TAX CLEARANCE CERTIFICATE
The tax clearance is a certificate of clearance, indicating one has been cleared for a period of time because it has paid its taxes if any. There are many uses for the TCC in Nigeria. The body or agency of government responsible for issuing Tax Clearance in Nigeria is the Federal Inland Revenue Service (FIRS) at the federal level for only companies; also the State Inland Revenue Services at the state level for individuals.
APPLICATION FOR TAX CLEARANCE CERTIFICATE (TCC)
Upon obtaining TIN, the company can now apply for the Tax Clearance Certificate by filling out the tax clearance form which would be three. The applicant must fill the questionnaires with the FIRS for new taxpayers on the company’s letterhead, and this would be addressed to the tax controller accompanied by relevant documents. But, due to introduction of Taxpromax by FIRS, TCC application is now restricted on the Taxprox. If there are no liability, upon application of TCC, Tax Payers are expected to get their TCC within 2 weeks
The existing companies can only make an application for a TCC after the company’s audited report has been submitted and all outstanding taxes have been paid. A tax clearance certificate can be obtained by an individual or a company. A tax clearance certificate is issued in arrears over a course of three years. You need to have rendered your tax returns to the relevant authority over the course of three years to be eligible for a tax clearance certificate in Nigeria.
USES OF TAX CLEARANCE CERTIFICATE (TCC)
Apart from the fact that the government clearly makes use of tax paid for the betterment of society, such as provisions of good roads, and constant electricity, and also the fact that one can be punished for not paying tax under the law, there are several other benefits to be derived from paying taxes and obtaining Tax Clearance Certificate evidencing it, which include:
- 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
- Usually required to stand as a surety for a person on bail
The fact that a company is new does not exempt such a company from obtaining a Tax Clearance Certificate. In such a circumstance, the Tax Clearance Certificate will clearly indicate “NIL”, which implies such a company does not own taxes for the period before its formation.
It is important to state further that all FIRS’s Tax Clearance Certificates in Nigeria are issued to cover arrears of three preceding taxable years. The fact that a company is new does not exempt such a company from obtaining a Tax Clearance Certificate. In such a circumstance, the Tax Clearance Certificate will clearly indicate “NIL”, which implies such a company does not own taxes for the period before its formation.
The TCC is issued by FIRS for companies, while the States’ Internal Revenue Services issue similar Tax Clearance for individual taxpayers within their respective states.