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Business and EconomyFinance bill makes tax ID compulsory to open accounts

Finance bill makes tax ID compulsory to open accounts

OrderPaperToday – The Finance bill 2021, forwarded by President Muhammadu Buhari to the National Assembly on Tuesday, has scaled second reading in the Senate.

A key provision in the bill is that bank accounts may no longer be opened without Tax Identification Numbers (TIN) by individuals and corporate organizations in Nigeria.

The bill which was presented by the Senate Leader, Yahaya Abdullahi (Kebbi North) at plenary on Wednesday, sought to amend seven different tax laws with the ultimate aim of shoring up government revenues.

Leading the debate on the bill, Sen. Abdullahi noted that the amendment would promote fiscal equity, reform domestic tax laws to align with global best practices, introduce tax incentives for investments in infrastructure and capital markets, support MSMEs, and raise revenues for government.

“Some areas which the legislation seeks to amend are the contentious commencement and cessation rules in the Companies Income Tax Act.

“The effect of these rules is that companies suffer tax twice on profits of at least 12 months, when they commence business. Conversely, on cessation of business, a period of up to 12 months escapes tax. The removal of these rules is considered a welcome development.

“Anti-avoidance provisions for business reorganization empowers the FIRS to grant certain exemptions on group reorganizations, where certain criteria are fulfilled”, he explained.

The lawmaker also noted that  bill sought to amend the Personal Income Tax for the removal of conditions attached to tax exemptions, the introduction of penalty for failure to deduct tax, and provision of Tax Identification Number (TIN) for opening bank accounts by individuals.

“Many of the changes are expected to have positive impacts on investments and ease of paying taxes especially for MSMEs. Going forward, we hope that changes to the tax laws would be on an annual basis to ensure that Nigeria’s tax system continues to evolve in line with economic conditions.

“I believe that this Bill is tailored to meet the critical needs of this country at this point of our democratic evolution and economic situation,” the Senator stated.

President Buhari, had in a letter to the Senate explained that the request for the passage of the Finance bill was made pursuant to the provisions of Sections 58 and 59 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended).

According to him, it seeks to support the implementation of the 2022 Federal Budget of Economic Growth and Sustainability by proposing key reforms to specific taxation, customs, excise, fiscal and other relevant laws.

Buhari also mentioned that the bill provides for enhanced Domestic Revenue Mobilization efforts to increase tax and non-tax revenues; and ensure Tax Administration and Legislative Drafting Reforms, particularly to support the ongoing automation reforms by the Federal Inland Revenue Service.

The bill, after scaling second reading, was referred to the Committees on Finance; Customs and Trade and Investment with a mandate to report back to plenary next week Tuesday.

 

Ojochenemi Onje-James
Ojochenemi Onje-James
Ojochenemi Onje-James is a research writer and journalist with years of proven footprints in areas of crime and politics. She has M.Sc in International Relations and Strategic Studies; and B.Sc in Mass Communication.
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