By John Umeh
The Federal Government has announced that beginning January 1, 2026, all taxable Nigerians must obtain a Taxpayer Identification Number (Tax ID) in line with the newly enacted Nigeria Tax Administration Act, 2025.
Signed into law by President Bola Tinubu, the legislation is designed to modernize tax administration, widen the nation’s tax base, and boost government revenue at a time when oil income continues to dwindle.
According to the Act, every taxable individual and business entity is required to register with the relevant authority to obtain a Tax ID card. The rule extends beyond residents to include non-resident companies or individuals supplying taxable goods and services in Nigeria.
The law also makes the Tax ID a prerequisite for entering government contracts and carrying out financial activities, including opening or operating bank accounts, taking out insurance, investing in stocks, or accessing other financial services.
To enforce compliance, tax authorities have been empowered to assign Tax IDs automatically where taxpayers fail to apply, though applications can also be declined if discrepancies are found. Applicants must be informed of such decisions within five working days.
The Act further provides for temporary suspension or full deregistration of Tax IDs where businesses halt operations, ensuring a mechanism for accurate records.
At the heart of the reform is the creation of the Nigeria Revenue Service (NRS) as the central tax authority. The agency, headed by an Executive Chairman who also chairs its Governing Board, will retain four percent of all revenue collected (excluding petroleum royalties) as operational funding.
The Governing Board will comprise representatives from the Ministry of Finance, Ministry of National Planning, the Attorney-General’s office, the Central Bank of Nigeria, the Revenue Mobilisation Allocation and Fiscal Commission, the Nigerian Customs Service, and the Corporate Affairs Commission.
Government officials say the compulsory Tax ID is part of a broader strategy to tackle tax evasion, formalize the informal economy, and reduce reliance on borrowing. Nigeria’s tax-to-GDP ratio currently sits below 10 percent—far behind African peers like South Africa, where it exceeds 25 percent.
