The Federal Government of Nigeria recently signed an Executive Order on Voluntary Asset and Income Declaration. This gives a 9-month window to Nigerians, who are in default of tax payment, to voluntary file their tax assessments and pay due tax without any prosecution, fines and interest on withheld taxes. The window opened on July 1, 2017 and will close on March 31, 2018.
This may not be news anymore. What may be news though is the following:
Effective January 1, 2018, Nigeria joins the growing list of countries to fully implement the Automatic Exchange Of Information (AEOI) Standard. This is an international standard that governs how tax authorities in the participating countries exchange data relating to the bank and safekeeping accounts of tax payers. The goal is to make tax evasion impossible.
So, are you a Nigerian? Do you have assets and investments abroad? All those assets and investments will be automatically and transparently shared with the Nigerian Tax Authorities by the countries that hold them. The estimated values (at time of purchase and current) will be made known. The time of purchase and nature of transaction will all be revealed.
What will the Nigerian Tax Authorities do with all these information? Simple. Your tax returns prior to the asset purchase will be checked to confirm if the income declared matches the expenditure outlay in acquiring those assets. Where there are discrepancies, questions will be asked.
Possible escape routes though include:
- a) where the income used for the purchase was earned from other tax jurisdictions other than Nigeria, in which case the Nigerian authorities will refer the matter to that jurisdiction to confirm if you evaded paying the tax due.
- b) Where the income is from some inheritance or lottery win.
In the absence of the above, there may be sufficient grounds to conclude that either:
- a) The monies used to acquire such assets were fraudulently obtained OR
- b) Your income level was understated to avoid tax payment.
Either conclusion isn’t particularly palatable as they amount to some criminal conduct.
Knowledge is power. Do the wise thing today.