I was invited last Thursday to speak at an event organized for entertainers. The aim was to encourage celebrities to pay tax and embrace the ongoing voluntary assets and income declaration scheme (VAIDS).
Interestingly many of the entertainers opened up about the myriad of challenges they face ranging from piracy, to lack of access to finance, society’s expectations of them often involving maintenance of expensive lifestyles while living on handouts. While some of the celebrities may be financially buoyant, the vast majority of them are really struggling to stay afloat.
I know that nobody is excited paying taxes and so people will find any excuse to avoid paying taxes but here are some of the key lessons I took away from the event which I thought to share as some of them affect everyone, whether you are a celeb, self employed, high-networth or just a regular individual.
- Documentation is key – No matter how compelling your story may be, nobody will believe you without proper evidence or documentation and it’s almost impossible to get finance or attract investors to your business. You may not even have tax to pay if you haven’t made a profit but even then you have the obligation to file returns. Wesley Snipes went to jail for failure to file returns. As much as possible get receipts for your purchases, use credit/debit cards and online banking instead of cash. Make sure you know your income and expenses and you can substantiate if required.
- Tax is a legal matter – Society agrees that tax is important for there to be a government but most people wish they don’t have to pay. You can say all you want about whether government deserves your money but make sure you are on the right side of the law. The fact that other people are not compliant is not an excuse neither is ignorance.
- You can do something about the Law, Tax and Governance – Some of our laws are clearly obsolete and unfit for modern day realities such as the stamp duty act which was enacted in 1939 but being applied to electronic banking when in fact there was no internet at the time. But the good news is that it doesn’t have to be this way, you and I can change it for good. We can hold government to account and ensure that only credible people who have paid the right amount of tax get elected or appointed into office to manage our collective resources – taxpayers money!
- Perception management inflicts pain – You don’t have to live up to society’s expectation even if you can afford it. Some people share their pictures on social media regularly but don’t ever want to wear the same outfit twice (check the richest people in the world, they can’t be bothered). If you are trying to prove a point by showing off (flying business or first class, expensive jewelries and accessories, gadgets, luxury cars etc), you may unknowingly be exposing yourself to not only kidnappers, robbers but also the taxman – it’s like blowing the whistle on yourself, there is everything to lose and nothing to gain.