Friday, October 11, 2024 - The federal government is proposing a new bill 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.
The objective of the bill is to enhance tax compliance and improve
the country’s revenue collection process, according to the government.
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.
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