Use Tax Evasion To Round the Corrupt Up! -By Bámidélé Adémólá-Olátéjú

What is stopping the arraignment and prosecution of Nigeria’s economic saboteurs and thieves? How long do we have to wait before prosecuting those who brought Nigeria to its knees economically? It is hard to trace stolen money because our special brand of thieves have perfected the art of offshoring their loot and domestically, they use fronts to cover their tracks. The recovery work is made harder by the very informal economy. The cash heavy nature of internal transactions and the existence of so much money outside the banking structures has been and milked to their utmost advantage by having cash only transactions leaving little or no paper trail. Even after the Central Bank of Nigeria’s (CBN) cashless policy, they have a way of colluding with bank staff who are in need of deposits and easy cash, to circumvent the system.

Tax evasion in Nigeria is easy to prosecute because malicious intent can easily be proven. Section 40 of the FIRS Es­tablishment Act 2007 provides that, “Any person who being obliged to deduct any tax un­der this act or the laws listed in the First Schedule to this Act, but fails to deduct, or having deducted, fails to pay to the Service within 30 days from the date the amount was deducted or the time the duty to deduct arose, commits an offence and shall, upon conviction, be liable to pay the tax withheld or not re­mitted in addition to a penalty of 10 percent of the tax withheld or not remitted per annum and interest at the prevailing Central Bank of Nigeria minimum re-discount rate and imprisonment for period of not more than three years”.

Apart from tax evasion, the charge of cheating the pubic revenue is a common law offence. Cheating the public revenue is a conduct offence, the prosecutor does not need to prove that the defendant caused any actual loss. Why are we not dragging dishonourable public officers into the net under these offences? To prove tax evasion, there must be proof of intent to evade an unpaid tax liability.

Under this act, concealing income is considered fraudulent. A lot of Nigerians do not even file taxes except when they need tax clearance to process official documents. Many are guilty of deliberately under-reporting or omitting income in their filling. Many business owner’s do not report over 60 percent of their receipts. Most of Nigeria’s well connected thieves are landlords because a huge chunk of their investments are in real estate as a store of value. Do they report rent payments? Most of them, if not all, are business owners or directors in corporations. In their businesses, they often keep two sets of books: one for them and one for the FIRS men. They make false entries in their books and records in form of accounting irregularities, such as a failure to keep good records, or a mismatch between what is reported on their company’s return and what is on the financial statements. This kind of shoddy record keeping generally demonstrate fraudulent intent. Granted that the veil of corporations may not be pierced but the same thing obtains in their personal finances. Without a solid identity scheme, many of them claim false or overstated deductions in their tax filling, if they ever file.

In a country where most taxes are derived from Pay As You Earn (PAYEE) system and a very subterranean informal economy, willful attempt to hide information in order to avoid paying taxes is not difficult to prove. According to the FIRS act, tax evasion is a serious crime and a felony. A successful conviction requires that the prosecution prove that unpaid tax liability does exist, the defendant took specific actions to evade, or in an attempt to evade paying tax, the defendant had specific intent to evade his legal obligation of paying tax to the state.

Apart from tax evasion, the charge of cheating the pubic revenue is a common law offence. Cheating the public revenue is a conduct offence, the prosecutor does not need to prove that the defendant caused any actual loss. Why are we not dragging dishonourable public officers into the net under these offences? To prove tax evasion, there must be proof of intent to evade an unpaid tax liability. In a country where most taxes are derived from Pay As You Earn (PAYEE) system and a very subterranean informal economy, willful attempt to hide information in order to avoid paying taxes is not difficult to prove. According to the FIRS act, tax evasion is a serious crime and a felony. A successful conviction requires that the prosecution prove that unpaid tax liability does exist, the defendant took specific actions to evade, or in an attempt to evade paying tax, the defendant had specific intent to evade his legal obligation of paying tax to the state.

As it is often said, the story of the hunt glorifies the hunter. The punishment of three years and a fine of N200,000.00 under the FIRS ACT is a sham. We seem to write our laws for the poor alone. What is N200,000.00 to these thieves when there are cognacs with higher price tags that they drink without giving the price a thought? Tax evasion is a serious offence and a crime that is easy to prove. It can be used to haul our traducers in jail while the case against embezzlement, conversion and outright theft is being prepared. This is because those who are involved in illegal enterprises often engage in tax evasion. They do so because reporting their real incomes would serve as an admission of guilt and could result in criminal charges. They understand they cannot report these earnings as coming from a legitimate source lest they face money laundering charges. There are many ways to catch economic saboteurs. This is one of them. Let those in authority act now!

Bámidélé Adémólá-Olátéjú maintains a weekly column on Politics and Socioeconomic issues every Tuesday. She is a member of Premium Times Editorial Board. Twitter @olufunmilayo