The federal government has introduced a bill that could significantly transform the financial services sector in Nigeria.
The proposed legislation mandates that all individuals involved in banking, insurance, and stockbroking provide a tax identification number (TIN) before opening or operating any bank account.
Submitted to the National Assembly, the bill aims to enhance tax compliance and streamline revenue collection across the country.
Dated October 4, it is 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.”
According to the bill, “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 legislation also stipulates that non-residents supplying taxable goods or services in Nigeria, or earning income from the country, must register for tax purposes and obtain a tax ID. However, non-residents earning only passive income from investments in Nigeria will not be required to register but must provide relevant data as directed by the appropriate tax authority.
The bill grants the applicable tax authority the power to automatically register individuals who are required to apply for a tax ID but fail to do so. In such cases, the tax authority must promptly notify the individual of their registration and the issuance of their tax ID.
Failure to comply with these requirements may result in administrative penalties. Specifically, if a taxable individual does not register for taxes, they will incur a penalty of ₦50,000 for the first month of non-compliance, followed by ₦25,000 for each subsequent month.
