This directive is part of the Nigeria Tax Administration Act, 2025, which was recently signed into law by President Bola Ahmed Tinubu.
Provisions of the Act
According to Part II, Section 4 of the legislation, every taxable person in Nigeria must register with the appropriate tax authority and obtain a Tax ID for compliance purposes. Government ministries, departments, and agencies (MDAs) at the federal, state, and local levels are also required to register.
The Act further stipulates that non-resident individuals and entities supplying taxable goods or services in Nigeria must secure a Tax ID, thereby ensuring that they are brought under the country’s tax net.
Section 7 empowers the relevant tax authority to issue a Tax ID to persons who fail to apply, while also granting it the right to deny applications where irregularities are discovered. Applicants must, however, be notified of such decisions within five working days.
Financial Services and Contracts Now Dependent on Tax ID
The legislation makes the Tax ID a prerequisite for financial and commercial activities:
- No Tax ID, no bank account.
- No Tax ID, no insurance or stock exchange participation.
- No Tax ID, no federal or state government contracts.
This condition will take effect from January 2026, making tax compliance a core requirement for access to financial services and public contracts.
Suspension and Deregistration Options
The Act provides flexibility for businesses that wish to suspend or cease operations. Tax IDs can be placed on “dormant” status if operations are suspended temporarily, while businesses that permanently cease operations must deregister within 30 days of closure.
Expanded Powers for the Revenue Service
The accompanying Nigeria Revenue Service Act, 2025, grants significant authority to the tax body. The Executive Chairman of the Service will also chair its Governing Board, with a four-year renewable tenure.
The Board will comprise high-ranking representatives from the Ministry of Finance, National Planning, the Attorney-General of the Federation, the Ministry of Petroleum, the Central Bank of Nigeria, Customs, the Corporate Affairs Commission, and the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), alongside executive directors appointed by the President.
The Service is further empowered to fund its operations through a 4% deduction from collected revenues, excluding petroleum royalties.
Implications
Analysts say the move is part of the Federal Government’s efforts to broaden Nigeria’s tax base and enhance revenue generation amid rising economic challenges. However, the enforcement of the Act may pose initial challenges for individuals and businesses yet to formalize their tax status before the 2026 deadline.
