March 7, 2018
On Tuesday, 6 March 2018, Nigeria’s Honourable Minister of Finance, Mrs. Kemi Adeosun, stated in a televised broadcast that the Federal Government of Nigeria has identified a new batch of over 130,000 high net worth individuals (HNIs) and companies that have potential tax underpayments. According to the Minister, the data compilation is a result of Project Lighthouse, a data mining initiative of the Federal Ministry of Finance.
The Project Lighthouse was launched in preparation for the closure of the Voluntary Assets and Income Declaration Scheme (VAIDS) which commenced on 1 July 2017 and is scheduled to lapse on 31 March 2018. The Project Lighthouse is aimed at obtaining information from various sources such as State Governments, the Federal Government and Overseas Countries including tax havens like Mauritius and British Virgin Islands with which Nigeria has information sharing agreements.
While emphasizing the Federal Government’s commitment to raising tax revenues through its data collection efforts, the Minister advised non-compliant taxpayers to seek professional advice on tax issues and stated that the deadline for the VAIDS would not be extended. Based on the Minister’s report, the nature of default noted for the identified HNIs and companies include the following:
However, it may well be that some of the identified HNIs and companies have actually not underpaid taxes because possession of assets does not necessarily amount to having taxable income. It will be important for taxpayers that hold such assets to be able to prove that the income used in acquiring the assets has already been taxed. Hence, it is imperative for taxpayers to engage their tax consultants to review their tax and accounting records to avoid undue harassment from the tax authorities.
Furthermore, there seems to be a new turn to inter-agency and international cooperation for exchange of financial and tax information and the post-VAIDS era may witness several prosecutions of tax defaulters by tax authorities and government agencies. Thus, taxpayers are well advised to key into the outgoing amnesty programme to make honest declarations and avoid imminent prosecutions from the tax authorities.
1. Please refer to our newsletter of July 2017 for additional information on VAIDS >> Andersen Tax Newsletter July 2017