10 things Finance Minister said about paying tax

The Minister of Finance said a few things last Thursday about the Voluntary Assets Income Declaration Scheme (VAIDS)


The broadcast is a fulfillment of the Federal Government’s Tax Thursday initiative under the new Voluntary Assets Income Declaration Scheme (VAIDS).

Tax Thursday has been slated, every Thursdays till March 2018, by the government to be a designated day of the week where there is a focus on the tax system in the country.

While speaking about taxes and revenue on Thursday, here are a few things the Minister of Finance said:

1. Nigeria is not an oil economy, so taxation is important

According to Adeosun, "Oil economies tend to have a lot of oil and very few people. Saudi Arabia has 30 million people and they pump 10 million barrels of oil a day; so, if they wanted to share their oil, 3 people share one barrel.

"Nigeria, with 190 million people, only pumps two million barrels of oil a day; so, if you wanted to share the oil, 90 people will share a barrel.

"Most oil economies with a lot of oil and few people can afford not to have a real tax system. So, in Saudi Arabia for example, the tax-to-GDP is 6%, same as Nigeria.

"But because Nigeria is not really an oil economy, we can't afford to do that because oil is actually 10% of our GDP."

2. 56 million economically active Nigerians are not paying their taxes

"What we found in Nigeria at the moment is that we only have 14 million taxpayers out of about 70 million people that are economically active.

"And the majority of that 14 million are people who have their taxes deducted at the source; largely lower income workers.

"That means that the tax burden is not being shared fairly. It's being carried by those who are least able to afford it whereas high net worth people are able to evade tax.

"This happens because they don't get their money deducted from the source. They largely work through companies and they are expected at the end of the year to compute all their income, deduct any relevant expenses, and voluntarily, under what we call direct assessment, pay those taxes to government.

"That's not happening on the right scale. At the very high end, there's a disconnect as those who are even filing and paying taxes are not even paying the right amount."

3. VAIDS is amnesty for honest Nigerians

"What we've done is launch Voluntary Assets Income Declaration Scheme (VAIDS) to give people an opportunity to regularise, we know, we have the data now.

"So we have a picture of the assets that people have, and those assets are supposed to be purchased out of tax returns.

"Under VAIDS, we're now giving people an opportunity to go back over the last five, six years and restate their tax returns, and regularise, and pay any taxes that they should have paid at the time.

"People have a window of nine months to go and regularise their tax status. Look at your lifestyle, the assets that you hold, how did you fund them, have you paid tax on those monies before you bought those assets.

"We're not saying if you have a home abroad, you have to pay for it, but when you bought that house abroad, where did you get the money from? If that money came from Nigeria or you're a Nigerian resident tax payer, did you pay the right taxes before you bought that house?

"The way it should work is if you want to build a house, it has to come from your tax income. That's what the law requires.

"In exchange, we are offering the opportunity of not charging interest or penalties which should normally have been paid, and we'll not do any further investigation on the person as long as they declare (their taxes) honestly.

"We're also providing amnesty from prosecution of tax offenders because actually, tax evasion is a crime.

"So, we're saying we'll not prosecute if you come clean."

4. Tax evasion is as bad as corruption

"We've had a project running here in the Ministry of Finance for the past 15 months and what it's been doing is building profiles. It looks at BVN, land records, car registration, private jet ownership, company's house records. It's building a financial profile of the individual.

"What do you own both here and abroad? And then we check your tax record. What did you declare?

"And once there's a disconnect, and in many thousands of cases, there's a huge disconnect, and once people understand how much data we have, they will begin to come into the tax net.

"We're building a very accurate financial picture of people, not just on assets here in Nigeria, but around the world.

"After March, once you don't come clean, we commence really very aggressive prosecutions and we're going to be discussing with the CJ about the possibility of setting up special tax courts.

"Tax evasion is one of the easiest prosecutions, and it's one of the hardest things to defend because the law is very clear.

"There can't be very many defences. If you have this asset, how did you get it?

"So, either you have to come and tell us that you stole it; which is great, we'll send you off to the EFCC or you have to tell us that 'I have income that I didn't declare'.

"So, it's very easy to prosecute tax avasion. It's as bad as corruption."

5. Response has been positive

"The response has been very positive. I think there's the sort of attitude, sort of national recognition. We need to come together and get this done. We think the resistance to paying tax is breaking down.

"And of course, part of that resistance is that people feel like, 'Even if I pay tax, what do I get?'.

"Our response to that is which one came first? The chicken or the egg? Somebody has to break that cycle. And we have to break that cycle by doing the right thing.

"If a man in the hot sun is paying his/her taxes correctly, if a policeman is paying his/her taxes correctly, the high net worth and middle class individuals must also do the right thing. Everybody must do what is needful."

