The names of 150 very wealthy Nigerians are on the list for the first batch of the exercise, which is expected to last for some months.
The Minister of Finance, Mrs. Kemi Adeosun, confirmed at a press briefing in Lagos on Thursday that the government had engaged some foreign firms to trace the local and foreign assets of some high net worth Nigerians.
She, however, refused to give the names of the other foreign firms the Federal Government had engaged for the exercise nor names of the wealthy Nigerians whose assets are being traced.
Adeosun said the objective of the exercise was to match the lifestyle of the wealthy individuals with the amount of tax they were paying to the Federal Government.
According to her, the government is building the profile of people to encourage them to pay the right taxes before wielding the big stick in terms of prosecution at the end of the nine-month window given for the payment of all outstanding taxes under the newly introduced Voluntary Asset and Income Declaration Scheme
She said, “How much we recover from their purses is not as important as getting people into the tax net and paying the right taxes. Majority of people who are paying taxes at the moment are the Pay As You Earn; most of the people whose taxes are being deducted at source. But the people who are evading taxes are either the people who own their businesses or the high net worth individuals.
“And ordinarily, they are supposed to pay the biggest share of the tax revenue. What is happening now is that the lower-end people are carrying more of the burden, which is unfair. Everybody has to carry their fair share according to their level of income. That is how progressive taxes work all over the world.
“Remember that tax is one of the instruments the government uses to redistribute income; to take from the rich to support the poor. That is very fundamental. Not only do we recover money from the people, it (VAIDS) is meant to ensure that people pay the right taxes going forward.”
She added, “The firms that we are using to trace assets internationally are working alongside the projects that we have locally.
“And that project puts together records of property ownership, foreign exchange allocations, company ownership from the Corporate Affairs Commission, and even private jet registration so that we can build profiles of people so that we have an idea of how much tax should this person be paying according to his or her lifestyle.
“And then we compare it with how much tax they are actually paying, and that is giving us a lot of information that hopefully will encourage people to come forward to do the right thing.”
According to the minister, the Federal Government is looking at realising about $1bn from the VAIDS.
Speaking earlier at an interactive session for executives and business owners on the VAIDS hosted by PwC Nigeria, Adeosun said while most developing countries had tax to Gross Domestic Product ratios above 20 per cent, Nigeria had a low of six per cent.
In a bid to address this anomaly, she said the Federal Ministry of Finance had set up the VAIDS in collaboration with all 36 states of the federation.
Specifically, it is expected to increase Nigeria’s tax to GDP ratio from the current six per cent to between 10 per cent and 15 per cent, broaden the national tax base, curb tax evasion and discourage illicit financial flows.
The Executive Chairman, the Lagos Inland Revenue Service, Mr. Ayo Subair said, “We have seen the positive impact taxpayers’ money can make at the state level in terms of social services, administration of government and infrastructure development.”
According to the Head of Tax, PwC Nigeria, Mr. Taiwo Oyedele, paying taxes is not particularly easy anywhere in the world for anyone who has expended time, energy and other resources to earn the income.
However, he said, “It is necessary for there to be an organised society for the benefit of all. We organised this session to discuss the background, design and structure of the VAIDS, key objectives, legal framework and the step-by-step process for declaration, remediation and resolution.”