Without system thinking and inter-agency coordination, reform risks duplication, confusion, and deeper distrust.
By OLARINRE SALAKO, Ph.D.
Introduction
When governments set out to modernize tax administration, citizens expect efficiency and simplification. Unfortunately, Nigeria’s new Tax Administration Act, 2025 (NTAA), signed into law by President Bola Ahmed Tinubu on June 26, 2025, risks achieving the opposite.
From January 1, 2026, every “taxable person”—individuals who earn income, companies, and non-residents deriving income from Nigeria—must register with a tax authority and obtain a Taxpayer Identification Number (Tax ID). Section 21 requires registration, while Section 21(2) compels banks, insurers, and brokers to demand it before providing services.
The Presidential Fiscal Policy & Tax Reforms Committee (PFPRC) has since issued an FAQ clarifying that non-taxable individuals are exempt and that National Identity Number (NIN) (for individuals) and Corporate Affairs Commission (CAC) Registered Company (RC) numbers (for companies) will eventually serve as Tax IDs. These clarifications are welcome. But because the Act itself is silent on integration, citizens remain anxious about duplication, over-enforcement, and new layers of red tape.
Companies vs. Individuals: A Crucial Distinction
For companies, Tax IDs make sense. A company is a legal entity with no biometric identity, just like U.S. firms that use Employer Identification Numbers (EINs).
For individuals, however, a new ID is redundant. Nigerians already carry biometric identifiers through the National Identification Number (NIN) and Bank Verification Number (BVN). Together, these uniquely tie people to government and financial records and should already suffice for taxation.
The FAQ promises that “ultimately” NIN will serve as Tax ID. But until this is written into law with a clear timeline, citizens fear they will be forced to line up again for yet another number.
How Other Countries Do It
The United States relies on the Social Security Number (SSN) for taxes and banking; only non-residents without SSNs get Individual Taxpayer Identification Number (ITINs) issued by the U.S. Internal Revenue Service (IRS).
The United Kingdom uses a single National Insurance (NI) number for both citizens and temporary residents. Canada relies on the Social Insurance Number (SIN), which the Canada Revenue Agency (CRA) securely shares with banks—seamless integration, no duplication.
I have lived in these countries and functioned with one number.
The story is similar outside the West. In South Africa, every citizen has a 13-digit national ID that doubles as a tax reference number. In India, taxpayers use a PAN (Permanent Account Number), but it must be linked to Aadhaar, the biometric national ID. Aadhaar verification is required for new PAN applications, and unlinked PANs are inoperative. This integration curbs fraud while keeping the system simple.
Across these countries, the principle is the same: design reforms around one trusted identifier. Nigeria, by contrast, asks its citizens to juggle NIN, BVN, and now Tax ID—an unnecessary burden in a country already struggling with complexity.
Beyond Banking: A Wider Net
The NTAA goes further than many realize. Section 7 requires Tax IDs for filing returns, while Section 8 mandates them for contracts with ministries, departments, and agencies. Banks must also file quarterly reports, flagging high-value transactions—over ₦25 million for individuals and ₦100 million for companies monthly.
What does this mean in practice? A farmer in Benue who wants to supply yams to a government school feeding program cannot sign a contract without a Tax ID. A market woman in Onitsha cannot get shop insurance. An SME in Lagos bidding for a state project is locked out if their Tax ID is missing.
The FAQ insists this isn’t new—TIN requirements date back to the Finance Act 2019. But the NTAA expands and enforces them across every level of government. For ordinary citizens, the fear is simple: no Tax ID, no banking, no contracts, no insurance, no participation in the formal economy.
Penalties and Enforcement
The Act gives tax authorities sweeping powers. Section 4(4) allows “best judgment” assessments if a person fails to register, while Section 94 covers general offenses with fines or imprisonment. Combined with Section 21’s banking restrictions, Nigerians risk being punished not for evasion, but for bureaucracy.
Even banks are left uncertain: how will they determine who counts as “taxable”? The Act leaves this critical question unresolved.
