The Federal Government has restated the mandatory use of Tax Identification Numbers (Tax IDs) for certain financial transactions, particularly in opening and operating bank accounts, as part of ongoing efforts to strengthen transparency and boost tax compliance.

The clarification follows renewed public interest in the Nigeria Tax Administration Act (NTAA), which mandates financial institutions to request Tax IDs from taxable persons before granting access to banking services. According to the Act, a “taxable person” is anyone engaged in trade, business, or other economic activities that generate income.

Explaining the provision, tax authorities noted that not every Nigerian is required to obtain a Tax ID. “Individuals who do not earn income and are not taxable persons are exempted from this requirement,” the Federal Inland Revenue Service (FIRS) explained in a public guidance note. This means the regulation primarily targets business owners, professionals, and others whose earnings fall under taxable income.

While some Nigerians expressed concern that the measure was a fresh policy, officials clarified that the requirement is not new. It has been in effect since the Finance Act of 2019, which amended section 49 of the Personal Income Tax Act. Since January 2020, individuals opening business accounts have been required to provide a Tax Identification Number (TIN). The NTAA only harmonises and expands enforcement to ensure uniform compliance across the financial system.

The move, according to FIRS, is intended to close loopholes that have historically enabled tax evasion, improve revenue mobilisation, and build a fairer system where everyone pays their share. Authorities further assured citizens that safeguards are in place to protect personal data and prevent misuse of taxpayer information.

Analysts say linking bank accounts to Tax IDs could also aid financial inclusion by ensuring that businesses operating in the informal sector are better integrated into the tax net, while still allowing individuals without taxable income to access personal banking services without undue barriers.

Stakeholders in the banking industry have pledged cooperation, noting that compliance with the NTAA is key to aligning Nigeria’s financial system with international best practices.

With Nigeria facing revenue pressures amid rising expenditure needs, the enforcement of Tax ID requirements is seen as a crucial step in broadening the tax base and reducing overdependence on oil revenue.

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