Introduction
For several years, Nigeria has relied on annual Finance Acts (since 2019) to address gaps in its tax system. While these amendments offered short-term fixes, they could not deliver the comprehensive overhaul needed. Imagine still operating with tax provisions dating back to 1938 in 2025—such outdated laws cannot address modern economic realities or drive the sustainable growth the nation has been advocating.
One of the key challenges has been the imbalance between progressive and regressive taxation. In practice, lower-income earners often bear a heavier relative tax burden than high-net-worth individuals. This imbalance has been worsened by tax evasion strategies and Base Erosion and Profit Shifting (BEPS) loopholes exploited by multinational companies.
The newly enacted tax reform acts represent a landmark shift. They consolidate over 110 separate taxes and levies into a simplified, unified framework, align tax obligations more closely with present-day business realities, and ensure that higher earners contribute a fairer share. Some notable features include:
- Exemption for loss-making companies from tax obligations.
- Expanded personal income tax brackets, providing relief for individuals.
- Resolution of long-standing ambiguities, such as clarity around responsibility under the Stamp Duties Act.
These reforms aim to place Nigeria on a stronger footing, boosting the Tax-to-GDP ratio and modernizing the system. However, the true test lies in effective implementation and enforcement.
The Four Reform Acts Approved
- Nigeria Tax Administration Act (NTAA)
- Nigeria Revenue Service (Establishment) Act
- Joint Revenue Board (Establishment) Act
- Nigeria Tax Act
Among these, the Nigeria Tax Administration Act (NTAA) introduces a key requirement: the mandatory use of Tax Identification Numbers (Tax IDs) for certain transactions. Although the idea of Tax IDs is not entirely new—it was first introduced in the Finance Act 2019, which amended Section 49 of the Personal Income Tax Act—the NTAA harmonizes, strengthens, and expands its application.
Understandably, many Nigerians are asking: What does this mean for banking, businesses, and everyday life? Below are the highlights.
Key Highlights of the NTAA and Tax ID Requirement
- 1. Mandatory Registration & Tax ID Availability
Section 4 of the NTAA requires all taxable persons to register with the tax authority and obtain a Tax ID.
A taxable person is anyone engaged in trade, business, or economic activity for income.
Banks and financial institutions are now required to request a Tax ID from taxable persons before opening accounts or processing transactions.
Implication:
Individuals or unincorporated businesses: Your personal Tax ID (linked to your NIN) is sufficient.
Companies, NGOs, and incorporated trustees: A Tax ID is automatically generated upon CAC registration. If your business was registered without one in the past, you must visit the FIRS to obtain it.
Non-taxable individuals (e.g., students, retirees without income) are not required to obtain a Tax ID.
- Unification of Identification Numbers
The reform harmonizes different TINs issued by the FIRS, NRS, JTB, and State IRS into one Tax ID.
For individuals, your NIN will serve as your Tax ID.
For companies, your CAC RC number will serve as your Tax ID.
Existing TINs remain valid; if you already have one, you are compliant.
- Foreign Companies, Diaspora Nigerians & Non-Residents
Foreign companies or non-resident entities supplying goods or services to Nigerian customers must register for a Tax ID.
Nigerians in the diaspora can use their NIN to obtain a Tax ID for banking, investments, or other transactions. A simplified process on how to generate NIN has been introduced. You can kindly visit the NIMC website for details.
Non-resident entities earning only passive income (dividends, interest, royalties, rent) are not required to register, as such income is taxed at source.
- Government MDAs & State Entities
Section 5 of the NTAA makes it mandatory for all ministries, departments, agencies, and government-owned enterprises (federal, state, and local) to register and obtain a Tax ID.
- 5. Implementation Timeline & Sanctions
The reforms under the Nigeria Tax Act and NTAA take effect from 1st January 2026.
From this date, any taxable person or company without a Tax ID will not be able to:
- Operate a bank account,
- Open or maintain an insurance policy,
- Contribute to a pension account, or
- Make investments.
Please note that, Sanctions for non-compliance will apply. And Individuals who are not taxable persons remain exempt.
What This Means for You
It is critical for all businesses and individuals engaged in taxable activities to register and obtain a Tax ID. Whether it is your NIN, CAC RC number, or existing TIN, ensure your records are up to date to avoid disruptions. Failure to comply could result in sanctions or the inability to carry out essential financial transactions.
Disclaimer
This newsletter is for information purposes only and does not constitute professional tax advice. For specific guidance tailored to your situation, please contact:
AAwotunde@coronationmb.com,WYusuf@coronationmb.com,JSoleye@coronationmb.com KAkinlotan@coronationmb.com, UAdeyemi@coronationmb.com
