From January 1, 2026, Nigerians and non-residents will not be able to open or operate a bank account without a Tax Identification number (Tax ID)

From January 1, 2026, Nigerians will face a new reality: no bank account, no business operation, and no access to financial services without a Taxpayer Identification Number. This reform is anchored in the Nigeria Tax Administration Act, 2025, signed into law by President Bola Tinubu in August. It is already being hailed as the most significant financial reform in decades.

The law makes tax compliance a precondition for participating in the financial system. While some citizens may initially view this as burdensome, the truth is that this policy represents a necessary, bold step toward building a sustainable national economy. For the first time, Nigeria is moving away from its dependency on oil revenues toward a citizen-driven taxation culture that is the backbone of prosperous nations.

For decades, Nigeria has had one of the weakest tax compliance records in the world. Out of a population of more than 200 million, only about 10 million are registered taxpayers, while more than 60 million Nigerians operate bank accounts. This mismatch has crippled government revenue and left the nation overly dependent on oil earnings, which are volatile and shrinking in relevance in a climate-conscious global economy.

The numbers speak for themselves. Nigeria’s tax-to-GDP ratio is a mere 10 per cent. Ghana stands at 13 per cent, Kenya at 16 per cent, South Africa at 27 per cent, and the global average is 34 per cent.

In practical terms, this means that while Nigeria has the largest economy in Africa, it collects far less in taxes compared to its peers, leaving public finances in a constant state of crisis. This explains why Nigeria’s budget deficits have widened, borrowing has increased, and infrastructure remains underfunded.

By mandating tax IDs for all financial transactions, the Federal Government hopes to close this dangerous gap, expand the tax net, and secure revenue to fund critical services such as healthcare, education, and infrastructure.