New Tax Acts and Tax ID Rules: What Nigerians Must Know About Banking, Business, and Daily Life

The recently enacted Nigeria Tax Administration Act (NTAA) is reshaping how taxation works in the country, with a strong emphasis on the use of Tax Identification Numbers (Tax IDs). While the development has sparked widespread conversations, many Nigerians are still asking: Who exactly needs a Tax ID? And how will this affect banking, businesses, and everyday transactions?

According to the NTAA, all taxable persons are required to register with the tax authority and obtain a Tax ID. A “taxable person” is defined as anyone engaged in trade, business, or any other income-generating economic activity. For this group, banks and other financial institutions must request a Tax ID before opening or maintaining accounts.

However, there are important clarifications. Individuals who do not earn income and are not considered taxable persons are not required to obtain a Tax ID. In other words, this is not a blanket rule for every Nigerian, but rather a regulation targeted at those with taxable earnings.

Some citizens have raised concerns about whether this is a new policy. Experts clarify that it is not. The requirement traces back to the Finance Act of 2019, which amended Section 49 of the Personal Income Tax Act. Since January 2020, anyone opening a business account has been legally required to provide a Tax Identification Number (TIN). What the NTAA has done is strengthen, harmonize, and expand enforcement of that earlier provision.

Officials note that the reforms are designed to create a fairer, more transparent tax system while ensuring citizens’ rights and data remain protected. The broader aim is to boost financial inclusion, improve compliance, and enhance government revenue without overburdening ordinary Nigerians.

The Fiscal Reforms Nigeria team has released a Frequently Asked Questions (FAQ) guide to clear misconceptions, stressing that safeguards are in place to prevent abuse while encouraging citizens and businesses to comply.

Lessons from 2019 to Date

Nigeria’s tax reform journey since 2019 has been a mixed bag of successes and struggles.

When the Finance Act of 2019 introduced compulsory Tax Identification Numbers (TIN) for business accounts in 2020, policymakers hailed it as a landmark reform to tackle widespread tax evasion and broaden Nigeria’s notoriously narrow tax base. The intention was clear: bring more businesses into the formal financial system, reduce leakages, and increase government revenue.

In practice, however, the rollout was far from smooth. Many small businesses complained about bureaucratic bottlenecks in obtaining TINs, while low levels of tax awareness meant compliance lagged. Some banks reported a slowdown in account openings by micro and small enterprises, as entrepreneurs feared the tax implications of registering formally.

On the positive side, the reform strengthened transparency in corporate banking. By linking business accounts to TINs, regulators gained better oversight of taxable activities. The Federal Inland Revenue Service (FIRS) also recorded improvements in identifying dormant or fraudulent accounts.

Yet, challenges remain. Nigeria’s tax-to-GDP ratio has hovered around 6–8%, one of the lowest globally and well below the African average of 15%. This reflects both structural issues—such as a large informal economy and weak enforcement—and deep-rooted mistrust between citizens and government over the use of tax revenues.

The NTAA now seeks to build on past lessons, not only tightening the rules but also emphasizing communication, safeguards, and financial inclusion. Analysts argue that for the reforms to succeed, authorities must strike a balance: enforcing compliance without discouraging small businesses or stifling economic activity.

Expert Commentary and Industry Voices

Officials at the Federal Inland Revenue Service (FIRS) say the new Act is a step in the right direction. “We are not trying to make life difficult for Nigerians,” explained a senior FIRS official who asked not to be named. “Our aim is to make sure that those who earn income contribute their fair share, while protecting people who are not taxable. This is how countries grow their tax base responsibly.”

Banks are also adjusting to the requirements. A compliance manager at one of Nigeria’s Tier-1 banks told this publication that the NTAA provides much-needed clarity. “Before now, there was confusion about whether individuals opening savings accounts needed a TIN. Now, we have clear guidance. For business accounts and taxable persons, it is mandatory, and we are fully aligned with that. For non-taxable individuals, banks will not insist unnecessarily.”

But small business owners remain cautious. Mrs. Olajumoke Adebayo, who runs a tailoring shop in Lagos, voiced concerns about red tape. “When I first tried to register for a TIN in 2020, it took me weeks of going to tax offices and filling forms. If government wants us to comply, they must make it easy and quick. Otherwise, many people will just avoid it.”

Tax analysts agree that the success of the NTAA will depend heavily on simplifying compliance and building trust. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has repeatedly emphasized that reforms must be about fairness and transparency, not just revenue collection. “Nigerians must see the link between paying taxes and getting value in public services. If government invests wisely in infrastructure, healthcare, and education, compliance will rise naturally,” he noted in a recent forum.

The Road Ahead

As Nigeria pushes forward with the NTAA, the stakes are high. The Act could become a cornerstone of financial transparency and tax justice, or it could repeat the pitfalls of past reforms if bureaucracy and mistrust persist.

For now, Nigerians—especially entrepreneurs and business owners—are watching closely to see whether this policy shift will strengthen confidence in the tax system or deepen the gulf between government and citizens.