VAIDS: Nigeria begins prosecution of tax defaulters

Nigeria's Federal Inland Revenue Service has embarked on a comprehensive crackdown on tax evaders and defaulters who did not take advantage of the Voluntary Assets and Income Declaration Scheme (VAIDS). The scheme, introduced five years ago by the government, aimed to encourage taxpayers to voluntarily disclose their assets and income, pay their taxes without facing interest, penalties, or prosecution. However, the effectiveness of the initiative has come under scrutiny, with concerns raised about its execution and outcomes. Esiri Agbeyi, a Partner at PwC, shed light on the shortcomings of the scheme in a recent interview with CNBC Africa. Agbeyi expressed disappointment in the program's performance, attributing it to poor implementation and monitoring. While initially well-received by taxpayers who viewed it as a step towards widening the tax net and promoting compliance, the post-implementation phase failed to yield the desired results. Agbeyi highlighted the stark contrast between Nigeria's outcomes and those of countries like Indonesia, where similar programs had significantly higher success rates. Indonesia's tax recovery from a comparable scheme exceeded $300 billion, dwarfing Nigeria's less than $300 million haul. The disparity underscored the missed opportunities and inefficiencies in Nigeria's tax recovery efforts. Agbeyi pointed out key areas that hindered the scheme's effectiveness, namely inadequate monitoring, lack of coordination between federal and state authorities, and insufficient data integration. The fragmented approach to tax administration in Nigeria, characterized by siloed tax authorities and disjointed information sharing, impeded the seamless identification and collection of taxes owed. The disconnection between individual and corporate tax obligations, compounded by the absence of a unified database, further complicated the process. Agbeyi emphasized the need for enhanced cooperation among tax authorities, improved data mining capabilities, and a broader focus on tax compliance across both public and private sectors. The interview highlighted the critical importance of addressing systemic challenges and enhancing collaboration to optimize tax collection efforts in Nigeria. As the country grapples with revenue mobilization and fiscal sustainability, leveraging lessons from past initiatives like VAIDS will be crucial in shaping effective tax policies and enforcement strategies moving forward.