June 30, 2020
In October, 2018, the Nigerian Government introduced the Voluntary Offshore Assets Regularization Scheme (“VOARS” or “the Scheme”) via the Presidential Executive Order 008 (VOARS Order). The Scheme requires defaulting taxpayers to voluntarily declare their offshore assets in exchange for a one-time levy of 35% on all offshore assets and immunity from prosecution for tax offences and other offences related to those offshore assets. However, since its introduction in 2018, not much has been done with respect to the implementation mechanisms and structures for the operation of the Scheme.
In this regard, the President signed an amendment to the VOARS Order on 20th May, 2020 to provide the modalities for the operations of the Scheme. The Scheme which was originally intended to last for 12 months from 8th October 2018 was further extended for another period of 30 months from 8th October 2019 via the amended VOARS Order.
Unlike the Voluntary Assets and Income Declaration Scheme (VAIDS) which had a bit of success in the way people responded to it, the VOARS, from its inception has been very poorly accepted. This may be due to concerns raised as to the legality and practicability of the Scheme, particularly because of its proposed novel introduction of a “tax” at a higher rate on assets (not income) via an Executive Order.
In this Article, we discuss the VOARS Order and examine the implementation and practicality of the Scheme.
VOARS is a Scheme that seeks to provide an opportunity for tax payers who have defaulted in their tax obligations (a key condition of the Order) to come forward and voluntarily declare all offshore assets and foreign-sourced income over a 30-year period from 1987 – 2017 (the main laws have limits of six years) in exchange for a one-time levy of 35% on the value of all offshore assets in lieu of all unpaid taxes, penalties and interest amongst other benefits. The Scheme does not apply to everyone who owns offshore assets but only those who have defaulted on their taxes and are not under pending investigation.
Defaulting taxpayers who wish to partake in the Scheme are required to voluntarily access any of the VOARS Facilities in Switzerland, United Kingdom (UK), Liechtenstein, Nigeria, the United Arab Emirates (UAE) or elsewhere (upon paying a facility access fee of 2%) along with the one-time levy of 35% on the declared offshore assets.
The Scheme provides various benefits to taxpayers who take up the opportunity to regularize their tax affairs as follows: