On 13th January, 2020, President Muhammadu Buhari signed the 2019 Finance Bill into Law. The said Finance Bill contains a lot of changes to our tax laws. According to the Presidency, the aim of the Bill is to increase the revenue generation capacity of the Federal Government. One of the peculiar additions to the Bill is the amendment of section 49 of the Personal Income Tax Act (PITA) as regards the requirement for opening or continued operation of accounts with banks.
Section 30 of the Finance Bill 2019 introduced an amendment to Section 49 of PITA, by introducing a new subsection (1) to the erstwhile provision, as follows:
49 (1)“Every person engaged in banking shall require that a person intending to open a bank account for the purposes of its business operations must provide a tax identification number as a precondition for opening such bank account or continued operation of a bank account.”
The implication of the above quoted law is that banks will now require their customers to provide their Tax Identification Number (TIN) to open or continue to maintain their accounts with the bank. In other words, before a customer can open a Corporate Account, such customer will be required to provide the TIN of his business entity.
An argument has however ensued on the applicability of the provision of Section 49 (1) of PITA to savings account. The posture that the bank will adopt in the implementation of Section 49 (1) of PITA to savings account is not yet clear, however, a literal interpretation of the Section 49 (1) of PITA shows that TIN is required in all accounts used for business purposes. It is a given that most people use their savings account for business transactions; this thus leaves such account holders liable to compliance with the new provision of Section 49 (1) of PITA.
CONCLUSION
The Ministry of Finance has announced that implementation of section 49(1) of PITA and some other provisions of the Finance Act, 2019 will commence from May 1, 2020. It is advised that anyone that uses his personal account for businesses purposes should get their TIN from their respective State Tax Boards before the implementation date in order to prevent a possible restriction on their accounts or prevent a late rush to get TINs at the state Tax Board as the implementation date approaches.
It must however be stated that TIN only confirms that an individual is a registered taxpayer in Nigeria. The provision of an individual’s TIN to the bank does not amount to a tax deduction at source neither does it confer the individual with an accreditation that he or she has fulfilled his or her tax obligations.