On Thursday, June 29, 2017, Acting President Yemi Osinbajo signed an executive order that makes payment of taxes mandatory for Nigerians at all levels.
An initiative of the Buhari-led administration, the new scheme was specially designed to help taxpayers, who had not declared their taxable incomes and assets, as well as those who don’t pay at all, and those who had been underpaying or under remitting, to correct their irregularities.
According to Osinbajo, the scheme would cover all federal and state taxes such as companies’ income tax, personal income tax, petroleum profit tax, capital gains tax, stamp duties and tertiary education tax.
The executive order signed during the official launch of the Voluntary Assets and Income Declaration Scheme (VAIDS) in Abuja is expected to also facilitate tax collection by revenue-generating agencies in the country.
Following the order, a nine-month grace was therefore given to all tax defaulters to regularise their tax status or face criminal prosecution.
While issuing the ultimatum, Osinbajo explained that VAIDS, which would be operated initially from July 1, 2017, to March 31, 2018, would be supported by the executive order and will offer a once in a lifetime opportunity to those in default to regularise their tax affairs.
“In exchange for a full and honest declaration, tax evaders will receive immunity from prosecution, forgiveness of penalty and interest that is due on unpaid taxes. They will also get the full assurance that all information provided will remain confidential.
“In addition, participants in the scheme will not be selected for audit investigation for the period. We understand that some tax payers may have problems raising cash and for that reason, we have built in a system that will allow those owing to pay over a period of time,” Osinbajo said.
The Acting President explained that taxation has always been the basis of raising funds around the world, but lamented that majority of Nigerians do not pay tax, a situation he said “is at variance with our economy as we are estimating that almost 70 million Nigerians are economically active. This means that just 20 percent of people involved in any form of business or the other registered and are paying taxes.”
“Despite having some of Africa’s wealthiest people whose lifestyles are the subject of global discussion, only 214 Nigerians pay taxes of N20 million or more each year. A personal tax of N20 million implies an income of N80 million a year with majority of them based in Lagos State. We must change our way of paying tax. Tax evasion is not just a civil matter but is also a crime,” Osinbajo said.
The Acting President stressed that when people pay taxes, they develop the attitude of paying attention to what government does with their money. He also lamented that the current situation in the country was one where a greater percentage of Nigerians paying taxes are those engaged in formal employment.
Osinbajo who assured Nigerians that funds paid to the government through taxes would be used to provide services also encouraged Nigerians to come up and take the commitment of government seriously.
Beginning from Thursday, June 29, 2017, the acting president declared that every Thursday of the week would be observed as ‘Tax Day’ within the next one year.
Osinbajo further stated that the Federal government would immediately commence a nationwide sensitisation for Nigerians on the scheme and tax in general to ensure compliance.
This, according to the Acting President, informed government’s decision to recruit and train 7,500 Community Tax Liaison Officers to go into every community and educate Nigerians on the tax system and the duty it imposes on every economically active citizen.
He, therefore, charged the Federal Inland Revenue Service (FIRS) and state governments to lead the initiative to organize sensitization events that would raise the level of awareness of the tax system and result in the massive enrollment of taxpayers.