A new bill has been introduced in Nigeria that would compel individuals who work in banking, insurance, stockbroking, or other financial services to furnish a Tax Identification Number as a requirement for opening a new account or managing 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.”

The bill also states that non-resident individuals who supply taxable goods or services to any individual in Nigeria or who derive income from the country must register for tax purposes and obtain a Tax ID; however, non-resident individuals who only receive passive income from investments in Nigeria will not be required to register, though they must still provide the relevant information as prescribed by the relevant tax authority.

The proposed legislation also gives the relevant tax authority the authority to automatically register and issue a Tax ID to individuals who should apply for one but do not. These requirements are part of larger efforts to ensure that all individuals and entities involved in financial activities are properly registered for tax purposes.

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.