Finance Bill: No TIN Requirement For Bank Account Opening, Says Presidency

The Presidency has eased people’s fears by making it clear that there were no provisions in the 2021 finance bill mandating Nigerians to have tax identification numbers (TINs) to operate bank accounts.

With so many documentation requirements tangled up in one process or another, many feared that requiring them to provide a TIN document would deprive them of the ability to operate a bank account.

TIN, which stands for Tax Identification Number, is a unique number allocated and issued to identify a person (individual or company) as a duly registered taxpayer in Nigeria.

A recent report quoted a lawmaker, claiming that there are provisions in the bill that "banks will be required to request a TIN before opening bank accounts for individuals while existing account holders must provide their TIN in order to continue operating their accounts."

Further examination showed that there was no provision for a TIN requirement in the 2021 Finance Bill.

Apparently, the only amendment discovered in the 2021 finance bill was section 10 of the Value-Added Tax (VAT) to mandate TIN for non-resident individuals making a taxable supply to Nigeria.

"For the purpose of this Act, a non-resident person that makes a taxable supply to Nigeria shall register for tax with the Service (FIRS) and obtain a Tax Identification Number", the bill reads.

"A non-resident person shall include the tax on its invoice for all taxable supplies."

According to the presidency, there would be 21 main changes proposed under the bill which would be further defended this week in both the senate and the house of representatives. 

"Capital gains tax at the rate of 5 percent would be applicable on the disposal of shares in a Nigerian company worth N500 million or more in any 12 consecutive months, except where the proceeds are reinvested in the shares of any Nigerian company within the same year of assessment," the statement reads.

Other areas sorted out in the new finance law include issues related to lottery and gaming businesses, share transfers, and companies engaged in petroleum operations.

The transfer of shares under the regulated Security Lending Transaction is exempt. 

Lottery and gaming businesses are specifically taxable under CITA, including betting, the games of chance, promotional competition, gambling, wagering, video poker, roulette, craps, bingo, slot or gaming machines, and the like. 

Companies engaged in petroleum operations, including midstream and downstream operations, will not be eligible for exemption on profits in respect of goods exported from Nigeria. Downstream companies were previously eligible under the old upstream and downstream classifications. 

"FIRS to be empowered to assess CIT on the turnover of a foreign digital company involved in transmitting, emitting, or receiving signals, sounds, messages, images, or data of any kind, including e-commerce, app stores, and online adverts. 

"Capital allowance claimable on an asset is limited to the portion used for generating taxable profits.

Assets partially used to generate taxable income will be eligible for a pro-rata capital allowance except where the proportion of non-taxable income does not exceed 20% of the total income of the company. 

"Any capital allowance or unabsorbed allowances brought forward by a small or medium company, other than a company under pioneer status, shall be treated as having been claimed and consumed in each such year of assessment. 

"The reduction of the minimum tax rate from 0.5 percent to 0.25 percent of turnover (less franked investment income) is to be applicable to any two accounting periods between 1 Jan 2019 and 31 Dec 2021 as may be chosen by the taxpayer. 

Disputed tax assessments are to be in abeyance until determination, while undisputed tax assessments are to be paid within 30 days after service of the notice of assessment on the company, except otherwise extended by the FIRS." Reference to provisional tax has been deleted in recognition of the well-established self-assessment tax regime. 

"Withholding tax on interest earned from a unit trust to be treated as a final tax." Only WHT on dividends is currently treated as a final tax for local companies. 

"The deployment of technology to automate tax administration, including assessment and information gathering by FIRS, now includes third-party technology (previously only proprietary technology may be deployed). 

A penalty of N50,000 will be applicable where a company fails to grant access to FIRS, in addition to N25,000 for each day the failure continues. 

"FIRS is to be the primary agency of the Federal Government responsible for the administration, assessment, collection, accounting, and enforcement of taxes and levies due to the federation, the federal government, and any of its agencies, except otherwise authorized by the finance minister. 

Any person or agency of the federal government must refer matters requiring tax investigation, enforcement, and compliance to the FIRS. 

Relevant officers who violate the rule are liable to a penalty of N10 million and/or 5 years’ imprisonment on conviction. 

"Deductible life assurance premium for personal income tax purposes to exclude a contract for a deferred annuity."

The finance minister, subject to the approval of the national assembly, shall make regulations for the imposition, administration, collection, and remittance, including the distribution of arrears of stamp duty and electronic money transfer levies collected between the 2015 and 2019 fiscal years. 

However, the highly controversial matter of who collects VAT still hasn’t been sorted out. The matter of who collects VAT between the states and the Federal Government is yet to be resolved by the judiciary.