The new Finance Bill, if signed into law, may now compelled banks to demand for customers Tax Identification Number (TIN) before an account could be opened or operate in the country.
In October 2019, President Muhammadu Buhari submitted the Finance Bill 2019 to the National Assembly, seeking a sweeping change to Nigeria’s outdated corporate tax laws. The bill, if signed into law, is expected to address most of the challenges with Nigeria’s corporate tax laws, ease payments of taxes, and ultimately increase government revenues.
According to Section 2 of the Finance Bill, Every person engaged in banking in Nigerian shall require all companies to provide their tax identification number as a precondition for opening a bank account, or in the case of an account already opened prior to September 30th 2019, the bank shall require such tax identification number to be provided by all companies as a precondition for the continued operation of the bank account.
Banks will be required to request Tax Identification Numbers (TINs) before opening accounts for individuals while existing account holders must provide their TINs to continue operating their accounts.
With this law, the TIN is now a critical KYC information required by banks, which inadvertently gives the FIRS access into the banking transactions of taxpayers.
The Finance Bill also gives the FIRS and the State Inland Revenue Service complete access to transactions in the bank accounts of businesses. The provision is obviously aimed at increasing the government’s revenue, giving them unfettered access into the bank accounts of millions of Nigerian companies.
According to an analysis of the Finance Bill by accounting firm, PWC, “there is also a deliberate effort to ensure that the sector contributes to revenue generation without excessive financial burden. An area of focus for the government would be to formalise these businesses through the TIN project in collaboration with the banks.”
As far as Managing Partner, Prime Consult, Dr Gbenga Adebayo, is concerned, the primary objective of the bill is the generation of additional revenues for the government to potentially partly finance the deficit in the 2020 Budget of the FGN.
He explained that requesting TIN connotes that the Federal Government is determined to ensure that everyone pays tax, and would be ready to enforce remittance from the source or ask the bank to freeze the account of defaulters.
Adebayo said, “FIRS has been freezing the accounts of tax defaulters, and insisting on TINs of both new and existing account holders is a drastic move to enforce compliance. The TIN could be used to monitor/track people’s accounts and curb default.”