Here’s Why FG is Proposing NIN, Tax for Foreigners

The Federal Executive Council (FEC) has recently unveiled an amendment to the National Identity Management Commission Act (NIMC) and the introduction of a new Economy Stabilisation Bill. This is to streamline foreign nationals’ identification (NIN) and taxation processes, marking a pivotal shift in Nigeria’s approach to foreign residency and economic participation.

The FEC’s proposal is an amendment to the National Identity Management Commission Act No. 23, 2007. This amendment seeks to extend the issuance of the National Identification Number (NIN) to foreigners living in Nigeria. 

Traditionally, the NIMC framework has been exclusive to Nigerian citizens, but the proposed changes will include foreign nationals who have a taxable presence or generate income within the country. By doing so, the government aims to create a more inclusive and comprehensive identification system that captures all individuals contributing economically to Nigeria.

Introducing the Economy Stabilisation Bill

On the same day, the FEC presented the Economy Introducing the economy stabilization bill which is poised to introduce taxation measures for foreigners living and working in Nigeria. 

This bill is designed to broaden the scope of registrable persons to encompass foreign individuals with taxable income or sources in the country. Additionally, it mandates the use of the NIN for all transactions relevant to tax administration. 

This integration ensures that foreign nationals are systematically incorporated into Nigeria’s tax framework, enhancing the government’s ability to monitor and collect taxes efficiently.

Key provisions of the proposed legislation

An addition to the legislation is a new paragraph in Section 16, which states: “Any person, whether or not he is a citizen of Nigeria, who is deemed to be resident or otherwise subject to tax in Nigeria under any legislation in force in Nigeria.” 

This clause explicitly includes foreigners who are considered residents or have taxable income within Nigeria, ensuring they are subject to the same tax obligations as Nigerian citizens.

If these bills are enacted, expatriates and income-earning immigrants will be required to pay taxes, aligning their responsibilities with those of local residents. This move is expected to generate additional revenue for the government while also promoting fairness in the tax system by ensuring that all contributors are accounted for.

Government’s rationale behind the proposals

Mr. Bayo Onanuga, the Special Adviser to the President on Information and Strategy, provided clarity on the government’s intentions during a briefing at the Aso Rock Villa in Abuja. 

He emphasized that the introduction of the NIN for foreigners is a step towards integrating them into Nigeria’s economic and administrative systems. “Once you are working here and earning income, you will be registered and given a NIN so that you can be taxed,” Onanuga explained. This registration not only facilitates tax collection but also provides foreigners with a formal tax identity within the country.

Onanuga also highlighted that the existing NIMC framework does not accommodate foreigners, making this amendment a necessary evolution to address the growing presence of expatriates and immigrants in Nigeria’s workforce.

Promoting Naira Over Foreign Currencies

In addition to the NIN and taxation proposals, the FEC has introduced a third bill aimed at amending the Nigerian Maritime Administration and Safety Agency Act No. 17, 2007. 

This amendment seeks to allow the payment of fees and charges in Naira, Nigeria’s national currency, instead of foreign currencies like the dollar. By amending Section 15 to include a new subsection, the government aims to enhance the ease of doing business and reduce the economy’s reliance on foreign currencies.

Mr. Onanuga elaborated on this initiative, stating, “Previously, these agencies were charging in dollars, but now they can always collect it in Naira. This government wants to put a lot of emphasis on our national currency instead of everything being dollarised in our economy. 

The government is now saying, ‘pay in Naira. Everything doesn’t have to be in dollars.’” This shift is part of a broader strategy to strengthen Nigeria’s economic sovereignty and reduce vulnerability to foreign exchange fluctuations.