The Federal Government recently announced a tax amnesty programme known as the Voluntary Assets and Income Declaration Scheme (VAIDS or “the Scheme). The Scheme is expected to run for nine months starting 1 July 2017 and is for all categories of taxpayers in default of taxes. An Executive Order for the administration of the Scheme has also been signed by the Acting President, Professor Yemi Osinbajo.
All entities are eligible to participate in the Scheme however in order to participate, business owners must have a full picture of the Scheme in order to take advantage of it. In this article, I have analysed things to know before, during and after participating in the Scheme.
1. If you have never registered for taxes or you have registered and paid taxes in some years but then stopped paying, or you have been paying less than you ought, this is your opportunity to pay your liabilities and walk away free from penalty, interest and prosecution. Those currently undergoing a tax audit and non-resident individuals and companies are also eligible to apply.
2. You must make full and frank disclosure of your tax liabilities. In this instance, if you are not aware of how much you have accumulate in tax debt, get your tax manager or a tax professional to assist with determining your liability. The tax authorities are also available to assist in this regard once you fill and submit your declaration form.
3. You can make declarations for any prior 6 years of assessment (i.e. 2010 to 2015 financial years) for any tax, as the Scheme covers all federal and state taxes including companies income tax, personal income tax, petroleum profits tax, capital gains tax, value added tax, stamp duties, tertiary education tax and NITDA levy.
4. There will be sensitization for professionals and taxpayers in general. About 7,500 Community Tax Liaison Officers (CTLO) are being recruited and trained for this purpose. Try to attend one of these sessions.
5. Read the FAQs section on the website, www.vaids.gov.ng to ensure that you are fully and completely aware of what is required of your business before participating.
1. You must make use of the declaration forms on the Scheme’s website at www.vaids.gov.ng to make your declaration. There are forms for companies and individual (i.e. sole proprietorship and partnership) respectively.
2. If you have never registered for taxes, simply walk into any tax office (state or federal) and obtain a Taxpayer Identification Number (TIN). Use this to fill out the declaration form and the relevant tax authority (RTA) will take it up from there. Please note that TIN is free. You do not have to pay to obtain one.
3. If your business is a business name, your declaration form should be submitted to the State Internal Revenue Service closest to where your business is located. For a company, your form should be submitted to the Federal Inland Revenue Service’s office closest to your business or your usual FIRS office for filing tax returns.
4. Taxpayer have the option to spread the payment of outstanding liabilities over a maximum period of three years subject to any agreement reached with the relevant tax authority. However, any default of an agreed payment plan may result in interest and penalty.
5. Information provided on the forms will be verified by the RTA and they may call for further document and information. There may also require you to submit an amended declaration form if the need arises. Therefore, you must ensure that you are ready to completely expose your business activities to the tax authorities as this is what will be required of you under the Scheme.
1. The Federal Government (FG) has stated that any eligible taxpayer who fails to take advantage of the opportunity provided by the Scheme, shall upon its expiration, be liable to pay in full, the principal tax liability due, penalty and interest thereon. The taxpayer may also be subject of a comprehensive tax audit exercise and prosecution.
2. Taxpayers are expected to be fully complaint after the Scheme or they may forfeit the benefits granted under the Scheme. Therefore, be sure that your business is ready to be tax complaint after the Scheme so that your latter is not worse than your former.
3. Be assured that all information provided by the taxpayer under the Scheme shall be treated with utmost confidentiality in accordance with the provisions of the relevant laws.
We encourage you to take advantage of the Scheme to regularize your tax record as this may be a once in a business lifetime opportunity.
You can attend the Annual Tax Seminar, organized by Covenant Capital, which is holding on Saturday, 29 July 2017 at The Covenant Place, Iganmu to discuss this and other tax matters. There would also be a tax clinic run by tax professionals to attend to tax matters on a one-on-one basis.
Start Smart Series – Part 2
Starting a business can be daunting but running the business successfully is the real deal. Running a successful small business starts with the planning stage of deciding what you will sell and where you will locate your business. However, it doesn’t stop there, as everything from your choice of employees to your accounting practices may influence your potential success. If you are smart, you will start right and start smart.
Starting smart begins with understanding “business essentials”, and a major aspect is accounting.
It is said that accounting is the language of business. It simply means that without accounting, no one truly knows what you are doing – even you too. The financial viability of your business is in doubt, business growth cannot be measured, and bankers don’t know if they can take the risk of providing credit to your business. This is aside from the fact that you will lack any probable basis for planning or making major decisions.
Accounting is the process of analyzing and reporting on the financial transactions of a person or an organization. It is therefore an important function of your business.
With a proper accounting system you are able to:
understand the financial health of your business
save money and reduce wastage
secure additional funding/bank loan in the future
make plans and achieve long-term goals
determine accurately how much tax to pay (without being ripped off by the man)
Small business accounting requires an entrepreneur to learn common accounting terminologies. Let’s take a look at the basic accounting reports that every business owner should prepare and review on a regular basis:
This is also known as the Profit or Loss (P/L) statement. It shows how much you made in revenue, how much you spent, and what your profit or loss is over a specific period of time. Are you making or losing money? Are you spending too much on an expense? The P/L statement will tell you.
This provides overview of your business financial health. It shows the worth of your business. That is, a summary of your business assets and liabilities. In simple English, it tells you what you own, what you owe and what is left over.
Cash flow statement
This captures how cash flows in and out of your business over a specific period of time. It captures cash flows in three categories: operations, financing and investing. Operations cash flow refers to money flows from normal business operations. Financing cash flows captures cash inflow and outflows from buying or paying off assets and liabilities the business uses for more than a year. While Investing cash flows captures capital inflows and outflows from investors (that is, from the entrepreneur, bankers, other funding parties)
If you desire to run a successful business, it would be beneficial to have an accounting system in place. This would ensure that you are accountable for the success of your business. It will also demonstrate that you are genuinely interested in growing your business. This will show that you are clearly ready for business!