#BounceExclusive: How To Obtain A Tax Clearance Certificate
This is in continuation of our series on Tax Thursdays.
Have you ever tried to obtain any service from a government agency or get cleared by LATSMA and VIO officials after you were arrested?
I am sure you were asked to provide a tax clearance certificate, which is in line with the rule of law.
The law actually mandates companies and government departments and agencies to see proof of this tax payment before doing business with you or granting you some service requests or concessions.
So, what is tax clearance certificate?
It is a document issued by the relevant tax authority.
The relevant tax authority (refers to either the Federal Inland Revenue Service, FIRS in respect of companies and the States Internal Revenue Service, SIRS in respect of individuals).
The tax clearance certificate shows the tax position of the taxpayer to whom it is issued.
The certificate can only be issued to you upon request via a written application.
In issuing the certificate, the FIRS or SIRS would have satisfied itself as follows:
1. Tax assessed on your income for three years, immediately following the year of assessment, have been fully paid.
2. In other words, FIRS or SIRS must be satisfied that you paid your fair share of tax on the income you earned three years before the current year.
The certificate must be issued within two weeks of demand. Otherwise, the relevant tax authority must give reasons for the delay or denial.
Meanwhile, the payment of current year tax shall not be made in a condition, for the issuance of the certificate, unless the applicant is relocating permanently away from the country.
The tax clearance certificate shall disclose the following in respect of the last three years of assessment:
a) Name, address and tax payer’s identification number (TIN) of the company;
b) Chargeable income;
c) Tax payable
d) Tax paid
d) Nature of business
e) Type of assessment and
f) Expiry date