Tax Clearance Certificate (TCC) in Nigeria is an important document issued by Federal Inland Revenue Service (FIRS) or States Inland Revenue Service showing that applicant’s tax affairs are in order. TCC in Nigeria is necessary for various corporate transactions by both individuals and corporate organizations in Nigeria.
For corporate bodies, there a six month grace from Nigeria federal government to issue your company her Tax Clearance Certificate for free.
Terms: Commencement Date. It means the date you started using the registered company for business.
Read: How to obtain TIN & Requirements
This means, you can register a company in Nigeria in year ABC and commence business operation in year XYZ. Year XYZ is your commencement date.
Whether you are a corporate body or an individual, you need Tax Clearance Certificate (TCC) in Nigeria. But before you can be issued tax clearance certificate, you must have rendered your tax returns to the relevant FIRS or states author as the case may be.
Tax clearance certificate usually covers a period of three years in arrears. This means if you want your company Tax Clearance Certificate for year “ABC”, FIRS or states tax body issue your company a TCC that will cover the present year tax and two previous years.
Where the business did not operate or not in existence, the two previous years will show nil.
Read: Obtain Your Tax Clearance Certificate
Apart from it makes your company to be a good corporate organization to other corperate bodies, government and people that what to do business with your company in Nigeria, Tax Clearance Certificate in Nigeria is also necessary for the following purposes:
- For doing business or registration your company with other corporate entities in Nigeria. Both private and public organizations.
- Application for Government loan for industry or business
- Application for certificate of occupancy
- Application for transfer of real property
- Application for registration as a contractor (mentioned earlier)
- Confirmation of appointment by Government. (Federal, State and Local)
- For contesting for public office inform of election in Federal, State and Local.
- Application for change of ownership of property (Land, house, vehicle etc.)
In fact, Tax Clearance Certificate makes a corporate citizen that you would want to be.
FIRS Tax Payment Guidelines
- Taxpayers must be registered with relevant Tax Office nearest to them and obtain a Taxpayer Identification Number (TIN).
- Taxpayers should render appropriate tax returns.
- Taxpayers should obtain Assessment and Demand Notices where applicable.
- Taxpayers should remit all taxes to the approved collecting Banks in the various forms so designed for such purposes and obtain an Electronic Ticket (e-ticket).
- Taxpayers should present the e-ticket for the issuance of FIRS official receipts.
- Taxpayers can now process their Tax Clearance Certificate accordingly.
Read: How to process Tax Clearance Certificate
Taxpayers are in two categories- Individuals and Corporations.
- Individual taxpayers: this category of taxpayer is further sub-categorised for ease of administration into-
- Resident individuals- taxpayers who reside in Nigeria for a period or periods amounting to 183 days or more in any 12 month period commencing in a calendar year and ending either within that same year or the following year.
- Non-resident individuals- this category include immigrants and any individual who is in Nigeria for some temporary purpose only and not with intent to establish residence.
- Individuals include a corporation sole and a body of indiduals but does not include a company, partnership, community, family, trustee or executor, or any body trustees of executors.
- Corporations: any company incorporated under the Companies and Allied Matters Act.
Read: Need a Legal Firm or Lawyer in Nigeria
Benefits of Tax Payment in Nigeria
Nigeria as a country and indeed all socially responsible and law abiding individuals, groups, organizations and corporate citizens will derive valuable benefits from imbibing a culture of tax compliance. The benefits derivable include but are not limited to:
- Providing sustainable finance and funding for governance, public and social services and economic development.
- Promoting civic responsibility, patriotism by citizens and social responsibility by corporate citizens.
- Stimulating priority social and economic activities and sectors while discouraging less preferred ones.
- Bringing about the redistribution of wealth and bridging sharp disparities in living standards.
- Giving taxpayers the moral and legal right to demand for (thereby engendering) a culture of accountability.
- Serving as a gauge for measuring the level, growth and health of economic units and economic activities.
- Individuals and corporate organizations are conferred with definite benefits, rights and privileges in the system based on their tax compliance status.
Tax compliance enables law abiding citizens to avoid the consequences, penalties and sanctions of non-compliance.
Read: Company Registration Service