Anambra offers three-month tax waiver to boost compliance

The Anambra State Government has approved a three-month tax waiver for business owners to regularise their tax status without penalties.

The Anambra State Government has approved a three-month tax waiver for business owners under its newly introduced Voluntary Assets and Income Declaration and Tax Regularisation Scheme (VAIDS), running from 6 July to 5 September. The Commissioner for Information and Value Reformation, Law Mefor, disclosed this in a statement on Thursday in Awka.

Mefor said the scheme offers a one-time opportunity for taxpayers to resolve their tax issues without incurring full penalties for non-compliance. The decision was reached by the state tax authority, led by the Chairman of the Anambra State Internal Revenue Service (AIRS), Ikeazor Okonkwo.

He urged businesses and other organisations that have not paid taxes or fees, and those who have not registered as taxable persons, to take advantage of the three-month window to register and pay their taxes. Mefor also urged other registered taxpayers with additional income, assets or liabilities to disclose them.

Those who failed to fully declare taxable income and assets, or who underpaid or under-remitted taxes or levies, would face the full weight of the law. He added that those currently under tax audit, investigation, or involved in a tax dispute with the AIRS, and who had been issued Best of Judgement (BOJ) assessments but failed to respond within the statutory time limit, would not be exempted from prosecution.

Eligible taxpayers who make full and honest disclosure would enjoy a 100 per cent waiver of penalties and accrued interest, as well as immunity from prosecution. Mefor warned that the AIRS would commence full enforcement against defaulting taxpayers at the expiration of the tax waiver by 5 September.

This mirrors the federal government's 2017 Voluntary Assets and Income Declaration Scheme (VAIDS), which offered similar incentives for taxpayers to regularise their status. The mechanism then was different, but the result was the same: a push to expand the tax base without raising rates. The federal scheme was moderately successful, but many states have struggled to replicate it.

For small business owners in Anambra, the waiver is a welcome relief. For the state government, it is a bet that the short-term revenue loss will be offset by long-term compliance gains. The question is whether the bet will pay off.

The winners: Anambra business owners who take advantage of the waiver; the Anambra State Government, which may expand its tax base; and the state's economy, which benefits from reduced tax evasion. The losers: businesses that fail to comply and face enforcement; and the federal government, which loses potential revenue from VAT and other taxes collected in the state.

Bottom Line: Anambra is offering a three-month tax holiday. The hope is that businesses will come out of the shadows. The risk is that they will stay there.