In Nigeria, it is the responsibility of the Federal Inland Revenue Service or State Inland Revenue Services to issue tax clearance certificates to applicants.
A tax clearance is a certificate stating that an individual or a corporation has no tax due for a particular period. The certificate is evidence that the applicant paid for tax.
In Nigeria, the tax clearance certificate is issued by the Federal Inland Revenue Service (FIRS) for only companies and issued by the State Inland Revenue Services for individuals. Anyone who carries out a taxable transaction is eligible to register for a Tax clearance certificate.
How to Process a Tax Clearance?
Obtaining a tax clearance certificate in Nigeria, there are three steps involved in obtaining a TCC in Nigeria, they are; registration of tax identification number (TIN), VAT Registration, and application for a tax clearance certificate.
Obtaining Tax Identification Number (TIN)
The first step in obtaining a tax clearance certificate for companies in Nigeria is to first a Tax Identification Number (TIN).
A tax identification number can be obtained at the nearest tax office in Nigeria. Nowadays the Federal Inland Revenue Service (FIRS) sends the TIN upon incorporation. However, the company needs to visit the nearest tax office to activate the TIN.
A couple of documents are required before you can apply for the tax identification number. These documents must be presented to the nearest Tax Office before they can receive a tax identification number.
- A certificate of Incorporation bearing an RC Number- This is issued by the Corporate Affairs Commission (CAC)
- Memorandum & Articles of Association
- Certificate of Incorporation: CAC2, CAC7
- Utility Bill
- Company seal
- An Application letter and TIN Application form
The original and two (2) photocopies of these documents need to be presented at the tax office. The original will be required for sighting, while the two copies will be stamped and signed by a FIRS official.
One copy will be left at the Tax office while the other will be given to you as evidence of the TIN application.
Application for TIN is usually free, as the FIRS does not charge to issue it. Ideally, obtaining tax identification should be given instantly or by the next day at most. However, when certain FIRS offices struggle with a backlog, it could take a week or two before it will be issued.
VAT Registration
The next step is the application for VAT registration. VAT is an acronym for Value Added Tax. It is a tax imposed under Nigerian law on the supply of goods and services. It is currently charged at 7.5%
To apply for VAT registration, simply visit the nearest FIRS office with the following documents:
- Memorandum & Articles of Association
- ·Duly filled and officially stamped VAT form 001
- Utility bill
- Certificate of Incorporation: CAC2, CAC7
- Application letter on company letter-headed paper
Just like TIN registration, you will need to take both the original and two (2) copies of each document. The originals will be required for sighting while the photocopies will be signed and stamped.
A copy will be kept by the FIRS, while the other will be issued to you as evidence of application. VAT registration is also free, as the FIRS does not charge for it. VAT registration can be completed immediately or by the next day, but it sometimes takes up to a week or two before completion.
Tax Clearance Certificate Application
After the previous steps have been completed, you can finally apply for your tax clearance certificate (TCC).
The Following Documents are required at the FIRS Office for the Application of a Tax Clearance Certificate:
- Application for Tax Clearance form
- Copy of memorandum and articles of association
- Copy of the certificate of incorporation
- Taxpayer registration input form (TRIF/2006/001 COYS)
- Completed FIRS questionnaire for new taxpayers- It has to be on the Company’s Letter Head and must be addressed to the Tax Controller
- Letter of appointment of tax adviser and a letter of acceptance
These documents must be presented in triplicate copies, and the original certificate of incorporation must be presented for sighting.
After all necessary documents have been provided as well as the receipt of the completed taxpayer registration input form, a tax reference number will be allocated.
It is important to note that the Tax Clearance Certificate will only be issued after the necessary taxes are paid in full. The Tax clearance certificate was issued to cover arrears of three taxable years.
New companies can also obtain a tax Clearance certificate, however, the certificate will indicate “NIL” to imply that the new company does not owe taxes for the arrears. The Federal Inland Revenue Service (FIRS) issues the Tax Clearance Certificate for companies while the States Internal Revenue Service issues the TCC for individual taxpayers in Nigeria.
How to process TCC under TaxPro Max (Online platform)
The Federal Inland Revenue Service (FIRS) has recently migrated to a new online Tax Clearance Certificate (TCC) application portal.
All taxpayers i.e. those whose TCC applications are still being processed under the old platform are required to reapply/apply by submitting a taxpayer data update form, which replaces the old paper and manually processed Tax Clearance Certificate (TCC).
After filing returns and paying taxes, business owners can request an electronic tax clearance certificate (e-TCC) from the comfort of their homes or office using the TaxPro Max e-service.
Step 1: They have to log onto the application portal, which has a link on the FIRS website (portal link https://tcc.firs.gov.ng) and follow online prompts to complete the form.
Step 2: Upon approval, Click on generate TCC and a copy of the document will be sent to the registered e-mail address
Step 3: Save or Print
If you are unable to generate TCC online, do not panic. It could be as a result of any of the following activities;
The taxpayer
- Is in the first 3 years of operation
- Is yet to file a corporate tax return on TaxPro Max
- Has an outstanding tax payment
- Has a pending tax reconciliation
how to get tax clearance certificate in nigeria
To know the specific cause, visit the designated tax office.
Benefits of a TCC
Ownership of a valid TCC is compulsory when a taxable person wants to carry out specific transactions in Nigeria. The transactions include an application for;
- business loan from the government
- firearms license
- foreign exchange permission to remit funds outside the country
- real estate title documents such as certificate of occupancy, approval of building plans, plot of land, transfer of real property
- The award of contracts by the Government or related agencies
- license such as agent, trade, business, pools, gaming, import or export license
- Registration as a contractor or distributor
- stamping of guarantor form for Nigerian passport
- Allocation of market stalls
- registration of motor vehicles, a limited liability company, or a business name
- stamping of the statement of loan capital, the nominal share capital of a new company, and the increase in share capital
In addition, multinationals, expatriates, and non-resident persons require TCC to show payment of Nigerian tax. The amount paid can reduce double taxation for treaty partners with Nigeria.
