I recently received an inquiry about obtaining a Tax Clearance Certificate and the question reads thus;
“… I don’t know if a newly registered business can be given a tax clearance certificate. In summary, I want a tax clearance certificate, but there doesn’t seem to be a way for me to get one…”
Upon receiving this question, I knew for a fact that there was going to be a whole lot of explaining to do about taxes in general before addressing the aspect of a tax clearance certificate.
I recommended my e-book “ESSENTIAL TAX GUIDE FOR BUSINESSES” to assist me with background explanation before addressing the elephant in the room. The book is priced at N3000 at the time of publishing this post.
If you do business in Nigeria and you have concerns such as;
What taxes am I to pay?
How do I pay my taxes?
Can I protect myself from fraudsters who disguise themselves as revenue collectors?
How do I profit from taxes (Yes, you can actually maximize a lot of profits from taxes)?
You should get a copy of my book and send a thank you note after exhausting all the value you’ll gain from it.
Now back to the subject of this article. We’ll consider this in detail below.
WHAT IS A TAX CLEARANCE CERTIFICATE
It is a document issued to an individual or corporate taxpayer and serves as proof that all outstanding tax (es) owed by such taxpayer has been paid.
A tax clearance certificate is valid until 31st December of the same year it is issued.
WHO ISSUES TAX CLEARANCE CERTIFICATES
In Nigeria, the Federal Inland Revenue Service is the sole agency responsible for issuing tax clearance certificates to individuals and companies at the Federal Level while the State Inland Revenue Service issues tax clearance certificates at the State level.
CAN MY BUSINESS APPLY FOR A TAX CLEARANCE CERTIFICATE (TCC) IF IT HAS BEEN REGISTERED FOR LESS THAN A YEAR?
The answer is YES. You can apply for a TCC even if your business is a day old. In addition, where a business that is less than 6 months old, it will not be required to remit/pay tax returns except in situations where it has generated revenue of over N25,000,000 (twenty-five million naira). In such a situation, it will be required to provide an audited financial statement. If for instance your business was registered in September 2023, your business will not be required to remit/pay taxes until the next year i.e 2024
WHAT ARE THE BENEFITS OF GETTING A TAX CLEARANCE CERTIFICATE FOR MY BUSINESS?
As a business owner, having a tax clearance certificate is important for several reasons;
1. To apply for loans or credit facilities
2. For registration of property
3. It is a mandatory requirement when lobbying for government contracts
4. It is required for obtaining several business licenses such as; import or export licenses, NCC licenses, etc.
REQUIREMENTS FOR APPLYING FOR TAX CLEARANCE CERTIFICATE IN NIGERIA
To get your tax clearance certificate at the FIRS, there are certain conditions that must be satisfied;
i. The taxpayer must have a tax identification number (also known as TIN)
ii. Complete VAT registration. Every registered business is required to complete VAT registration not more than 6 months after registration
iii. Apply for a Tax Clearance certificate by filling required forms, providing your company incorporation documents, and bank statement where available.
RECENT UPDATE ABOUT APPLYING FOR A TAX CLEARANCE CERTIFICATE WITH THE FIRS– TAXPRO MAX SOLUTION
Recently, the Federal Inland Revenue Service introduced its Taxpro Max solution. This solution is designed to be a one-stop-shop in which taxpayers can carry out taxpayer registration, tax returns filing, tax payment, and tax clearance certificate requesting, among other functionalities online.
This solution is however only applicable to registered companies and not individuals who are meant to file their tax returns at the State level.
As a business owner, tax compliance is an essential part of doing business and your tax clearance certificate is proof that your business satisfies the requirement in that regard.
I hope we’ve been able to resolve any doubts or concerns you may have concerning getting your tax clearance certificate in Nigeria. We understand the subject of obtaining your tax clearance certificate could be complex at times, and that is why we always recommend you get the services of an experienced tax consultant or law and tax consultant to assist you with the process.
Need help applying for your tax clearance certificate? Feel free to reach out to us through the Whatsapp icon on the lower right part of this part or leave a message here, and we will attend to you.