BiafraSay Forum
Welcome, Guest: Join BiafraSay Forum | Login | Trending | Recent

Stats: 1,261 members, 11,196 Topics. Date: February 24, 2018, 9:04 am

Tax Drive: Confidentiality Concerns As FG Mines Individuals Bank Accounts

BiafraSay Forum | BiafraSay General | #Politics* | Tax Drive: Confidentiality Concerns As FG Mines Individuals Bank Accounts (79 Views)

(Go Down)
According a World Bank ranking, Nigeria’s tax-to-GDP ratio is one of the lowest in the world at 6 per cent; even by African countries performance.
Whilst the rich evade paying taxes, the poor are the hardest hit. “Tax evasion leaves an unfair burden of payment on those who can afford it least - Nigeria’s poorest people” Minister of Finance, Minster Kemi Adesoun said recently.
Thus, the government is concerned about reversing the trend and make the rich pay their fair share of taxes. When this occurs, government hopes, its revenue base will be deepened, its income stream a bit diversified, more revenue for infrastructure will be generated and the economy would work better.
As a part of its tax compliance drive, the FG last year launched the Voluntary Assets and Income Declaration Scheme (VAIDS), a time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods.
VAIDS, an initiative of the Kemi Adeosun-led-Federal Ministry of Finance in collaboration with the State Tax Authorities, is a revolutionary programme that provides tax defaulters a nine-month opportunity to voluntarily and truthfully declare previously untaxed assets and incomes. It also ushers in an opportunity to increase the nation’s general tax awareness and compliance. As at May 2017, the total number of taxpayers in Nigeria was just 14 million out of an estimated 70 million who are economically active, according to statistics obtained from the Federal Ministry of Finance.
This also implies only 20 per cent of the economically active Nigerians pay tax, particularly salary earners.
“Nigeria’s tax to Gross Domestic Product (GDP) ratio, at just 6 per cent, is one of the lowest in the world (compared to India’s 16%, Ghana’s 15.9%, and South Africa’s 27%). Most developed nations have tax to GDP ratios of between 32% and 35%.
VAIDS is aimed at correcting the anomaly, getting the rich and big entrepreneurs to pay tax. Government also reckons that Nigeria’s low tax revenues are at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world.
“There has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations. These include but are not limited to, transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names. In addition, despite having some of the most profitable and well capitalized companies in Africa, the level of tax remittance in Nigeria is very low” Mrs. Adeosun recently said.
Already, she noted that VAIDS has yielded over $50 million in revenue between June 29, 2017 when it was launched and October 31, 2017. Two foreign companies have also agreed to pay $110 million in regularizing their tax status. About $1 billion additional revenue is being targeted from the scheme. Also, over N17 billion has been realised since the launch of VAIDS.
The federal government recently announced that it was collecting net-worth of Nigerians from banks.
It is also collecting data on the income and assets of high net-worth individuals and companies in the country.
“Data have already been mined from the Nigerian Customs Service and the Asset Management Corporation of Nigeria (AMCON) for all payments and receipts between 2010 and 2015 - and personal bank accounts would be in the next round of data mining” the Ministry of Finance said in a press statement recently.
Data, according to the ministry, would also “be collated from the Federal Inland Revenue Service, state lands departments, Corporate Affairs Commission (CAC), Securities and Exchange Commission (SEC), National Identity Management Commission (NIMC), land registries, treasury bills and Nigerian Inter-Bank Settlement System (NIBSS), Integrated Payroll and Personnel Information System (IPPIS), Nigerian Civil Aviation Authority (NCAA) and payment platforms such as Remitta.”
“The data being collected is on individual and corporate liquid as well as fixed assets and income over the last five years both within and outside Nigeria. Data collected will be profiled against tax payments made by such individuals and corporate entities,” it said.
The federal government expects to generate $1 billion, raise the country’s tax-to-GDP ratio to 6 percent, to 20 per cent by 2020 and provide vast tax education to boost voluntary tax compliance.
