How to Avoid Tax Clearance Problems
Tax clearance certificates are issued to taxpayers by the tax authorities certifying that the taxpayer has either paid all taxes due or that he is not liable to any taxes. Tax clearance certificate was introduced in Nigeria as a weapon of revenue collection in 1978. This document has several legislative backing and is equally relevant today in Nigeria.
Uses Of Tax Clearance Certificate
- To apply for a trade license such as NUPRC & NCC License
- To apply for contracts from the government or agencies of the government and government-owned companies
- To process an import or export license
- For the processing of a gaming license
- To process FORM A (FOREX)
In as much as it is an important document, there have been some problems faced by the Federal Inland Revenue Service (FIRS) which is the body solely responsible for issuing tax clearance certificate to incorporated companies in Nigeria.
Problems and Issues Faced By The FIRS In Processing Tax Clearance Certificates
- Unnecessary delays in the process of issuing the certificates leading to bribe taking. Which as a result can lead to incompetency of the FIRS
- Another key problem is Large scale forging of the certificates by organized syndicates
- Further problem associated with the use of tax clearance certificate is that it has not been possible to apply it to the private sector of the economy. Whereas the private sector is predominantly the area where much tax should accrue to the government
- Problems of Political Influence. An example is the cancellation of the production of Tax Clearance Certificate by candidates contesting election into political offices.
- The Joint Tax Board and other tax authorities lack the mechanism for the enforcement of their decisions, thereby qualifying them as a toothless bulldog
Solutions to Problems in Processing TCC
1)It is suggested that the phenomenon of Tax Clearance Certificate can be employed to great advantage by complying with the legal provision making the possession of Tax Clearance Certificate requirement for transacting any form of business with government and any of its agencies. This would increase the attitude of taxpayers in filing returns.
2) It requires adequate and skilled manpower to ensure it is done swiftly
3) Staff allowances, salaries and perquisites of offices should be promptly attended to so as to avoid the temptation of collecting meager as bribe from taxpayers thereby eradicating corruption.
4) In this age of Information Communication Technology (lCT) the tax authority should have a data base system where it can assess all records of all taxes filled by all applicable individuals and corporate bodies in the country. This will enhance efficiency.
5) The INEC and JTB should collaborate and work harmoniously for the screening of candidates seeking political offices.
For more information on how to avoid tax clearance problems, kindly contact us at: