A significant new bill mandates that individuals involved in banking, insurance, stockbroking, or other financial services in Nigeria must now provide a Tax Identification Number (TIN) as a prerequisite for opening new accounts or maintaining existing ones. The bill, 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,” aims to enhance tax compliance and streamline revenue collection across the country.

Tax ID Requirement to Ensure Financial Accountability

According to the bill, which was dated October 4, 2024, and obtained from the National Assembly, this legislation seeks to ensure that all individuals and entities participating in financial activities are registered for tax purposes. The bill specifically states, “A person engaged in banking, insurance, stockbroking, or other financial services in Nigeria shall make the provision of a tax ID, a precondition for opening a new account or operating an existing account.”

The introduction of this requirement reflects the government’s broader efforts to enhance accountability and improve Nigeria’s tax collection infrastructure.

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Tax Obligations for Non-Residents

The bill further outlines that non-resident individuals supplying taxable goods or services in Nigeria, or earning income from the country, must also register for tax purposes and obtain a Tax Identification Number. However, non-residents earning passive income from investments in Nigeria are exempt from the registration requirement but must still provide relevant information to the appropriate tax authority.

Automatic Registration for Non-Compliant Individuals

In cases where individuals fail to voluntarily register for a Tax ID, the bill empowers tax authorities to automatically register them and issue a Tax ID. Tax authorities are required to notify these individuals promptly once they are registered.

Penalties are set to be imposed on those who fail to comply with these requirements, with a N50,000 penalty for the first month of non-compliance, followed by an additional N25,000 for each subsequent month.

This legislation represents a robust effort by Nigerian authorities to ensure tax compliance and improve the efficiency of the country’s tax system.