A new legislative proposal in Nigeria aims to enhance tax compliance by requiring individuals engaged in banking, insurance, stockbroking, and other financial services to provide a Tax Identification Number (TIN) as a precondition for opening or operating accounts.
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 emphasizes improving the country’s revenue collection processes.
Dated October 4, 2024, the bill aims to ensure that all participants in financial activities are properly registered for tax purposes.
The bill states, “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.” This requirement extends to non-resident individuals supplying taxable goods or services in Nigeria or deriving income from the country, who must also register for tax purposes and obtain a TIN.
However, non-residents earning only passive income from investments in Nigeria will not be required to register, though they must provide relevant information as specified by the appropriate tax authority.
Additionally, the legislation empowers tax authorities to automatically register individuals who fail to apply for a TIN. In such cases, the tax authority must promptly notify the individual of their registration and TIN issuance.
Failure to comply with these requirements could result in administrative penalties. A taxable person who does not register for tax will incur a penalty of N50,000 for the first month of non-compliance, followed by N25,000 for each subsequent month.
This bill represents a significant step towards increasing tax compliance and improving Nigeria’s overall revenue collection system.