Speaking on the policy, Mr. Okepeyemi Agabaje, the Chief Executive Officer RTC Advisory Services limited said it is complicated as plausible as it may sound. He cautioned against arbitrary abuse of customer-banker confidentiality rule as this may have negative consequences on the banks.
“We have to ensure that customer confidentiality isn’t breached, which it threatens to do. The banker-customer relationship is supposed to be a confidential relationship. We have to be sure we don’t breach that” he cautioned.
However, he noted that if the government must breach the confidentiality rule, then it must have a law that permits it to do so. “We don’t just transfer people’s data between the CBN and FIRS. So that’s an issue of law and privacy.”
He however maintained that “there is the need to drive tax compliance in this country. So we have to find a policy and a legal way to address the issue. I know there is an opportunity to use the banking data to improve tax significantly because the money is resident in the bank. I won’t oppose any efforts to do that but let it be lawful and respectful”.
Mr. Rislanudeen Muhammad, who was an acting MD/CEO of Unity Bank said “ideally, individuals and corporates are statutorily expected to provide accurate data on their income to tax authorities for the purpose of taxes as provided by law. We know this is not practicable given the information made to public on Panama Papers, tax avoidance issues etc, especially by high networth individuals, who are the subject of the VAIDS.
“The VAIDS itself is adhoc, more of fire brigade approach to deal with efficacy of existing tax collection. The legality as well as potency of collecting data on assets of individuals offshore depends on cross border agreements and may of course lead to some individuals devising other means of legal tax avoidance”.
He noted, “beyond supporting existing anti money laundering and counter terrorism financing rules, recall that CBN is still battling to find legal ways of compelling banks to even temporarily transfer blocked accounts of individuals that fail to get captured on bank verification number etc.
“However, given our entrenched mono product economy and as part of revenue diversification strategies, government needs to devise means of enhancing our tax base which is very weak even by African standard. Before GDP rebasing in February 2014, our tax to GDP ratio was about 20% and down to 6 to 7% presently which is very low and implies huge incidences of tax avoidance and tax evasion.”
Another commentator, a banker, who spoke under condition of anonymity, said “a lot of litigations may occur against the banks for breach of trust by the customers. The banks themselves may want legal interpretation of the policy and all that if it threatens their business.”
He also noted that “the CBN has been compelling the banks to drive financial inclusion. This may significantly impact new deposits. In fact, those that could provide saves at home may resort to banking their monies at home or building properties, if they can. What would they really be losing by keeping their monies at home?
Explaining further, he said except fixed deposits, savings account attracts little interest rates. An interest rate of 3 percent or 5 percent isn’t that significant if your deposits are not huge. So, some people may choose to keep money at home”.
The banker also said the government is just being lazy about driving revenue through taxes. “I can tell you for a fact that only VAT can give Nigeria more than N2trn annually if government is willing to work with the informal sector. Do you know how much the road side mechanics, tailors, furniture guys, boutiques, restaurants etc make monthly? Do they pay VAT? Do you pay VAT when you access those services? All government needs to do is educate them on how to automate their payments and charge VAT on every service provided and watch government revenue grow,” he said.

www.dailytrust.com.ng/tax-drive-confidentiality-concerns-as-fg-mines-individuals-bank-accounts.html

0 Like

Don't have a BiafraSay Forum Account? Use the form below to signup for a BiafraSay Forum Account and join discussions on BiafraSay Forum.
Full Name:
Email:
Username: E.g Ohamadike
Password:
Confirm Password:
I agree to the terms of service


Invitee: greenermodels
Viewing this topic:
1 guest viewing this topic

BiafraSay Forum is owned and managed by Kalu(Admin) (Read our Rules ) - Advertise With Us
BiafraSay Forum - Copyright © 2018. All rights reserved.
Disclaimer: Every BiafraSay Forum member is solely responsible for anything that he/she posts or uploads on BiafraSay Forum.
For enquiries & feedbacks send email to: info@biafrasay.com