Simplicity for All Nigerians
Any reform that complicates identification ignores the reality that millions of Nigerians are unlettered or have limited digital literacy. For them, juggling BVN, NIN, and now Tax ID is not just inconvenient—it is exclusionary.
In a country where 40% of citizens still lack formal IDs, piling on mandates without integration risks widening inequality. A truly modern tax system must be simple enough that even a market trader in Kano, a fisherman in Bayelsa, or a farmer in Benue can comply without confusion.
One identifier—NIN, already linked to BVN—is enough to bring every Nigerian into the tax net without multiplying bureaucracy. Sections 4–8 unify TINs within the tax system but say nothing about linking NIN or BVN. The FAQ promises harmonization “ultimately,” but offers no deadline. Will it be 2026? 2027? Nigerians deserve clarity, not vague assurances.
One is left to wonder if President Tinubu or his aides actually reviewed this Act in detail before signing it—or if the implications for ordinary citizens were overlooked.
A Call to Action
To be clear, the goal of the NTAA is laudable. Nigeria urgently needs broader tax coverage, digitization, and fairer enforcement. These reforms are long overdue, and the Tinubu administration deserves credit for taking them on. But in fixing a broken system, government must take care not to complicate it further. Real reform is measured by how simple and usable it becomes for citizens.
The NTAA aims to modernize, but without mandated NIN/BVN integration it risks creating digitized chaos. Lawmakers should amend the Act to:
- Mandate NIN as the universal Tax ID for individuals by mid-2026.
- Retain Tax IDs for companies and non-residents without biometrics.
- Require cross-agency data sharing among FIRS, NIMC, and CBN to eliminate duplication and ensure integration.
Globally, successful reforms thrive on interoperability, not proliferation. Estonia’s e-ID, for example, allows agencies from tax to healthcare to pull from one secure system. Nigeria can leapfrog if it mandates API-level data sharing now, instead of forcing citizens to chase redundant IDs.
True reform requires simplification before implementation. Instead of rushing to enforce new tax law, government should first harmonize NIN and BVN, test integration across agencies, and then expand the tax net. Without this sequencing, citizens will be forced to navigate confusion that could have been avoided.
Conclusion
At this critical moment, Nigeria needs not more hurdles but a smarter approach—one that uses NIN as the single identifier, leverages BVN to capture financial activity, and ensures agencies work together instead of in silos. Only then can we build a tax system that is simple, fair, and trusted.
The NTAA reflects an important effort to bring order and transparency to Nigeria’s chaotic tax system. But a good idea can falter in execution if it multiplies burdens for the very people it is meant to serve. The challenge before government is not only to modernize, but to simplify.
And this lesson goes beyond taxation. The electricity sector remains crippled because regulators, generators, and distributors act in isolation—witness the national grid collapse just two days ago. Transport networks—road, rail, and ports—fail to connect seamlessly. Hospitals and schools lack digital platforms linked to identity and financing systems that could target subsidies and improve services.
In each case, the problem is the same: Nigeria builds fragments instead of systems. Until coordination becomes the norm, even well-intentioned reforms will collapse under their own complexity.
True leadership means making governance seamless for citizens—whether paying taxes, electricity bills, or accessing healthcare. That is the simplicity Nigerians deserve, and the kind of reform this moment demands.
About the Author
Dr. Olarinre Salako is a multi-disciplinary scientist, engineer, and consultant based in Texas, USA. His expertise spans energy, oil and gas, automotive, data analytics, and artificial intelligence. Formerly a research scientist at the Energy and Environmental Research Center, he contributed to pioneering technologies and best practices for energy transition in multi-million-dollar U.S. Department of Energy projects. He has also consulted for Toyota on Data & AI for vehicle safety and electrification, resulting in 10 patented inventions. In addition, he is a U.S. Department of Justice Fully Accredited Representative on Immigration Law. Born in Òyó town, Nigeria, Dr. Salako is passionate about nation-building—hence his deep interest in public affairs analysis and global comparative study.