Whether you’re starting a business, opening a bank account, or simply trying to comply with the law, your TIN (or “tax ID” as it’s now officially called under the new legislation) is your unique fingerprint in the nation’s tax system. With the Nigeria Tax Act 2025 entering into effect January 1, 2025, understanding what the law says about this crucial identifier has never been more important.
What’s New Under the Tax Administration Act, 2025
The Nigeria Tax Act 2025 refers to a Tax Identification Number, as “tax ID.” It is a unique number assigned to every taxpayer in Nigeria for identification and tracking purposes. The tax ID serves as a permanent identifier that follows you throughout your financial life and links all your tax obligations and transactions to a single, verifiable identity.
The Nigeria Tax Act, 2025 introduces a unified system that makes the Tax ID the core of every taxpayer’s identity. Under the Act, the National Revenue Service (NRS), which replaces the Federal Inland Revenue Service (FIRS) serves as the primary authority responsible for issuing and managing TINs.
Who Needs a TIN?
1. All Companies Operating in Nigeria
Every Nigerian company must have a tax ID. The Act defines a Nigerian company as any company “formed, registered or incorporated under any law in Nigeria,” or whose “central place of management or control is Nigeria,” or whose “effective place of management or control is Nigeria” (Section 202). In other words, any company registered under the CAMA of 2020. This includes:
- Large corporations subject to the standard 30% corporate income tax rate (Section 56)
- Small companies (those earning ₦50,000,000 or less annually with fixed assets not exceeding ₦250,000,000) who pay 0% tax but must still maintain registration
- Foreign companies with a permanent establishment in Nigeria
- Non-profit organizations and charitable entities, even though they may be exempt from certain taxes
2. Self-Employed Individuals and Professionals
If you operate any form of business, trade, or professional practice from which income is generated, you need a tax ID.
3. Employees
While employers typically handle withholding for employees, individuals earning employment income are still part of the tax system. The Act establishes progressive tax rates for individuals ranging from 0% to 25% (Fourth Schedule), with the first ₦800,000 of taxable income exempt from tax.
Notably, the Act provides that “income of a person from an employment where such person earns gross income of National Minimum Wage or less from such employment” is exempt from tax (Section 163). However, this exemption doesn’t eliminate the need for a TIN to document that exemption.
4. Non-Resident Persons Conducting Business in Nigeria
The Act is clear that non-residents conducting business in Nigeria fall under its purview. For VAT purposes, the Act specifically addresses non-residents: “A non-resident person who makes taxable supplies to Nigeria shall register for tax and include VAT on its invoice for all taxable supplies” (Section 151). Registration for tax necessitates obtaining a tax ID.
Instances Where You’ll Require Your TIN
The Nigeria Tax Act 2025 contains numerous provisions that implicitly or explicitly require a tax ID for compliance:
1. VAT Invoicing and Compliance
The Act requires that VAT invoices contain specific information, including the “supplier’s tax ID” (Section 153). This means every VAT-registered person – anyone making taxable supplies – must display their tax ID on all tax invoices. Given that VAT is charged at 7.5% on most goods and services, this affects millions of transactions daily.
2. Withholding Tax and Tax Deductions
Without a tax ID, your business partners cannot properly account for taxes withheld from payments to you, potentially leading to double taxation or compliance issues.
3. Claiming Tax Credits and Deductions
The Act provides numerous deductions and incentives. For example, companies can claim deductions for “any sum payable by way of interest on debt employed in generating the income” (Section 20), donations to qualified organizations (Section 164), and research and development expenses (Section 165). To claim these benefits, you must be properly registered in the tax system with a valid tax ID.
4. Economic Development Incentives
The Act introduces an economic development incentive scheme for priority sectors that offers significant tax benefits. Companies in sectors like agriculture, manufacturing, renewable energy, and technology can qualify for tax holidays and credits (Sections 166-183). However, applications for these incentives require full tax registration.
5. Business Restructuring and Transactions
The Act contains detailed provisions on business restructuring, including mergers, acquisitions, and asset transfers (Section 190). Tracking these transferred benefits requires clear identification of all parties, making tax IDs essential for such transactions.
6. Stamp Duties on Instruments
The Act imposes stamp duties on various instruments and transactions.. While the Act doesn’t explicitly mandate including tax IDs on all stamped instruments, proper identification of parties is necessary for tax administration, and tax authorities routinely require tax IDs for processing stamp duty payments.
Why the TIN Matters Now More Than Ever
The 2025 Act strengthens enforcement. Without a valid TIN:
- You cannot open or maintain a corporate bank account.
- You cannot bid for government contracts or obtain certain business licenses.
- Your tax filings, including VAT, income tax, or development levy, will not be processed.
- You could face fines or administrative penalties for non-registration or delayed registration.
Obtaining Your Tax ID: The Process
While the Nigeria Tax Act 2025 establishes what taxes apply, the Nigeria Tax Administration Act 2025 and the Nigeria Revenue Service (established under the Nigeria Revenue Service (Establishment) Act, 2025) govern the registration process. Here’s a general overview:
For Companies:
- Initiate Registration: Most company registrations now happen online through the Nigeria Revenue Service portal or integrated platforms linking the Corporate Affairs Commission with tax authorities.
- Provide Required Information: You’ll need your Certificate of Incorporation, Memorandum and Articles of Association, details of directors and shareholders, business address, and expected nature of business operations.
- Specify Business Activities: Given the Act’s sector-specific provisions (like the 0% rate for small companies or economic development incentives for priority sectors), accurately describing your business is crucial.
- Receive Your Tax ID: Upon successful registration, you’ll receive your unique tax ID, typically in the format TIN-XXXXXXXX-XXXX.
For Individuals:
- Gather Documentation: You’ll need valid identification (National ID, international passport, or driver’s license), proof of address, and details of your income source(s).
- Register Online or In-Person: The Nigeria Revenue Service offers online registration portals, though you can also register at designated tax offices.
- Specify Income Category: Whether you’re self-employed, employed, or earning from investments affects how your tax obligations are calculated under the progressive rate structure.
- Obtain Your Tax ID: You’ll receive your unique identification number for use in all tax matters.
If you already have a TIN from a previous registration, it will remain valid under the new regime. However, you may need to update your records with NRS to ensure full compliance with the 2025 tax regime which will enter into effect on January 1, 2026.
Digital Compliance and Future Integration
The 2025 Act signals a major step toward full digital tax integration. The NRS now links TINs directly with electronic invoicing, VAT filings and remittance systems. This means all taxable transactions, whether between businesses or across digital platforms, can now be automatically tracked through your registered TIN.
Over time, it is expected this system will merge with national digital identity infrastructure, to create a more transparent tax environment. For businesses, this also means less paperwork, faster filings and fewer disputes with tax authorities.
