Key Takeaways:
1. Starting in 2026, banks and fintechs must mandate Tax ID validation for all individuals and businesses during onboarding and account activities under the NTA.
2. The Nigeria Tax Administration Act mandates centralized digital tax reporting via the Electronic Fiscal System, heightening oversight and penalties.
3. Financial institutions need to upgrade onboarding, verification, and reporting systems to meet the new tax law in Nigeria and avoid compliance risks.
Introduction
The Nigeria Tax Administration Act (NTAA) is the body of laws that oversees the framework for tax administration in the country. This Act was signed by the president on June 26, 2025. Effective January 1, 2026, the NTA laws determine how banks and financial institutions operate in line with tax regulations in Nigeria.
Under the new Nigerian tax law for 2026, fintechs will be assessed for stricter onboarding processes, mandatory Tax ID validation for both individuals and businesses, and clearer tax tracking. Hence, financial institutions will have to align on the newly updated rules on real-time verification, taxpayer identification and digital reporting, amongst others.
As banks and fintechs align to this new system, it is important to know what the NTA is and how the new tax law affects compliance and customer onboarding.
The NTA Laws for Banks and Fintechs in 2026
For banks and fintechs, the NTA law sets clear rules for customer onboarding, data collection on tax, and ongoing compliance checks.
The newly enacted tax reform acts represent a major shift for the country’s tax system. The four reform acts approved are the Nigeria Tax Administration Act (NTAA), Nigeria Revenue Service (Establishment) Act, Joint Revenue Board (Establishment) Act, and Nigeria Tax Act.
However, the Nigeria Tax Administration Act (NTAA) 2025 highlights:
- The Compulsory use of Tax Identification Numbers (Tax IDs) for certain transactions.
From 2026, banks and fintechs must match and verify Tax IDs for every individual and business before account opening or service activation. In simple terms, all customer accounts must be linked to a valid Tax ID.
This requirement by the NTA is to make Tax ID validation a strict compliance step. It also ensures accurate tax payment in Nigeria and a traceable identity record for regulators.
- A Digitalized Tax Filing System
The NTA introduces a centralised digital tax reporting system called Electronic Fiscal System (EFS). The aim of this is to improve efficiency, transparency and reduce errors across agencies. Section 23 of the Act states that any person making a taxable supply must use the EFS for recording and reporting all supplies.
In addition, a taxable individual or entity who fails to use the EFS for taxable supplies will owe a N200,000 penalty, 100% of the tax liability, and interest calculated at the CBN's current Monetary Policy Rate annually.
These measures emphasize the essential need for digital tools in tax management to boost compliance and create a streamlined and accountable system. Consequently, financial institutions and banks must implement automated data reporting and ensure Tax ID details fully match official national records.
Why Tax ID Compliance Matters for Banks and Fintechs
With the rollout of the NTAA and NTA laws, Tax ID compliance has become an essential part of risk management and regulatory adherence for banks and financial institutions. This shift requires proactive actions across key areas like:
1. KYC and KYB Requirements
Banks and fintechs must verify customers Tax IDs during onboarding to meet KYC and KYB requirements under the tax act. For most NIN holders and businesses that have an existing Tax ID, the financial institution is expected to retrieve and match these IDs to their customer records.
Hence, using the Tax ID as a primary identifier ensures accurate customer records while achieving compliance with tax regulation.
INTERESTING READ: Why Businesses Need a Tax ID in Nigeria
2. Fraud Prevention and Identity Validation
Tax ID verification improves identity validation and reduces the risk of tax fraud. Banks and fintechs verifying Tax ID data will also prevent and reduce the rate of impersonation and fake business registrations.
3. Regulatory Filing and Audit Readiness
Tax IDs support automated reporting and with the adoption of the Electronic Fiscal System, there is a better chance of close monitoring for regulators. Accurate Tax ID records help financial institutions stay compliant during audits, avoid penalties related to tax payment in Nigeria and meet updated tax regulation obligations.
How Banks and Fintechs Should Prepare for 2026
Banks and fintechs are advised to comply with the new tax law and the updated tax act requirements by January 2026.
A quick checklist:
- Update and align onboarding processes to meet up with NTA rules for individuals and businesses.
- Fill compliance gaps and reporting systems to meet 2026 regulatory expectations.
- Adopt and integrate automated Tax ID verification APIs to validate customers in real time.
- Strengthen digital identity checks to support KYC, KYB and Know Your Taxpayer (KYT) standards.
Bottom Line
Effective 2026, the NTA laws will transform banks and fintechs approaches to onboarding, reporting, and tax compliance.
You are one step closer to being compliant-ready with Youverify in 2026. Our unified system allows real-time Tax ID validation, high-volume accuracy, and gives your institution full audit preparedness.
Ready to make this work? Talk to our compliance team today.