The Bill, submitted to the lawmakers with Budget 2020 by President Muhammadu Buhari, is designed to improve financial operations of the country and streamline the tax regime.
Evidence of tax payment will be a condition for operating a bank account from January, according to the Financial bill passed by the National Assembly.
It is expected to be signed with the budget before end of the month, to actualise the return to the January – December budget cycle.
According to a section of the Bill, banks will require anybody opening an account to provide his Tax Identification Number (TIN)
Those who already have accounts with banks will also be required to provide their TIN.
There are 30 million Bank Verification Numbers (BVN)-linked accounts.
The intention is to make sure that more people are captured into the tax net.
According to the Joint Tax Board, the tax identification number (TIN) is a unique identifier for an individual or a company for tax remittance.
The TIN is prepared by the tax office and issued for proper identification and verification.
Applying for TIN is free. The TIN generation process is real-time and should not exceed 48 hours after a request is submitted.
Another major feature of the Financial Bill is the hike in Value Added Tax (VAT) to 7.5 per cent from the extant five per cent.
Also in the bill, emails will be accepted by the tax authorities as a formal channel of correspondence with taxpayers.
The bill will also strategically “promote fiscal equity by mitigating instances of regressive taxation; reform domestic tax laws to align with global best practices; introduce tax incentives for investments in infrastructure and capital markets; support small businesses in line with the ongoing Ease of Doing Business Reforms; and raise revenues for the Government by various fiscal measures.”
Under the proposed Personal Income Tax Act: the bill will state that pension contributions no longer require the approval of the Joint Tax Board (JTB) to be tax-deductible.
The bill when signed into law, will remove the tax exemption on withdrawals from pension schemes except the prescribed conditions are met.
The bill will come up with a penalty for failure to deduct tax by agents appointed for tax deduction. This penalty is 10 per cent of the tax not deducted, plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria (CBN).