‘Tax reforms will encourage voluntary disclosure, check illicit funds’

In a seemingly desperate move to raise revenue from new sources, the Federal Government has disclosed that it will tax illicit funds brought into the country.

The Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, stated this on an X space hosted by Nairametrics in partnership with BudgIT, BusinessDay and CODE.

He said it is only after collecting the tax that the government would come back to ask for the source of the funds. He disclosed that under the new tax bill, illicit funds such as laundered money or proceeds of crimes would be taxed.

Oyedele said that the government would rely on data and intelligence reports to track illicit funds of Nigerians and tax them before probing the source of such funds.

He said such tax would be collected through what he termed a “voluntary disclosure programme”, in which individuals will declare the source of their funds whether it is illegal or legal.

“Yes, we have provisions (for illicit funds) in those bills. You have to pay tax regardless of the source of the income, and once we find that you have revenue, including from the international data we’re going to be receiving and you can’t explain it, you have to pay the tax.

“But for people to be able to do that almost seamlessly, we plan to do a voluntary disclosure programme, where we give the people the opportunity to self-declare before we come down on them because this time around there is going to be data and everybody will know it is not a joke,” he said.

He further explained that the government will find out the revenue of citizens whether a citizen discloses or not. Oyedele said: “We are going to write you and tell you, ‘this is how much you have in your account’, the number of bank accounts that you have; how much money you spend on your payment card; the money you have with investment accounts and asset management, stock accounts, and how many times you have travelled abroad.

“I don’t want to scare anybody, but these are pieces of cake that they have been doing in small, large, developed and underdeveloped countries for years. “So, we are not even doing anything novel, we are just trying to be at par with the rest of the world.”

He also noted that expanding the tax net to the underworld of crimes will help Nigeria fight corruption, noting that the government wants to be serious with the fight against corruption.

He added that the bill makes provision for an Ombudsman to ensure that taxpayers are not cheated and overtaxed. He said the Ombudsman would be legally empowered to function.

“The Ombudsman can also bite, and it is not just about protecting the vulnerable person, you come in and just vent,” he said.
He noted that the Ombudsman has the means and resources to intervene immediately and there are consequences for the revenue authority if they don’t listen to you, including legally.”

The new tax bills submitted to the National Assembly which among other things provide for a new value-added tax VAT distribution formula and some tax reliefs for small businesses and low-income earners, has remained very controversial with governors, particularly from the north kicking against it. The controversy led to the stepping down of debate on the bills at the National Assembly to allow for more consultations.