TIN policy: Many Nigerians may not be able to operate their accounts come January



Many Nigerians may not be able to operate their accounts by January 2, 2020 as some others may also not be able to open new accounts in any deposit money bank. This is because the Finance Bill which will, expectedly be signed into law by President Muhammadu Buhari on January 2, 2019, among other things, prescribes that individuals must possess their Tax Identification Numbers, TIN before they can own accounts as well as be able to operate same.


 

Of the 71.79 million account owners in Nigeria – with 38.5 million of them being BVN-connected accounts, not many will be able to withdraw money from their accounts next year. This will be when the presentation of TIN-before-you-operate-your-account kicks off early next year.

 

The Tax Identification Number, TIN is prepared by the tax office and issued to individuals or registered business/ incorporated companies for proper identification and verification. It is a unique identifier for an individual or a company for the specific purpose of tax remittance.

 

The TIN shows you are a registered tax payer in Nigeria. Underscoring the looming state of distress that the enforcement of the policy is likely to introduce, already, not a few Nigerian business owners are complaining that their bank accounts had been frozen by their banks at the behest of the Federal Inland Revenue Service, FIRS.

 

In a few days from now, the New Year will commence, and the government will once again be faced with the herculean task of looking for ways to fund its budget. The federal government will soon sign into law the budget of N10.59 trillion for the year 2020. And as is to be expected, the federal government must raise money to fund the budget which already has a deficit component of N2.5 trillion.

 

In order to pay for fixing the already identified infrastructure gap among other social needs for the country and her citizens, the leadership has devised creative means to achieve her objectives. This includes intensifying its tax drive, expanding the tax net and increasing tax amounts in other areas. It is also in this wise that all Nigerians who operate bank accounts must now show that they pay tax before they can do any form of transactions from those accounts from January 2020.

 

There are however fears that the policy might discourage many who in one way or another are not able to provide evidence of payment of tax from owning account or discontinuing operations of their accounts. Others appear uncomfortable that the exercise will be counter-productive to the Central Bank of Nigeria’s target to increase financial inclusion to 80 per cent by 2022.

 

However, a director in CBN who would not want his name mentioned in print said the apex bank was not afraid of any negative effect of the policy on financial inclusion adding’ ‘’when we get to that bridge we shall cross it’’.

 

In fact, another director in the CBN also said that the matter will be tackled amicably between the apex bank and the fiscal authorities in order that it does not affect its plans and focus to achieve growth in the economy.

 

However, while the deposit money banks are already jittery over the fact that the policy may reduce the numbers of their teeming customers and consequently reduce their quantum of deposits, most of them said there has been no circular to that effect yet from the apex bank. And on its part, though the FIRS says the policy was yet to be law since the bill has not been passed and signed, Nigerians are already panicking that their deposits may be trapped in the banks.

 

‘’The finance ministry are the only people that can guide us on that. Of course, you know the bill is yet to be passed. And the ministry must give a directive before we can act’’, said Wahab Gbadamosi, spokesman of FIRS.

 

Contacted, a spokesperson of one of the largest banks said that the bank was still in a waiting mode as the CBN ordinarily sends circulars to the banks to implement any policy it wants to push. “I learnt that the TIN system will come into effect on January 2, 2019 but we are yet to receive any order from the regulator for implementation”.

 

Analysts explain that the Finance Bill permits the FIRS and the State Inland Revenue Service unfettered access to transactions in the bank accounts of businesses.

 

Though no bank claims to have noticed a run, there are fears that many persons intend to remove their cash from the banks before the end of December.

 

The federal government had meant to use the policy to raise more revenue to finance its projects next year, notes an analyst from PriceWaterHouseCooper (PWC).

 

“There is also a deliberate effort to ensure that the sector contributes to revenue generation without excessive financial burden. An area of focus for the government would be to formalise these businesses through the TIN project, and in collaboration with the banks.” PWC added

 

According to Dr. Gbenga Adebayo, the Managing Partner, Prime Consult, the primary objective of the bill is the generation of additional revenues for the government to partly finance the deficit in the 2020 Budget of the FGN.

 

He argued that requesting TIN shows that the Federal Government was determined to ensure that everyone paid tax, and would be ready to enforce remittance from source or ask the bank to freeze the account of defaulters.

 

“FIRS have been freezing the accounts of tax defaulters, and insisting on TINs of both new and existing account holders is a drastic move to enforce compliance. The TIN could be used to monitor/and track people’s accounts and curb default,” revealed Adebayo

 

However, and in what may seem as a mitigating point, there is also the perspective that most people who are actively involved in financial activities are already expected to have their TIN numbers. So the policy may not have much material effect on the deposit money banks, argues Mr. Johnson Chukwu, the Managing Director/ CEO of Cowry Asset Management Limited.

 

According to him, the issue depends on the financial need of an individual.

 

He also explained that ‘those who have higher financial need will not be affected that much except for new persons who may want to open new accounts now. Of course, they may not be significant’’.

 

In a nation that is saddled with over half of the population officially classified as living below the poverty mark, as well as being one with a very high level of income disparity, analysts fear that indeed one of the telling effects of the policy would be to send the have-nots further out of the loop. Does someone want the masses dead?

 

While no one will admit to harbouring such morbid desires, however, Mr. Fred Nwaogazi said that he will go and remove the small amount of money he has left in the bank before the end of December, adding that since he is only a labourer who gets jobs once in a while, it will be a colossal disaster for his paltry cash holdings to be locked out of his reach by a policy that he does not understand.

 

Clearly, findings are that very many are yet to understand fully the issues around having a TIN number to operate their accounts and it may then be necessary to take steps to ensure that too much pain does not come to them in the process of its implementation.

 

 

 

 

Source: Business Hallmark