The Federal Government is proposing a new bill that will require individuals engaged in banking, insurance, stock-broking, or other financial services to provide a Tax Identification Number (TIN) as a prerequisite for opening a new bank account or operating an existing one.
According to 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’ is part of the current tax and fiscal policy reforms by the current administration to enhance tax compliance and improve the country’s revenue collection process.
The Executive Bill, which was forwarded to the National Assembly and dated October 4, 2024, provided for, inter alia: “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.”
According to the proposed legislation, this requirement is part of broader efforts to ensure that all individuals and entities participating in financial activities are properly registered for tax purposes.
The Bill, which is yet-to-be tabled for deliberation during plenary, also outlines that any non-resident person supplying taxable goods or services to any individual in Nigeria or deriving income from the country must register for tax purposes and obtain a Tax ID.
However, non-resident individuals who derive only passive income from investments in Nigeria will not be required to register, although they must provide relevant information as prescribed by the relevant tax authority.
The draft Bill also empowers the relevant tax authority to automatically register and issue a Tax ID to individuals who should apply for one but fail to do so, and in such cases, the tax authority is required to promptly notify the individual of their registration and the issuance of the tax ID.
According to the draft bill, a taxable person who fails to register for tax will incur a penalty of N50,000 in the first month of non-compliance, followed by N25,000 for each subsequent month, amongst other enforceable penalties.
