Economy
Lawmakers propose bill demanding tax ID to operate bank accounts
The National Assembly has on October 4, 2024, proposed a new bill that mandates tax ID for operating bank accounts.
The bill requires individuals engaged in banking activities to provide tax ID as a prerequisite for opening or running a bank account.
These bank activities include stock-broking, insurance or other financial services.
According to Punch, the bill is 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 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.”
It is reported to be part of broader efforts to ensure that all individuals are properly registered for tax purposes.
It also ensures that entities participating in financial activities are registered for taxation.
The bill also mandates tax ID for operating bank accounts by non-residents who receive money from Nigeria.
Those who provide taxable products or services are also required to register for taxes and acquire a Tax ID.
Non-residents who merely get passive income from investments in Nigeria, however, will not be needed to register.
Instead, they will just need to supply the pertinent data as directed by the relevant tax body.
Additionally, the proposed legislation gives the relevant tax authority the ability to automatically register and issue Tax IDs to anyone who should have applied for them but didn’t.
The tax authorities should timely notify the person of their registration and the tax ID’s issue.
What is Tax ID?
A Tax Identification Number (TIN) is a special number given to people, companies, and organizations in Nigeria for tax-related purposes.
It is often known as a Tax ID.
TINs are issued in order to facilitate effective tax administration, compliance, and payment tracing.
The Federal Inland Revenue Service (FIRS) is responsible for issuing TIN.
In Nigeria, the administration of taxes is significantly impacted by the TIN.
Compliance, openness, and effective revenue collection are guaranteed.
Nigeria’s economic growth might be bolstered by individuals and firms who comprehend the significance and procedure of obtaining a TIN.
Types of TINs in Nigeria
- Individual TIN: This is for personal income tax purposes.
- Business TIN: This is usually for companies, partnerships, and other business entities.
- Value Added Tax (VAT) TIN: For businesses registered for VAT.
Importance of TIN
- Tax Compliance: Necessary for paying taxes and submitting tax returns.
- Registration of Businesses: Required in order to register companies with the Corporate Affairs Commission (CAC).
- Opening a Bank Account: Necessary in order to open a bank account as there is a proposed bill that mandates tax ID for operating bank accounts.
- Government Contracts: Enrollment in government contracts is required.
- Loan applications: They might be necessary in order to apply for loans.
How to obtain a TIN in Nigeria
- Register online: By visiting the website of the Federal Inland Revenue Service (FIRS).
- Visit the FIRS office: You can register in person at any FIRS office across the country.
- State Internal Revenue Service: Open an account with the Internal Revenue Service of your state.
Required documents for individuals
- National ID card.
- Passport.
- Driver’s license.
- Utility bill.
Required documents for businesses
- CAC certificate.
- Business name registration.
- Memorandum and Articles of Association.
- Utility bill.
Advantages of TIN
- Simplified Tax Procedures: Automation of tax payment and filing.
- Better Transparency: More responsibility for taxes.
- Effective Revenue Gathering: Enhanced tax revenue gathering.
- Better Public Services: Infrastructure and public service funding.
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