A new legislative proposal in Nigeria aims to tighten the country’s tax compliance by mandating that anyone involved in financial services such as banking, insurance, or stock-broking must present a Tax Identification Number before opening a new account or maintaining an existing one.
The PUNCH reported that the bill, 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,” is designed to streamline tax collection and increase government revenue.
Dated October 4, 2024, and currently under review by the National Assembly, the legislation explicitly state, “A person engaged in banking, insurance, stock-broking, 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 proposed measure reflects a broader national effort to ensure that individuals and businesses engaged in financial transactions are registered for taxation, addressing long-standing concerns about tax evasion and under-registration in Nigeria’s informal and formal economies.
Additionally, the bill extends its reach to foreign entities. Any non-resident individual or entity supplying taxable goods or services within Nigeria or earning income from Nigerian sources will also be required to register for tax purposes and obtain a TIN.
However, the bill provides an exemption for non-residents who only derive passive income, such as dividends or interest from investments in Nigeria, though they will still need to submit relevant financial information to the appropriate tax authority.
Moreover, the bill empowers tax authorities to take proactive steps in enforcing compliance.
If an individual or entity fails to voluntarily apply for a TIN, the relevant authority is authorized to automatically register them and issue a TIN, notifying them promptly about their registration status.
Non-compliance with the tax registration requirement comes with financial penalties.
Individuals who fail to register within the specified time will face a fine of N50,000 for the first month of non-compliance, and an additional N25,000 for every subsequent month until they comply.
This stringent measure is part of a broader initiative to plug revenue leaks and ensure that every citizen and organization contributing to the economy is properly taxed.
Through this bill, the Nigerian government is not only working to improve its tax collection infrastructure but also attempting to expand the tax base by bringing more individuals and businesses into the formal tax system, including those who may otherwise slip through the cracks.