6. Government needs to be more responsible with spending taxpayer money

"On government's side, we've got to be better at spending money, we've got to be more efficient, we've got to be more accountable so that people can see that it's a partnership, and that as they pay, government is doing what government is meant to do.

"Under President Muhammadu Buhari, we are incredibly committed to doing the right thing, providing value for money.

"We already have an efficiency unit and we're trying to cut cost wherever we can to make sure that when people do pay the taxes, they can see the benefits in their own lives."

7. Side businesses must also pay tax

"We have a lot of people who are in the tax net that have a full time job but also have like three, four, five businesses running on the side. Those businesses are also taxable.

"In some cases, what we find is that the main job is actually just a little bit of the income.

"You find someone making jewelry and they're making a fortune but they're not paying any taxes. That's got to be corrected.

"So, it's not just people who are fully self-employed, but those who are partially unemployed, who in addition to what is deducted from their taxes at source from their main salary also need to make a declaration from their side businesses.

"That happens everywhere in the world."

8. Air tickets will soon be taxed

"We signed something yesterday on luxury goods; champagne, brandy, whiskey, wine, jewelry, high-end jewelry.

"We've signed something that will be a surcharge on first class and business class tickets, we are just doing the final parts of the implementation and we also want to try and amend the tax payer book on high end cars, and an additional surcharge on luxury cars."

9. Some Nigerians in diaspora will have to pay tax too

"If you're a Nigerian resident for tax purposes, it means you lived in Nigeria for 185 days of the year. We've signed bilateral agreements with many countries so there's no double taxation; if you're paying your taxes in the UK, or in America, or Canada, you're not affected by this.

"However, if you're collecting rent on properties, we've found that a lot of properties are owned by Nigerians in the diaspora. They collect the rent and they remit it to America or they keep it here, but they don't pay tax from it.

"If you don't declare those dividends you collect in Nigeria in the country you live in, it has to be declared in Nigeria under VAIDS.

"If you're resident for tax purposes in Nigeria, you have to pay your tax in Nigeria. You might live abroad, or holed up in Dubai or London for most of the year, but if you're registered in Nigeria as a taxpayer, you have to pay your tax in Nigeria, including taxes on income that you earn abroad.

"A Nigerian that owns a property abroad and rents it out, that income is taxable in Nigeria. The fact that you earned it (as a Nigerian resident for tax purposes), you have to declare in Nigeria and pay tax on it in Nigeria. That's what the law requires, and that's what we're enforcing."

10. Nigeria has survived solely on tax before

"The overall objective is to move our tax-to-GDP, our tax compliance rate from 6%. Really, we need to be able to be in the 16% range; Ghana is at 15%, South Africa is at 24%. We've really got to, as a nation, come together and sort this out.

"Some countries don't have oil. Before we had oil, we lived on taxes. Most of the works done on the old roads and old railways were done from the cocoa, the groundnut, and stuff we had before oil. So now, we've got to rewind and reset and go back to doing the right thing.

"And that'll put this country in an amazing position for the future because we'll not be dependent on oil, we'll have a far more diversified economy.

"There's absolutely nothing unique about our problems that we'll not be able to solve. We pool together, have a credible budget, we fight corruption, wastage, and make sure everybody who's meant to pay taxes pays the right taxes, brings the money into the pool and then we hold people accountable.

"The citizens have an assurance of a far better Nigeria. We'll grow at a stable and consistent base if we have a stable tax base.

"If we really aspire to be like many of the countries we admire, we've got to get this tax issue right."


Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:


Recommended articles

Foreign powers responsible for insecurity in Nigeria – Buhari

Foreign powers responsible for insecurity in Nigeria – Buhari

Oyetola v Adeleke: Why we can’t react to Osun tribunal verdict - INEC

Oyetola v Adeleke: Why we can’t react to Osun tribunal verdict - INEC

IGP to face contempt charge over ignoring court order

IGP to face contempt charge over ignoring court order

FG backs US on visa ban for Nigerians disrupting democracy

FG backs US on visa ban for Nigerians disrupting democracy

Why I am not allocating land in FCT – Minister

Why I am not allocating land in FCT – Minister

7 governors who have been sacked by Nigerian courts since 2012

7 governors who have been sacked by Nigerian courts since 2012

What went wrong with BVAS in the Osun governorship election?

What went wrong with BVAS in the Osun governorship election?

Jandor promises to convert Lagos ‘Area Boys’ into positive tools if elected

Jandor promises to convert Lagos ‘Area Boys’ into positive tools if elected

BREAKING: Court dismisses suit seeking Buhari's sack

BREAKING: Court dismisses suit seeking Buhari's sack