HOW TO OBTAIN A TAX CLEARANCE CERTIFICATE IN NIGERIA, EVERYTHING YOU NEED TO KNOW

WHAT IS A TAX CLEARANCE CERTIFICATE?

A Tax Clearance Certificate in Nigeria is a document stating specifically that a body (corporate or individual) does not owe any tax for the period stated in the tax clearance certificate. It basically gets to prove to whoever the document is presented to, that the entity bearing the certificate has paid his due tax for the period covered by the certificate and as such is a tax compliant citizen.

The Government agencies responsible for issuing Tax Clearance Certificates in Nigeria are the Federal Inland Revenue Service (FIRS) at the federal level designated for the Companies registered in Nigeria and the various state internal revenue service’s at the state level for individuals.

WHO IS ELIGIBLE FOR A TAX CLEARANCE CERTIFICATE IN NIGERIA?

WHO IS ELIGIBLE FOR A TAX CLEARANCE CERTIFICATE IN NIGERIA?

An individual or a company who wishes to obtain a tax clearance certificate must have paid his/her due tax to the relevant tax authority (The FIRS or the State IRS)over the course of three years to be eligible for a tax clearance certificate. This is because Tax Clearance Certificates are always giving in arrears over a period of three consecutive years. However this does not stop New Companies from obtaining a tax clearance certificate, as the column for their due tax will  state “NIL” to show that they  didn’t owe tax for the period before the company was formed.

WHAT ARE THE BENEFITS OF A TAX CLEARANCE CEERTIFICATE IN NIGERIA

Many benefits abound for the remittance of tax to the government. The most obvious reason being that the  government uses the tax generated to run various developmental projects like, road construction, provision of affordable shelter, provision of electricity, security, and the rest of them. Another reason to pay ones tax is the fact that the government can punish someone who does not pay the tax as stated by the law.  Apart from the above obvious reasons, there are quite other benefits of paying taxes and getting the necessary tax clearance certificate for companies and individuals, they can be seen as follows:

1. To obtain loans and grants from the government for business.
2. To obtain Foreign exchange from banks
3. To obtain a certificate of occupancy,
4. To obtain building permit from the government.
5. To obtain import or export licenses.
6. To obtain gaming or betting licenses.
7. To obtain Trade Licenses.
8. To obtain forms for election into public offices.
9. To take up political appointments.
10. To apply for contracts from the government agencies or institutions.
11. To be a registered government contractor.

 THE PROCESS FOR APPLICATION OF TAX CLEARANCE CERTIFICATE

The ideal process to obtain a Tax Clearance Certificate is to:

1. Incorporate your company with the CAC (in the case of a corporate body)
2. Hire a Consultant
3. Register your company with the Tax Authority  (FIRS)
4. Register for  Value Added Tax (VAT)
5. Fill in the Tax Clearance forms
6. Provide your audited books to the officers at the FIRS.
7. Submit an application with the relevant documents.
8. Pay the necessary fees as prescribed by the FIRS
9. Issuance of the Tax Clearance Certificate.

The need to go digital has made the FIRS  to introduce an online platform; the taxpromax from where taxpayers can login and pay their taxes online. Some other state internal revenue service’s like Lagos state Internal Revenue service (LIRS) have also created such an online payment system : Electronic Tax Clearance  (e-tcc) which replaces the old, manually processed application process for a tax clearance certificate in Lagos state.

The application for tax clearance certificate for companies is to be directed to the FIRS while the application for tax clearance certificate for individuals and the registration of PAYEE  for the employees of a company is to be addressed to an individual’s state of residence.

The emergence of this new tax application systems have made it possible for an application for tax clearance certificate to be processed online to make the duty of paying taxes less tedious and more encouraging.

Notwithstanding the new application systems, the issue of tax payables and auditing, calculation and processing of same are matters better handled by professionals, it is advised that you consult a professional to handle your taxes so you don’t over pay or under pay, the latter which could lead to prosecution for tax evasion.

Authored by EBC’s Tax Department

Contact via Call/Whatsapp : +234-9044968631