New Requirements for Financial Services
The new legislation requires a Tax ID to be a prerequisite for using a wide range of financial services, including opening and operating a bank account and engaging in insurance and stock market activities. This is a significant change aimed at broadening the tax base and improving compliance.
Who Needs a Tax ID?
The law states that every "taxable person" must register for a Tax ID. This includes:
- All individuals and companies.
- Federal, state, and local government ministries, departments, and agencies.
- Non-resident individuals and companies that supply taxable goods and services in Nigeria.
The relevant tax authority is also empowered to issue a Tax ID to anyone who should have applied for one but failed to do so. Conversely, they can also refuse to issue a Tax ID if they have a valid reason, in which case they must inform the applicant within five business days.
Nigeria Revenue Service and Its Powers
The new tax framework also establishes the Nigeria Revenue Service (NRS), which replaces the Federal Inland Revenue Service (FIRS). The chairman of the NRS will hold a four-year term, renewable for another four years, and will chair the governing board. The NRS is primarily funded through a 4% deduction from the revenue it collects, excluding petroleum royalties.
The new tax reform acts aim to simplify tax collection, broaden the tax net, and enhance tax administration across all levels of government.
A video from News Central TV Africa discusses lawyer Femi Falana's views on the Nigerian justice system. This video sheds light on the broader context of justice and governance in Nigeria, which is relevant to the new tax laws and their implementation.