Tax Defaulters: FG set to work with DMB
In a bid to track tax defaulters, the Federal Government in collaboration with the Deposit Money Banks (DMBs) is installing appropriate technologies that will enable commercial banks to submit information of wealthy customers and other taxpayers to the FG under the Common Reporting Standard programme (CRS)
The CRS, a programme which was signed up to last August is a standard for automatic exchange of bank accounts information on individuals and certain types of entities. All countries that have implemented the standard will be required to automatically exchange this information on an annual basis.
Implementing the CRS will allow Nigeria to automatically receive information on the bank accounts held in other countries by Nigeria tax residents.
This was made known by the Partner, Tax and Regulatory Services Unit with PricewaterhouseCoopers (PwC), Nigeria, Esiri Agbeyi, at the weekend while making a presentation at an event organised by the Securities, Wealth and Asset Management unit of Ecobank in Lagos.
According to Esiri, when the CRS is fully implemented in the country, all banks would have to submit information about their taxpayers’ information, identity numbers and bank verification numbers (BVN), among others to the tax authorities.
With this, the tax authorities can then share such information with any other country that has signed up to the CRS.
She added: “And if they share that information with that country, automatically, that country has to share that information with Nigeria.
“So, it is exchange of information across borders. Nigeria signed up to it in August 2017 because they would need a lot of information to drive the Voluntary Assets and Income Declaration Scheme (VAIDS).”
She explained that the next step required under this arrangement was for Nigerian banks to acquire the technology to drive the CRS for easy collection of data as well as for the tax authorities to have similar technology that they can use to submit such data.
“One of the key requirements is security. So, Nigeria is not there yet. It will take some time to get there, because not all the banks are aware of CRS.
“So, maybe in the next two years, we might have Nigeria fully take on the CRS. Ghana was among the first African countries to sign up to this. So, Ghana will be submitting information already to the authorities this year.
“There is going to be that free flow of information and on the back of that, the tax authorities will come after those who have not taken advantage of the amnesty period provided by VAIDS to prosecute them.”
She pointed out that the country’s low tax base was a major reason for the high interest rate in the country.
“Government is looking to raise taxes from six per cent tax to GDP ratio, to about 15 per cent, because ours is abysmally low when compared with other countries.
“One of the ways they have thought of doing this is through VAIDS. We don’t have much people as we should have in the tax base. There are a lot of high net worth individuals who do not pay taxes.
“That is the key target of the government and as we progress, it is going to go around to the entire informal sector,” she added.