Maximizing Revenue Generation from an Amnesty Program: Evidence from the Voluntary Asset and Income Declaration Scheme in Nigeria

Project Researchers: Oyebola M. Okunogbe
Past Project

This project examines how technology and third party information can be harnessed to promote tax compliance in the context of an amnesty program. Nigeria’s ongoing amnesty program, the Voluntary Assets and Income Declaration Scheme (VAIDS) is a time-limited opportunity for taxpayers to declare their previously undeclared assets and income for tax purposes. To avoid moral hazard problems (citizens’ expectation of future amnesties), amnesty programs must be credibly done once. As such, amnesty programs provide a small window of opportunity to collect previously undeclared taxes in exchange for forgiveness of interest and penalties, and it is crucial that the one-time opportunity be maximized. In practice, since it will be impractical to prosecute an extremely large number of persons believed to have been under-declaring or not declaring at all, amnesty programs must rely on voluntary compliance and can achieve this by increasing citizens’ perceptions of the expected costs of non-compliance following the amnesty. In a country like Nigeria where tax liabilities have not been enforced in the past, the challenge is to convince people that coming forward during the amnesty (a certain cost) is better than not coming forward and risking the possibility of enforcement afterwards. This study therefore seeks to assess different ways by which the Nigerian government can increase the perceived risk of enforcement following the amnesty in order to maximize compliance during the amnesty period.