Nigeria - How to obtain an Income Tax Clearance Certificate for your company :-

Step 1: If you are yet to do so, get in touch with FIRS and register your company. The FIRS usually maintain offices in almost every local government area. So, if your office is located in Surulere, you will have to register with the Integrated Office on Bode Thomas. After registration, your company will be given a Tax Identification Number (TIN). Your TIN will be used for every tax related transaction you do like vat and WHT. It is however not to be used for your state related taxes like the ones collected by the LIRS. This should be your last direct contact.

Step 2. Whatever you do, never approach a tax man (FIRS official or office) by yourself, it can make or mar you. At this point you should get a tax consultant. However, the next steps guide you with what the processes will be.

Step 3. The tax consultant will ask you questions like when your company was incorporated and when it commenced business? A company may be incorporated but yet to commence business. Incorporation simply means you have registered your company with the corporate affairs commission. Commencement means the date you started using the company you registered for business. It doesn't matter if the business is generating income or not. Once it has a bank account that shows inflow and outflow of money, it is typically considered to have started business by the tax man.

Step 4: if your company commenced business in January 2010 like Abc Ltd and have never filed for tax then you will be asked by your consultant to provide an audited Financial Statement (FS) or Statement of Affairs. An FS is a document that contains the financial state and performance of your business for the period under consideration. It includes things like your Balance Sheet and Profit and loss account.

Step 5: Once the Financial Statement is prepared and signed by the representative of the company and the auditors, hand it over to your consultant. The Financial Statement for a company in operation also includes your estimated tax payable. Your estimated tax payable is the amount of tax you are telling the FIRS that you are liable to pay. However, this is not usually acceptable by the authorities as they often make their own computation. But you should do yours and make it as conservative as possible.

Step 6. Your consultant will give you several forms to fill. You will be guided as you fill the forms. However, it is important that you read through the forms as most of the information you reveal in it are confidential and so you will not want to give out something that might implicate you because it is wrong. You will also be told to provide copies of your letter head. These copies are used for correspondences with the tax authority which will typically include your application for tax clearance certificate. You will also need to give your consultant your Certificate of Incorporation and Memorandum and Articles of Association (often called MEMAT). You will also give the tax man a copy of the personal tax clearance certificate of your MD or/and any Director which you will obtain from the state inland revenue service. For example, in Lagos it is obtained from the LIRS.

Step 7: Your tax consultant will then submit your documents with the FIRS. The role of the tax consultant is very critical as their handling of your case with the authorities usually determines if the tax man will accept your figures and give you a certificate on time. In a situation where the account you prepared is not acceptable to the authorities they can by law use a Best of Judgement (BOJ) decision to compute the amount of tax you should pay. This is often a drastic and unfavourable scenario for the tax payer. However it can be minimized or all together avoided.

Step 8: You will be given a Tax Clearance Certificate that is signed by an Inspector of Taxes. The tax clearance certificate is usually for the 3 years preceding your application. So, for ABC Ltd, they will be given a certificate reflecting the years 2010, 2009, and 2008.

The cost of a tax consultant differ for small businesses. However, the can fall between N50k to N100k depending on the peculiarity of your case.

For more details, visit http://www.ugometrics.com/2011/10/how-to-obtain-tax-clearance-certificate.html

Does any1 got any link in cac. Those guys der ar cow dung. My name of company to register has been rejected 10times. I believe its some ploy to discredit me opening my NGO. Any one with a direct link of CAC worker in Abj let me know, No spam here

Nice info. regrettably, I went to IFRS myself and while the secretary was encouraging; she explained to me the benefits of TAX clearance and that it was free for new businesses, the Head honch demanded N200k because I had not registered within 1 month of registering the company and this is 3 years after. I told him this was the first time i needed to use this company for business and it has no bank account whatsoever. No dice. he stuck by his demands so i left. sadly.

Where can one get a reliable TAX Consultant in Lagos.
Good job with the information - keep it coming

So what of those in employment? Do we walk up to our Finance unit and ask them to get us one? What if we have not worked for 3 years?

@lagerwhenindoubt , do not mind the head honch…, if this is the first time, then you need not pay anything. So long as you have not started trading, you are entitled to a free tax clearance certificate. However you use to have a 6months grace period over which you can stay without trading (seems it has been increased to 18 months). But you have not traded in 3 years? Wao, there might be a problem there. You would have been safe if you had registered for your TIN number (tax identification number) and later write them that you wont commence business till further notice due to financial problems. If you had done this, then you will just need to write another letter letting them in on your intention to commence business; and a week later, you apply for the tax clearance. |Since its been 3 years, get an accountant to advice you. Make sure its one that deals with that particular tax office, as he/she will know the right people to meet. Or alternatively, try talking to a few of the lowly staff in the office, and you will be amazed at the information they will give you, even giving you the secrets of the so called head honch. i.e. I had almost a similar prob as yours; from one of the low staff I got a info that that same day was their boss’ only son’s birthday. Immediately I went back out got some gifts for the boy and gave the ‘oga’. He was amazed and excited ad what ever I told him, he just said no probs. So instead of ‘bribing’ a 100k, I gave him 5k for transport.
Remember the 3 tearly CAC fee, as non payment might lead to your company being wound up.

Good information Seun.

This is what we need. Information that helps us when we need.

wat type of TCC does an unemployed needs if he intends to go join politics-contest for an elective post pls?

For any member of this forum that needs clarification on tax issue,

Come straight to ijewere & Co. The are specialist in tax consultancy both for individual and corporate tax issue,
Ijewere and Co will advice you on how to manage your tax efficiently, unlike the corrupt taxman at LIRS and FIRS. The like sucking blood out of any unsuspecting victim and that why tax evasion is an issue in the country.

