What EXACTLY is a Tax Clearance Certificate and why do Companies need it?

Perhaps, you are asking…

The idea behind this write-up is to show you a practical approach by which you can obtain a Tax Clearance Certificate for your company provided you are transacting business in Nigeria.

First, a description of Tax Clearance Certificate.

A Tax Clearance Certificate (TCC) as it is popularly called, is a written evidence from the Federal Inland Revenue Service (F.I.R.S) that a company’s tax affairs as at a particular point in time are in order and up-to-date at the time of issuance of the Certificate.

It is the responsibility of the Federal Inland Revenue Service (F.I.R.S) to issue a Tax Clearance Certificate after ascertaining that the company’s tax liability (amount owed the Federal Government) has been fully paid and nothing outstanding – where this is established, the TCC should be ready for pick up in four weeks.

Attached image is a sample of a Company Tax Clearance Certificate (TCC) issued by the Federal Inland Revenue Service (F.I.R.S).

(Sidenote: This information is for educational purposes only. If you're interested in owning one, please, talk to your Accountant or a Tax Consultant)

But then it is not as easy as it sounds as there are a couple of intricacies involved before your company can be issued a TCC.

In order for your company to be issued a TCC, first, your company would have been issued a TIN (Tax Identification Number) – that means your company would have registered with the F.I.R.S (Federal Inland Revenue Service) as a “taxpayer” to be issued a TIN.

How Does A Company Register As A Tax Payer?

The whole essence of registering as a tax payer is to show that your company is a responsible and statutorily complaint business entity carrying on business in the country. It is an obligation as required by law and also a forerunner to the issuance of a TIN (Tax Identification Number).

So, in order to obtain a TIN, the tax payer will provide a number of information to the tax office (F.I.R.S) in his jurisdiction.

For a Limited Liability Company, such will register under the Corporate Registration while an Enterprise (Sole Proprietor) will perfect his registration for T.I.N under the Individual registration at the F.I.R.S office close to his business.

(Sidenote: The F.I.R.S does not issue TCC to Sole Proprietors. L.I.R.S (Lagos Internal Revenue Service) does in the case of Lagos State. Please, be clear with that)

To register as a Tax Payer, these are the following documents you'll provide:

1. Duly completed application form for TIN.
2. Certificate of Incorporation (for a Limited Liability Company) or Business Name Registration Certificate (for an enterprise) showing clearly the Registration Number (RC No.) in each case.
3. Documents containing the following information:
• Address of company, enterprise or business
• Principal location of business
• Date of commencement of business

Once this is done and submitted to the Integrated Tax Office (ITO) in your jurisdiction, you are good to go.

Obtaining TIN (Tax Identification Number) is FREE. It doesn’t come at any cost from the FIRS to you except for the consultancy fee paid to the tax consultant you engage to help you process it in the event that you are unable to do it yourself.

I hope this helps.

To be continued...

Chidera ANELE
[img][/img]