A new bill has been proposed in Nigeria that will require individuals engaged in banking, insurance, stock-broking, or other financial services to provide a Tax Identification Number as a precondition for opening a new 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”, this legislation aims to enhance tax compliance and improve the country’s revenue collection process.
The bill, obtained from the National Assembly and dated October 4, 2024, stated, “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 is part of broader efforts to ensure that all individuals and entities participating in financial activities are properly registered for tax purposes.
The bill 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 proposed legislation 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.
In such cases, the tax authority is required to promptly notify the individual of their registration and the issuance of the tax ID.
Failure to comply with these requirements may result in administrative penalties. According to the 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. (Punch)
