New Bill to Mandate Tax ID for Banking and Financial Services in Nigeria

A new bill has been proposed in Nigeria that would require individuals involved in banking, insurance, stockbroking, and other financial services to provide a Tax Identification Number (TIN) as a prerequisite for opening a new account or maintaining an existing one.

The legislation, 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 aimed at enhancing tax compliance and improving revenue collection across the country.

Dated October 4, 2024, and obtained from the National Assembly, the bill stipulates: “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 measure is part of broader efforts to ensure that individuals and entities engaged in financial activities are properly registered for tax purposes.

The bill further extends this requirement to non-resident individuals or entities supplying taxable goods or services to Nigerians or deriving income from the country. These individuals must also register for tax and obtain a TIN. However, non-resident individuals whose only income is passive, such as investments, are exempt from mandatory registration but must still provide relevant information as required by tax authorities.

In cases where individuals fail to apply for a TIN, the bill authorises tax authorities to automatically register and issue a TIN on their behalf, with a prompt notification to the concerned party. Failure to comply with the new requirements will result in administrative penalties. The bill specifies a fine of N50,000 for the first month of non-compliance and N25,000 for each additional month thereafter.

This proposed legislation reflects Nigeria’s ongoing drive to widen its tax base and ensure that participants in the financial sector meet their tax obligations, contributing to a more robust and efficient revenue collection system. If passed, the law is expected to play a crucial role in streamlining tax procedures and combating tax evasion across various financial services.