Allow more time for TIN

A FinanceBill that President Muhammadu Buharirecently sent to the National Assembly along with the 2020 budget was designed to,among others,streamline the tax regime. It amends sections 33, 49 & 58 of the Personal Income Tax Act, PITA.  Theseamendments cover the deletion of provisions that grant certain personal reliefs and also the deductibility of pension contributions.

Amendment of PITA provides that henceforth, individuals would be required to produce their Tax Identification Numbers (TINs) before they can operate new or existing bank accounts in Nigeria.According Finance Minister Mrs. Zainab Ahmed, the bill when signed into law will take effect from January 2, 2020.Its main goal is to ensure that more people are captured into the tax net.

TIN is a requirement for every taxable individual in Nigeria. A taxable individual is anyone that earns an income and/or is paid an income by an organization irrespective of age. These include foreigners working in Nigeria. TIN does not take away an individual’s tax relief or exemptions but confirms that a person is registered for tax purposes.According to the Joint Tax Board [JTB], applying for TIN is free. TIN is a unique identifier for an individual or a company for tax remittance. TIN is prepared by the tax office and issued for proper identification and verification.

When signed into law, the duties currently performed by JTB as it relates to administering PITA will now be performed by Federal Inland Revenue Service, FIRS. The bill prescribesa 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.

According toJTB, individuals are automatically assigned with a TIN based on their Bank Verification Number [BVN] or National Identity Number, NIN. This presupposes that before one can have a TIN, he or she must be enrolled in BVN and/or NIN. Thus,individuals that already have BVN or NINare likely to have been assigned a TIN. Individuals who are employees in an organization that remits PAYE may already have some form of tax identification from the State Internal Revenue Service. JTB shall, however,have to harmonize tax ID numbers. Persons who are students, self-employed or live in the diaspora are expected to also obtain a TIN. TIN only confirms that the individual is a registered tax payer in Nigeria. It is neither a confirmation of a deduction of tax from source nor does it confirm that an individual has paid his tax.

The present resolve by the federal government to capture more taxpayers into its tax net is one of the deliberate attempts intended to widen its revenue base in view of the growing economic liabilities occasioned by huge infrastructural demands. The recent increase in VAT is another income measure. However, the January 2, 2020 deadline given to individuals operating bank accounts to obtain TIN is a short noticethat could disrupt the normal flow of business activities in the first week of the New Year, 2020.There would be confusion in few weeks to come if millions of bank account owners are denied access to carry out transactions due to their inability to obtain TIN.

The limited time given for the enforcement of TIN could force many who operate bank accounts to return to the old practice of keeping money at home for fear of their accounts being blocked at the expiration of the deadline.Thiswould defeat CBN’s cashless policy. Besides, it would be inappropriate to enforce TIN policy if it is not signed into law before January 2020. We advise that the enforcement of TIN should be preceded by adequate period of time during which the public wouldbe sufficiently sensitized. In order to forestall any confusion and allow most individuals to obtain TIN, we recommend for a shift of the proposed deadline by at least three or six months.