The Federal Government has made the possession of a Taxpayer Identification Number (Tax ID) compulsory for all taxable Nigerians, as well as for those engaging in banking, insurance, stocks, and allied financial services.
The directive will take effect from January 1, 2026, under the new Nigeria Tax Administration Act, 2025.
The legislation, recently signed into law by President Bola Tinubu, seeks to modernize Nigeria’s tax administration, expand the tax net, and strengthen government revenue.
According to 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 also applies to all ministries, departments, and agencies at federal, state, and local levels.
Non-resident individuals or companies supplying taxable goods and services in Nigeria are equally mandated to register for a Tax ID, as stipulated in Section 6 (1), making them subject to Nigerian tax obligations.
Section 7 (3) empowers tax authorities to issue a Tax ID to individuals or entities who fail to apply on their own, while also granting them the discretion to refuse issuance based on available information. Applicants must, however, be notified of any rejection within five working days.
The Act also ties the Tax ID directly to government contracts and financial participation. Section 8 makes it a prerequisite for entering into contracts with federal and state governments, while also requiring it for operating bank accounts or engaging in financial services once the law takes effect.
For businesses that cease operations, temporary or permanent, the Act provides mechanisms for suspension or deregistration of the Tax ID. If a business halts operations, the ID may be classified as “dormant,” while full deregistration applies in cases of permanent closure, provided notification is given within 30 days.
The Act also establishes the Nigeria Revenue Service (NRS) as the country’s central tax authority, vesting significant powers in its Executive Chairman. The Chairman doubles as head of the Governing Board and will serve a four-year renewable term.
The Board includes representatives from key institutions such as the Ministry of Finance, Ministry of National Planning, the Attorney-General of the Federation, the Central Bank of Nigeria, the Revenue Mobilisation Allocation and Fiscal Commission, the Nigerian Customs Service, and the Corporate Affairs Commission.
Funding for the Service is guaranteed under Section 22 (a), which provides that the NRS shall retain 4 percent of all revenues it collects, excluding petroleum royalties.
The compulsory Tax ID is part of wider efforts by the Tinubu administration to curb tax evasion, formalize more of the economy, and improve Nigeria’s revenue base amid mounting debt and dwindling oil income. Nigeria currently has one of the lowest tax-to-GDP ratios in Africa—below 10 percent—compared to countries like South Africa (over 25 percent).
