By Funso Dare
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‘Any taxpayer who truthfully and voluntarily complies with the conditions of the scheme, pays a one-time levy of 35 percent on the total offshore assets or pays all outstanding taxes, penalties and interest after forensic audit of their offshore assets and income shall obtain immunity from prosecution for tax offences and offences related to offshore assets, among others. Equally, failure of any defaulting taxpayer to take advantage of this scheme shall, at the expiration of the scheme result in investigation and enforcement procedures concerning offshore assets anywhere in the world pursuant to information now readily available through automatic exchange of information between Nigeria and foreign countries.’

Few days ago, President Mohammadu Buhari signed the Executive Order 008 tagged the Voluntary Offshore Assets Regularization Scheme (VOARS) compelling Nigerians with offshore assets to declare their assets and pay relevant taxes within a period of twelve months. This  is another assets regularization scheme in Nigeria.  This scheme is specifically targeted towards curbing money laundering and reducing tax evasion to the barest minimum.

Prior to this Executive Order 008, the Nigerian Voluntary Asset and Income Declaration Scheme (VAIDS), a time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods and pay any tax due, was in vogue. Earlier, the Buhari led federal government came up with the Executive Order 006 which addresses the Preservation of Suspicious Assets Connected with Corruption and other Relevant Offences. This addresses assets of any Nigerian within the territory of the Federal Republic of Nigeria.

The Executive Order 008 which became effective on the same day it was declared is designed to make money laundering and tax evasion much more difficult or even bring such to an end. In the words of the Senior Special Assistant to the President on Media and Publicity, Mallam Garba Shehu, by this order, Nigerian taxpayers who hold offshore assets and incomes are expected to, within a period of 12 months, declare voluntarily those assets and pay taxes on them. He further said that when they do, they should expect to derive certain specified benefits.

‘Any taxpayer who truthfully and voluntarily complies with the conditions of the scheme, pays a one-time levy of 35 percent on the total offshore assets or pays all outstanding taxes, penalties and interest after forensic audit of their offshore assets and income shall obtain immunity from prosecution for tax offences and offences related to offshore assets, among others. Equally, failure of any defaulting taxpayer to take advantage of this scheme shall, at the expiration of the scheme result in investigation and enforcement procedures concerning offshore assets anywhere in the world pursuant to information now readily available through automatic exchange of information between Nigeria and foreign countries’

This scheme covers all categories of individual and corporate entities that own offshore assets, especially Nigerian banks, sundry businesses and individuals who could have schooled or worked abroad, as well as professionals who are beneficiaries of trans-border income and fund transfer.

The envisaged gains of the scheme include a new extended tax base for the federal government and easier practical regularization of offshore assets connected to Nigeria amongst others. This means of course that there would be increase in revenue generation by the federal government and the government might be much more alive to its responsibilities.

However, there might be practical challenges in tax revenue recovery. President Buhari noted that complications caused by the change in the character and nature of asset, insufficient financial intelligence and long delays in courts among others are the reasons why it is difficult to recover taxes from defaulters through litigation.

The Voluntary Offshore Assets Regularization Scheme (VOARS) as it appears might be burdened by the aspect of implementation. It is quite unrealistic to assume that most Nigerians would  voluntarily declare their offshore assets. Assets and income that are not declared or found out can not be taxed. A popular Yoruba adage says that one can only see the sign or mark inscribed on the calabash only when the calabash is found.

Many Nigerians see the scheme as an obviously motivated advantage by the Federal Government due to its ineffectiveness in tax administration within the country’s territory. At different levels of government in Nigeria, tax administration had issues with respect to policy concerning valuation of taxable entities and collection of tax revenue. The country needs to first, deal with the difficulties encountered in its internal tax administration before embarking on regularization of offshore assets which are domiciled outside the shores of the country.

 Another puzzle that needs to be solved is also the offshore assets income valuation and taxation technique. There is no universally accepted method on the landscape of managing taxation of offshore assets and income in the world, not even among the member countries of the Organisation for Economic Co-operation and Development (OECD) which Nigeria is not even a member.

The Executive Order 008 would also be limited by the fact that the scheme might lead to double taxation by the administration since these assets and income would  have been taxed in the country where they are located ab initio.