FIRS TAX CLEARANCE CERTIFICATE
A Tax Clearance Certificate in Nigeria is basically a document stating that an entity does not owe tax for a period of time specified in the 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 of the Tax Clearance Certificate 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 levels for individuals.
APPLICATION FOR TAX CLEARANCE CERTIFICATE
Upon obtaining TIN, the company can now apply for the Tax Clearance Certificate by filling 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 accompanying with relevant documents.
The existing companies can only make an application for a Tax Clearance Certificate after the company’s audited report has been submitted and all outstanding taxes have been paid.
WHO CAN OBTAIN A TAX CLEARANCE CERTIFICATE?
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 IN NIGERIA
Apart from the fact that the government clearly make use of tax paid for the betterment of the society, such as provisions of good roads, 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 obtain loans from the government for business or trade
- To obtain a certificate of occupancy for a land
- To apply for a trade license
- To apply for contracts from the government or agencies of the government and government-owned companies
- To obtain foreign exchange and related issues
- To obtain an import or export license
- To obtain a gaming license
- To obtain an agent license
- To be registered as a contractor
- To be appointed into a public office position
It is important to state further that all Tax Clearance Certificates in Nigeria are issued to cover arrears of three taxable years. The fact that a company is new does not except 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 the company’s formation.
The Tax Clearance Certificate is issued by FIRS for companies, while the States Internal Revenue Services issue similar Tax Clearance for individual taxpayers within their respective states.
By Taxation Team at Resolution Law Firm