November 6, 2018
The Nigerian Government’s drive to boost non-oil revenue is clearly evident with intensified tax audits, increase in treaty networks, promulgation of new Transfer Pricing Regulations and the launch of tax amnesty schemes. While the recently concluded Voluntary Assets and Income Declaration Scheme (VAIDS) was applauded by various stakeholders, the newly introduced Voluntary Offshore Assets Regularization Scheme (VOARS or the Scheme) has not received similar commendations.
The VOARS, which was introduced by Presidential Executive Order 8 (VOARS Order) on 8 October 2018 seeks to provide an incentive for taxpayers who have defaulted in the payment of taxes in respect of their offshore assets and foreign-sourced income to voluntarily declare their offshore assets and regularize their tax affairs.
The VOARS Order has generated varied reactions as many stakeholders are unclear on how it will be implemented. In this article, we have analysed the provisions of the VOARS Order and the potential impact on taxpayers.
VOARS provides a platform for taxpayers who have defaulted in the payment of their taxes, to voluntarily declare all offshore assets and foreign-sourced income relating to the preceding 30 years of assessment and pay a one-time levy of 35% on all offshore assets in lieu of payment of outstanding taxes amongst other benefits. The Scheme is scheduled to run for a 12-month period commencing 8 October 2018.
The Scheme seeks to provide some form of clemency to taxpayers who would take the opportunity to regularize their tax affairs. The benefits being offered by the VOARS are:
The VOARS Order mandates the Attorney General of the Federation and Minister of Justice to set up the VOARS facility in Switzerland. To take advantage of the Scheme, taxpayers are required to access the facility by paying a 2% facility access fee and making all necessary disclosures.
Any defaulting taxpayer who fails to take advantage of the Scheme will be liable to the tax due, the interest thereon, investigation, charges and enforcement procedures in respect to offshore assets held anywhere in the world.