Taxation Of Offshore Assets: Highlights Of The Presidential Executive Order No. 8 Of 2018

Apparently, the Executive Order No. 8 of 2018 was on Monday, October 8, 2018, signed by President Muhammadu Buhari in furtherance of the current administration’s resolve to increase tax revenues and stem the tide of tax evasion and money laundering by Nigerian citizens in and outside the country. The Executive Order essentially creates a window for owners of taxable offshore assets, who have defaulted in their tax payment in the past, to regularize their positions.

Tagged Presidential Executive Order on the Voluntary Offshore Assets Regularization Scheme (“VOARS” or “EO8” or “the Order”), the Order directed the Office of the Attorney General of the Federation and Minister of Justice (“OAGF”) to set up in Switzerland a Voluntary Offshore Assets Regularization Scheme (“the Scheme”). The purpose of the Scheme is to encourage and provide opportunity for all categories of eligible taxpayers who hold offshore assets and incomes to, within a period of twelve (12) months beginning from October 8, 2018, voluntarily declare those assets; pay taxes on them; and obtain compliance certificate under the Order shielding them from the legal consequences of tax evasion in respect of the declared offshore assets. 

According to the EO8, offshore assets include liquid assets (bank balances), stocks and bonds held in portfolios, insurance policies, shares in listed or unlisted offshore companies, property assets and all manners of assets held directly or indirectly through corporate entities, trust structures and non-Nigerian resident companies and intermediaries.

This piece reviews the provisions of the EO8 and the implications of the Order on affected owners of offshore assets. 

WHAT THE ORDER IS SET TO ACHIEVE

For the duration of the Scheme, eligible taxpayers will be encouraged and given opportunity to:

• voluntarily elect to access the Voluntary Offshore Assets Regularization Facility in Switzerland (“the Facility”) and obtain an Eligibility Certificate to declare offshore assets through the Scheme. However, payment of a two percent (2%) facility access fee and submission to compliance procedures required by Swiss authorities are preconditions to doing this. It should be noted that the Facility is the qualified intermediary of the Federal Government of Nigeria (“FGN”) rendering sovereign advisory services for the Scheme;

• regularize their offshore assets held anywhere in the world by paying the taxes due on them, or voluntarily elect to regularize their tax status for all the relevant years by paying a one-time levy of thirty-five percent (35%) of the value of their offshore assets to the FGN in lieu of all outstanding taxes, penalties and interest; 

• ensure full tax compliance on their residual offshore assets after accessing the Scheme by paying taxes on income earned thereon to the FGN, and

• avoid and stop tax evasion.

However, in order to use the Scheme, eligible taxpayers are required to establish a Swiss nexus for their offshore assets held anywhere in the world or arrange for their management either in Switzerland or through the Swiss financial system and institutions.