incentive contained in the programme may not entice tax evaders to submit themselves for scrutiny, that the major tax evaders are small holding companies, which have not been recorded and accounted for.
“The list of companies at the Corporate Affairs Commission are not authentic as most of the companies are only existing in names and may have done no business since incorporation,” an analysts said.
KPMG, global professional service company, in its Nigerian Tax Journal 2017 released in February, noted that the nation’s tax administration must make changes in order to come close to global best practices.
“We expect that Government will introduce, in the course of the year, tax policies geared towards improving the overall tax environment in Nigeria and making it competitive. According to the World Bank Group (WBG), Nigeria ranks 182 out of 190 benchmarked economies on the Paying Taxes sub-index under the Ease of Doing Business index for 2017.
“The distance to frontier score is 28.09%, which implies that Nigeria is about 72% away from the best performance observed under the Paying Taxes sub-index. The conclusion from these two benchmarks is that Nigeria needs to embark on a significant tax reform to improve its ranking,” the report read in part.
According to a statement by the Ministry, the tax amnesty will remain open between July 1 and December 31, 2017 and will be implemented by the Ministry of Finance in collaboration with the 36 state governments and the FCT.
The ministry specifically said it expects the new tax amnesty to boost government income and widen Nigeria’s tax net despite the fact that non-compliance, impunity and leakages have dogged the tax administration of Africa’s largest economy.