The Nigerian federal government has introduced a new legislative proposal that mandates individuals working in sectors such as banking, insurance, stockbroking, and other financial services to present a Tax Identification Number (TIN) before they can open or operate a bank account. The proposed legislation, officially titled “A Bill for an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States, and Local Governments; Prescribe the Powers and Functions of Tax Authorities, and for Related Matters,” was presented to the National Assembly on October 4, 2024.
The primary objective of the bill is to bolster tax compliance and enhance the efficiency of revenue collection throughout Nigeria. It stipulates that financial service professionals are required to supply a TIN as a prerequisite for account operation, thereby ensuring their proper registration with tax authorities. The bill provides an exemption for non-resident individuals who only receive passive income from investments within Nigeria, although they are still obligated to furnish pertinent information to the tax authorities.
Tax authorities are empowered by the bill to automatically register individuals who neglect to apply for a TIN and to inform them about their registration status. This measure is designed to address and mitigate the longstanding issue of tax evasion by closing existing loopholes.
The automatic issuance of TINs to non-compliant individuals is intended to streamline the registration process for both the government and the citizens, minimizing bureaucratic holdups and ensuring tax compliance without the need for individuals to undergo the manual registration process. Failure to comply with the TIN requirement will result in financial penalties, with a fine of N50,000 for the initial month and N25,000 for each subsequent month of non-registration.
This bill is a key component of the wider tax reform efforts led by President Bola Tinubu‘s administration, which, in August 2023, formed a tax and fiscal reform committee chaired by tax expert Taiwo Oyedele. The committee’s mandate is to revamp Nigeria’s tax framework to increase efficiency, foster economic growth, and achieve a more equitable distribution of tax obligations. Other reform measures include a hike in the Value Added Tax (VAT) and tax relief provisions for individuals with lower incomes.
The introduction of the TIN requirement is among several strategies aimed at expanding Nigeria’s tax base, enhancing the transparency of tax collection, and sealing revenue leakages. The government anticipates that by enforcing more rigorous tax registration and compliance protocols, it will not only increase its revenue but also tackle issues of income disparity. This bill is anticipated to have a profound effect on Nigeria’s financial services sector by promoting higher levels of accountability and tax compliance among professionals and businesses.
