Determined to plug further all forms of loopholes in the nation’s tax administration system, the Federal Government is now working on modalities to implement the Common Reporting Standards (CRS) in the banking sector.
The CRS 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.
The measure will, among other options, enable the government to obtain taxpayers’ information from the commercial banks.
Disclosing this at the weekend during her paper presentation at an event organised by the Securities, Wealth and Asset Management unit of Ecobank in Lagos, the Partner, Tax and Regulatory Services Unit with PricewaterhouseCoopers (PwC), Nigeria, Esiri Agbeyi, said the implementation of the CRS would mandate banks to submit their depositors’ tax information to the fiscal authorities.
According to her, apart from using the tax information details for domestic tax purposes, the government may also share such information with other countries that are signatories to the CRS on demand of it the need arises.
She clarified: “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)”, the tax expert added.
Agbeyi explained that the next step required under this arrangement was for Nigerian banks to acquire the CRS technology to facilitate easy collection of data as well as for the tax authorities to have similar technology that they can use to submit such data.
She said: “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.”
“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.
It would be recalled that in August 2017, Nigeria initiated moves towards implementing the standard by signing the Multilateral Competent Authority Agreement (MCAA) on the CRS.
Analysts believe that the implementing of the CRS will allow the country to automatically get information on bank accounts held in other countries by Nigeria tax residents.