On the face of it, the latest Federal Government Executive Order (008) on the regularisation of offshore assets would appear to be a step in the right direction. Tagged Voluntary Assets Regularisation Scheme (VOARS) and signed into law on Monday October 8 by President Muhammadu Buhari, the scheme has been couched as an attempt on the part of the current administration “to provide an opportunity for taxpayers who are in default under all relevant statutes to voluntarily declare their offshore assets and income and pay taxes due on them and in return obtain some benefits.” For this purpose, and in further demonstration of its seriousness, the administration has gone ahead to set up a Voluntary Offshore Assets Regularisation Facility (VOARFS) in Switzerland. As a matter of principle, recovering taxes and assets from those who have refused to disclose them is consistent with the administration’s anti-corruption stance.
If all goes according to plan, “eligible taxpayers” with “offshore assets held anywhere in the world” will “voluntarily elect to access the facility in Switzerland by paying two per cent facility access fees and submitting to compliance procedures required by Swiss authorities in order to obtain an eligibility certificate to declare offshore assets through the scheme.” As well, they will “voluntarily elect to regularise their tax status for all the relevant years by paying to the Federal Government of Nigeria a one-time levy of 35 per cent of their offshore assets in lieu of all outstanding taxes, penalties and interest.”
The scheme provides some tangible benefits for those who “truthfully and voluntarily” comply, among them “permanent waiver of criminal prosecution for tax offences and offences related to the offshore assets, immunity from tax audit of the declared and regularised offshore assets and waiver of interest and penalties on the declared and regularised offshore assets.” At the same time, “failure of any defaulting taxpayer to truthfully and promptly take advantage” of the scheme will trigger certain penalties, including “loss of right to plea bargain, liability to be prosecuted in accordance with relevant existent laws for tax offences, and withdrawal of any reliefs, which may have been granted to the participant.”
Although the administration probably means well, the egregious flaws in this initiative lead us to believe that it was not well-thought-out. This is unfortunate, given the wealth of economic expertise both within and outside the country that the president and his advisers could have mobilised. For example, if the presidency’s aim is to go after Nigerians who have stolen money from public coffers and either stashed them abroad or acquired properties with them, why not do just that? Why the vagueness about “eligible taxpayers” when, currently, there are millions of Nigerians who live in various countries across the world and maintain accounts there?
Why should a Nigerian who lives in the United Kingdom and pays taxes to Her Majesty the Queen also pay what is effectively a 35 per cent surcharge on his or her account? Or is the Federal Government oblivious of the fact that, increasingly, many Nigerians call different countries of the world home, and are accordingly liable to the tax regimes in those countries and dominions? Why should the simple and totally legitimate fact of having assets where one resides be criminalised? The scheme refers specifically to “liquid assets (bank balances), stocks and bonds held in portfolios, insurance policies, shares in listed or unlisted offshore companies.” Is the Federal Government suggesting that Nigerians who have dual citizenship and maintain retirement accounts in the United States, say, surrender 35 per cent of such accounts? Does it not realise that if such were to happen, the affected individuals would be paying taxes twice on their savings?
If anything, VOARS confirms the fears of those who have insisted all along that, while well-meaning, the Buhari administration lacks the vision to craft a successful economic policy. The Executive Order No 8 is a monument to poor judgment and an abuse of logic. It should be rescinded forthwith.
