In a decisive move to modernize its revenue system and expand the tax net, the Federal Government of Nigeria has enacted a new law making the possession of a Taxpayer Identification Number (Tax ID) compulsory for all taxable individuals and entities.
The directive, a cornerstone of the newly signed Nigeria Tax Administration Act, 2025, is set to take effect from January 1, 2026.
President Bola Tinubu recently signed the legislation into law, marking a significant shift in the nation’s approach to tax collection. The Act aims to streamline tax administration, improve compliance, and ultimately strengthen government revenue for public services and infrastructure development.
The mandate is comprehensive. Under Part II, Section 4 of the Act, “Every taxable person shall register with the relevant tax authority and obtain a Taxpayer Identification Card (Tax ID) for the purpose of compliance with tax obligations.” This requirement extends beyond individuals to include all ministries, departments, and agencies (MDAs) across federal, state, and local government levels.
The law also casts a wide net to encompass international economic activity. Section 6 (1) stipulates that non-resident individuals or companies supplying taxable goods and services within Nigeria must also register for a Tax ID, bringing them formally under the purview of Nigerian tax obligations.
To ensure widespread adoption, the Act grants significant power to tax authorities. Section 7 (3) allows them to issue a Tax ID to individuals or entities who fail to apply voluntarily. Conversely, authorities also have the discretion to refuse issuance based on available information, though they must notify the applicant of any rejection within five working days.
READ: Seyi Tinubu Holds Roundtable with President Tinubu’s SSAs from All Six Geo-Political Zones
The integration of the Tax ID into core financial and commercial activities is a key feature of the new regime. Crucially, Section 8 establishes the Tax ID as a non-negotiable prerequisite for entering into any contracts with federal or state governments. Furthermore, it will be mandatory for operating bank accounts or engaging in a wide range of financial services, including insurance and stock market transactions, once the law takes effect.
The Act also provides clarity on the status of a Tax ID when business activities change. If a business temporarily ceases operations, its Tax ID can be classified as “dormant.” In the event of permanent closure, the ID can be fully deregistered, provided the tax authorities are notified within 30 days of closing down.
This sweeping reform represents a fundamental step towards formalizing Nigeria’s economy and creating a more robust and equitable tax infrastructure for the future.
