The Federal Government of Nigeria has introduced a new tax bill that mandates individuals working in the banking, insurance, and stockbroking sectors to present a Tax Identification Number (TIN) before opening or operating any bank account. The bill, presented to the National Assembly on October 4, is designed to strengthen tax compliance and improve revenue collection nationwide.
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,” the bill outlines that providing a TIN will become a requirement for opening new accounts or continuing to operate existing ones in financial institutions.
However, the bill makes an exception for non-resident individuals who earn passive income from investments in Nigeria. These individuals will not be required to register for a TIN but must provide relevant information to the appropriate tax authorities as instructed.
Key Provisions:
- The bill empowers tax authorities to automatically register and issue TINs to individuals who must have one but fail to apply.
- If a TIN is issued without an individual’s request, the tax authority must promptly notify the person of their registration and provide their TIN.
- Non-compliance will result in penalties, with fines of ₦50,000 for the first month and ₦25,000 for each additional month after failing to register for a TIN.
Background:
This new bill is part of an ongoing tax reform initiated by the federal government shortly after President Bola Tinubu set up a Tax and Fiscal Reform Committee in August 2023. The committee, led by tax expert Taiwo Oyedele, was tasked with overhauling the tax system to create a more efficient structure that promotes economic growth and enhances compliance.
Broader Reforms:
The government is considering increasing the Value Added Tax (VAT) to boost revenue and introducing tax exemptions aimed at low-income earners. These measures are intended to address income inequality while ensuring a more even distribution of the tax burden across the economy.
Additionally, the government aims to broaden the tax base, improve transparency in tax collection, and close loopholes that have previously hindered revenue generation.
These tax reforms, combined with the new bill, are part of a comprehensive strategy to enhance Nigeria’s revenue system and improve compliance among individuals and businesses in the financial sector.
