How to get your tax clearance certificate in Nigeria

Keeping up to date with your taxes is an important part of running a business in Nigeria. Apart from being your civic responsibility, it is also a requirement for several activities like getting government contracts, grants, loans and more.

One way to show that you’re up to date with your taxes is using a Tax Clearance Certificate (TCC). Similar to other countries, the Nigerian Tax Clearance certificate confirms that an individual or corporate entity has settled all their tax liabilities up to the date of issuance. 

In Nigeria, the Tax Clearance Certificate is usually issued by the Federal Inland Revenue Service (FIRS) to taxpayers every year. In this article, you will learn how to get your tax clearance certificate if you run a business in Nigeria. 

Who Needs a Tax Clearance Certificate?

Both individuals and companies operating in Nigeria may need a TCC for various reasons. However, some of the common reasons people get a tax clearance certificate include:

• Applying for licenses
• Applying for government loans
• Applying for real estate title documents 
• Bidding for contracts from the government or associated agencies
• Standing as surety for a person on bail

Expatriates and other non-citizens who do business in Nigeria are also required to have a TCC to show that they’re compliant with local tax laws. It can also help prevent double taxation if they come from countries with bilateral tax agreements with Nigeria. 

Preparing for Your Application

Before applying for a TCC, it’s crucial to ensure that you have fulfilled all tax obligations. This preparation includes filing all necessary tax returns and paying any outstanding taxes. For businesses, this means ensuring that PAYE (Pay As You Earn), VAT (Value Added Tax), and corporate taxes are up to date. Individuals must ensure their personal income tax is cleared.

Step-by-Step Guide to Obtaining a Tax Clearance Certificate in Nigeria

Step 1: Register with the FIRS

If you haven’t already, the first step is to register with the Federal Inland Revenue Service (FIRS), the body responsible for tax collection and enforcement of tax laws in Nigeria. Registration provides you with a Tax Identification Number (TIN), which is necessary for all tax-related transactions.

Step 2: File Your Tax Returns

Ensure that you have filed your tax returns up to the current date. Tax returns must be accurate and complete, reflecting all income and tax liabilities for the period in question. 

Step 3: Pay Outstanding Taxes

After filing your returns, ensure that any taxes due are fully paid. You may need to check with the FIRS to confirm any outstanding amounts or discrepancies.

Step 4: Apply for the Tax Clearance Certificate

With your tax obligations settled, you can now apply for a Tax Clearance Certificate. The application can be made online through the FIRS website or at any FIRS office. You will need to provide:

• Your Tax Identification Number (TIN),
• Completed application form,
• Evidence of tax payment (receipts),
• And other relevant documents as specified by FIRS.

Step 5: Processing Your Application

The FIRS will review your application and verify your tax compliance. This process involves checking your tax returns, payment receipts, and any other required documents. Ensure all provided information is accurate to avoid delays

Step 6: Collection of the Tax Clearance Certificate

Once your application is processed and approved, the FIRS will issue your Tax Clearance Certificate. The timeframe for processing can vary, but it generally takes about two weeks from the date of application to get your certificate. You may be required to collect the TCC in person or it could be sent to you via your email, depending on the application method.

What to expect in a Tax Clearance Certificate

If it’s your first time getting a tax clearance certificate, you probably don’t know what the document looks like and what information is in it.  TCCs issued by the FIRS usually contain tax information for the previous three years before the date of assessment. 

Here’s some information you can expect to see if your tax clearance certificate:

• turnover
• assessable profit or loss
• total profit
• tax payable
• tax outstanding (if any)

Tips for a Smooth Process

• Stay Up-to-Date with Tax Filings: Regularly file your tax returns and make payments on time to avoid complications when applying for a TCC.
• Keep Accurate Records: Maintain detailed records of your income, expenses, tax filings, and payments. These records are crucial for both tax compliance and the TCC application process.
• Seek Professional Advice: Consider consulting with a tax professional or accountant. They can provide valuable guidance on tax planning, compliance, and navigating the TCC application process.
• Follow Up: If your TCC application seems to be taking longer than expected, don’t hesitate to follow up with the FIRS for updates.

Conclusion

Obtaining a Tax Clearance Certificate in Nigeria is a straightforward process for those who maintain compliance with their tax obligations. By ensuring that you regularly file your tax returns, promptly pay any tax due, and accurately complete the TCC application, you can obtain your certificate with minimal hassle. Remember, staying proactive about your tax obligations not only eases the process of obtaining a TCC but also contributes to the broader goal of fostering a compliant and transparent business environment in Nigeria.