Nigerian companies and entrepreneurs that don’t have their tax affairs in order should act now to take advantage of the government’s Voluntary Assets and Income Declaration Scheme (VAIDS), says Magnus Nmonwu, regional director for Sage West Africa, a market and technology leader for integrated accounting, payroll, and payment systems.
According to Nmonwu, the VAIDS initiative, which runs from 1 July 2017 to 31 March 2018, gives taxpayers an opportunity to voluntarily declare all previously undisclosed assets and income, and thereby regularise their affairs, adding that it applies to all tax paying entities (individuals, companies, executors, trusts, partnerships and so on) and encompasses most tax categories, including company income, personal income, capital gains, VAT and stamp duty.
Implemented by the Federal Inland Revenue Service (FIRS) in collaboration with the State tax authorities, the scheme aims to increase Nigeria’s tax base, improve the tax collection to GDP ratio and clamp down non-compliance.
“This is a perfect opportunity to come clean for people and companies who have under-declared or failed to declare their assets and income,” he said adding: “When the window closes on 31 March, companies and individuals that do not have their tax affairs in order may be subject to stringent penalties, punitive interest and even criminal prosecution. They may be named and shamed in a register of tax evaders, harming their personal and business reputations.”
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Nmonwu says that the first step to compliance is getting your business’s books in order, irrespective of whether you’re running a registered company, earning freelance income or working in a partnership. The right accounting and payroll software can make it simpler to report accurately on revenue and expenses and to streamline tax submissions.
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“Spreadsheets and other manual methods are no longer sufficient to keep up with the growing complexity of today’s tax environment,” he said.
“Automated software can streamline capturing of transactions, automate payroll calculations, processes and improve visibility into the business so you can comply more easily.
“It can also help you stay on top of annual changes to tax regulations that impact on payroll tax calculations and various changes in legislation. What’s more, the ability to generate tax certificates, reports and electronic payslips with the click of a button is a major timesaver,” he noted.
He equally emphasized that Nigeria’s federal and state governments are eager to expand their tax bases, and are investing heavily in modernising and streamlining tax administration.
“Companies can no longer risk non-payment of tax or incorrect remittances of taxes to the relevant government agencies, whether the reason is deliberate evasion or an accidental oversight,” he warned.