Why new tax bill mandates ID for bank customers

A new bill in Nigeria has mandated that citizens engaging in bank operations, insurance, stock-broking, or other financial services are to provide a Tax Identification Number (TIN) as a requirement to open a new account or operate an existing one to ensure accurate tax payment history.

Tax identification number is a unique number issued by the Federal Inland Revenue Service (FIRS) or State Board of Internal Revenue (SBIR) that identifies a citizen’s tax payment and ensures compliance with tax regulations in Nigeria.

The new bill obtained by the National Assembly 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”, was proposed to enhance tax compliance and improve Nigeria’s revenue collection processes.

“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,” it stated.

It added that non-citizens of Nigeria 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.

Non-citizens who derive only passive income from investments in Nigeria will not be required to register. However, they must provide relevant information to the appropriate tax authority.

According to the bill, tax authorities are expected to automatically register and issue a Tax ID to individuals who should apply for one and 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,” FIRS says.

Read also: Tinubu transmits tax reform bills to National Assembly

How to get a Tax ID in Nigeria

According to FIRS, every person earning an income in Nigeria must obtain a TIN before filing their first tax return. It helps tax authorities properly credit tax payments and track tax compliance history.

Applying for a TIN is free but now mandatory for opening a bank account, applying for SME/ government loans, or getting an import/export licence.

A TIN can be obtained online via the Joint Tax Board (JTB) TIN registration portal or in person at the nearest FIRS or state IRS tax office with required documents and even through an accredited tax professional.

Here are the requirements

Individuals: An accurate date of birth, Bank Verification Number (BVN), registered phone number, valid identification card like a driver’s licence or national ID card, a utility bill, and a completed TIN application form.

Registered business owners: A registered business name and the certificate, a utility bill, an accurate date of birth, a Bank Verification Number (BVN), a registered phone number, and a completed TIN application form.

Incorporated companies: Memorandum and Articles of Association (MEMART), certificate of incorporation, particulars of directors and share capital statement.