The Nigerian federal government has introduced a transformative bill aimed at revamping the financial services sector by mandating that all individuals involved in banking, insurance, and stockbroking provide a Tax Identification Number (TIN) before opening or operating any accounts. This move is part of a broader strategy to enhance tax compliance and improve revenue collection across the nation.
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,” was submitted to the National Assembly on October 4. Its introduction signals the government’s determination to tackle issues related to tax evasion and improve the overall financial ecosystem.
According to the proposed legislation, “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.” This requirement aims to ensure that all financial transactions are traceable and accountable.
In a noteworthy expansion of the bill’s scope, it addresses non-resident individuals as well. Those supplying taxable goods or services to Nigerian citizens, or earning income within the country, will be required to register for tax purposes and obtain a tax ID. However, non-residents earning only passive income from investments will not need to register but must submit relevant data as directed by tax authorities.
The legislation grants tax authorities the power to automatically register individuals who neglect to apply for a tax ID when required. The authorities must promptly inform these individuals of their registration status and the issuance of their tax ID, ensuring transparency in the process.
To enforce compliance, the bill outlines specific penalties for those who fail to register for taxes. Taxable individuals who do not comply may incur a fine of ₦50,000 for the first month of non-compliance, followed by ₦25,000 for each subsequent month. This financial incentive is intended to encourage prompt registration and adherence to tax laws.
Experts believe this legislative initiative could significantly enhance tax compliance and streamline the collection process across Nigeria.
