Mr. Babatunde Fowler is the Chairman, Federal Inland Revenue Service. In this interview, he sheds more light on what Nigerians should expect after the Voluntary Assets and Income Declaration Scheme. ABIOLA ODUTOLA reports:
How would you describe the compliance level of Nigerians to the VAIDS scheme?
A lot of people have shown interest in the scheme, especially as the deadline approached. At the federal level, people have declared and paid taxes. Based on our experience, people usually wait till the last minute before taking things seriously. In terms of applications received at the federal level, some have paid, while some are still in the process of putting together their facts, and by the end of the scheme, the figure will be different.
Any shocking revelation?
We have identified properties worth N2 trillion that belong to corporate organisations that have never filed any tax; and now, we are in the process of getting a court order to start selling those properties if the owners do not come and pay the taxes.
From the exercise carried out on corporate Nigeria, which we started in Abuja, we looked at all corporate organisations that own property. We got a valuation of those assets and found that over 2,000 properties are owned by corporate organisations that do not pay tax. Now, what the law says is that, if you don’t file your returns, we can use an estimated turnover, and based on that turnover, we assume you make a profit of 30 per cent and we charge you at 30 per cent.
Are there chances that the deadline will be extended?
The issue of extension does depend on the President or the Vice President, who oversees the economy, through the Minister of Finance.
The agency is not considering shifting the deadline as the government has given a grace period of nine months, from July 1, 2017 to March 31, 2018, for tax defaulters to voluntarily pay back to the government what they owe.
Now that the March 31 deadline is over, what follows?
We shall follow the laws that deal with tax administration, and for those that are not compliant, we shall investigate them and if need be, prosecute them. We shall take all actions in line with the law, which includes the stoppage of their business activities, and if need be, the sale of assets.
If a big tax payer pays only 80 per cent of his taxes, are there chances he will be pardoned?
Tax is based on profit and income. So, what we look at, as tax administrators, is the level of compliance. That is, we should use same law for those who are paying N100,000 and those who are paying N1 billion. Every tax defaulter, either big or small, will be prosecuted.
What was the target amount for VAIDS?
The target amount we are looking at is N305 billion; this includes both corporate and individuals.
Countries can say they welcome foreign investors, but they need to probe where the funds are coming from, the types of business such persons do and if they had been paying their tax… There are some individuals based in Nigeria that work for multinationals and are paid from abroad; how are they expected to pay their tax?
Do you get the required support from the state governments?
In 2016, we signed a Memorandum of Understanding with all the states’ Internal Revenue Services to exchange tax information. This meant that all tax companies that were registered by the state were given to us. We equally gave to them the names of all our own tax payers. Some states were able to add close to 100,000 new corporate accounts that were paying tax to the FIRS, but were not paying to the states. Likewise, we got over 200,000 companies that were paying to various states but were not paying to us.
How do you get data beyond the shores of Nigeria?
We signed certain agreements with the Organisation for Economic Co-operation and Development, to exchange information. That means that they can ask us for information about individuals or corporate entities that transact with us; likewise, we can also ask for information. A number of countries have offered to give us information of corporate organisations and individuals who own properties also.
How do you trace those who don’t keep their monies in the bank and use fictitious names in buying assets?
There was a law passed in Britain called the Unexplained Wealth Order. For now, they are dealing with property. It means that if you are a Briton or a foreigner, you have a house and you can’t show evidence of tax payment, based on the income you used in buying that house, or you cannot substantiate the source of your income, that property would be taken away.
So, some countries have taken this a step further than Nigeria. But a lot of Nigerians have now seen that even if they have property or investments in other countries, those countries are not going to allow them to continue to invest without doing the right thing.
I will give you an example; I was speaking at an anti-corruption forum that took place after Evans, the alleged kidnapper was captured. He (Evans) had bought property in one of the wealthiest neighbourhoods in Ghana. He took money there and the Ghanaian authorities did not investigate who he was. They didn’t ask for evidence of his tax. But he was living among the high and the mighty. He might have even gone there to open a new branch of his business and they wouldn’t have known. So, countries can say they welcome foreign investors, but they need to probe where the funds are coming from, the types of business such persons do and if they had been paying their tax.
There are some individuals based in Nigeria that work for multinationals and are paid from abroad; how are they expected to pay their tax?
You pay tax where you reside, regardless of your nationality. Foreigners, who are posted here, for example, are paid. If they earn an allowance for even coming into Nigeria, they are supposed to declare that income and they are expected to pay their taxes here.
How would you deal with issues of corporate organisations that are underpaying their taxes, even after deducting same from their workers?
We are addressing it. That is part of the MoU we signed with the states’ internal revenue agencies. After they pay the corporate tax and they pay their workers’ salary, every individual worker must have a tax clearance. And what we are doing on the JTB is that, we are consolidating the tax database. That means that, if I am in Lagos, I can hit a button and it will give me your name. For instance, if you are in Sokoto, it will state it and also provide your tax profile. So, we are insisting that every worker should request for a tax clearance certificate from their employer. If the employer does not give them, we come in and take up that employer.