Alternatively you can reach me via ireogwu at ijewere.com

fenando po:

@lagerwhenindoubt , do not mind the head honch…, if this is the first time, then you need not pay anything. So long as you have not started trading, you are entitled to a free tax clearance certificate. However you use to have a 6months grace period over which you can stay without trading (seems it has been increased to 18 months). But you have not traded in 3 years? Wao, there might be a problem there. You would have been safe if you had registered for your TIN number (tax identification number) and later write them that you wont commence business till further notice due to financial problems. If you had done this, then you will just need to write another letter letting them in on your intention to commence business; and a week later, you apply for the tax clearance. |Since its been 3 years, get an accountant to advice you. Make sure its one that deals with that particular tax office, as he/she will know the right people to meet. Or alternatively, try talking to a few of the lowly staff in the office, and you will be amazed at the information they will give you, even giving you the secrets of the so called head honch. i.e. I had almost a similar prob as yours; from one of the low staff I got a info that that same day was their boss’ only son’s birthday. Immediately I went back out got some gifts for the boy and gave the ‘oga’. He was amazed and excited ad what ever I told him, he just said no probs. So instead of ‘bribing’ a 100k, I gave him 5k for transport.
Remember the 3 tearly CAC fee, as non payment might lead to your company being wound up.

Thanks for the info. I have a TIN that came with the CAC documents. I think your suggestion will work. this guy does will not bug an inch unless i drop N200k. he advised that i drop the company name and register a new one instead, then i do not need to pay any thing.

If you need any assitance on company income tax, personal income tax and registration with CAC, you can reach via this email address, labiola@yahoo.com

begwong:

wat type of TCC does an unemployed needs if he intends to go join politics-contest for an elective post pls?

What you need is a Personal income tax clearance which can only be issued by your state's tax board. You can only deal with the FIRS if you work with the forces(police, army etc) or are a federal worker. There's a provision for unemployed folks but you've got to prove it cos there's usually a flat rate for those earning below a certain amount.

lagerwhenindoubt:

Thanks for the info. I have a TIN that came with the CAC documents. I think your suggestion will work. this guy does will not bug an inch unless i drop N200k. he advised that i drop the company name and register a new one instead, then i do not need to pay any thing.

The guy was actually being lenient by asking for just 200k! You have to realize the number of laws you've broken to appreciate the amount you're bein charged. You failure to register for VAT alone and file monthly returns for the period would have racked up more than that amount not to speak of your non rendering of Áccount for the period. There's always a chance you might meet someone lenient but the law has u on this one and u're at their mercy. BTW, are you sure what u've got is a TIN no? They NEVER come with the CAC documents but have to be applied for separately at your DOMICILED tax office.

It doesn't matter if the business
is generating income or not. Once it has a
bank account that shows inflow and outflow
of money, it is typically considered to have
started business by the tax man.

Let me point out that Tax inspectors seldom ask for bank accounts for companies collecting their first TC within the first 18months of incorporation but usually rely on the TIN No. to determine whether a company has commenced or not especially when your nature of biz has to do with contracts and involves Witholding taxes. It is usually more convenient for inspectors to demand for the payment of a POL levy than to start scrutinizing an infant company. There's really no hiding place with the introduction of the new TIN as the system captures all activities concerning your company so any false declaration in your accounts or submission would be disastrous.
There's a whole load to say concerning this biz of tax issuance and collection and I hope questions roll in.

Got mine a long time~

a friend of mine who is having all certs including the tax clearance was given a statement of acct. withholding tax of n2.6m 4rm d state board of internal revenue. He renews/pays his tax clearance, dpr and some other certs yearly. Now he's been given one month ultimatum or else. . . Wht can he do and wht is suppose to mean? He pays yearly, bt yet n2.6m.

I recently bought a registered company without caring about Tax clearance.All was well till I tried opening a new bank account for the company(still maintained the old name).I was made to understand that I needed my tax clearance pin or whatever for the new account.Long and short of it,someone from the bank offered to get me one @ 40K,I refused.Finally went to the tax office and paid 160k.

wesley80:


What you need is a Personal income tax clearance which can only be issued by your state's tax board. You can only deal with the FIRS if you work with the forces(police, army etc) or are a federal worker. There's a provision for unemployed folks but you've got to prove it cos there's usually a flat rate for those earning below a certain amount.
The guy was actually being lenient by asking for just 200k! You have to realize the number of laws you've broken to appreciate the amount you're bein charged. You failure to register for VAT alone and file monthly returns for the period would have racked up more than that amount not to speak of your non rendering of Áccount for the period. There's always a chance you might meet someone lenient but the law has u on this one and u're at their mercy. BTW, are you sure what u've got is a TIN no? They NEVER come with the CAC documents but have to be applied for separately at your DOMICILED tax office.

It is a TIN, I think in those times they came with CAC. I did a search at Sanusi Fafunwa FIRS and my company name came with a TIN.

TIN with CAC!!!

Never heard of that though!

Before FIRS, it was TIN with CAC,  now the roles are separate or maybe my lawyer did me a favour

@op
Thks for d info
Do one need a consultant to get TIN or u can just work in to firs to get on. I just registed a coy last month, but yet to start business. What will be required to get a TIN

Pls what's different btw LIRS AND FIRS.then which can cover me throughtout federation,for example , i do busines in lagos state and pay tax in lagos, can that cover me every where in nigeria,

sylve11:

a friend of mine who is having all certs including the tax clearance was given a statement of acct. withholding tax of n2.6m 4rm d state board of internal revenue. He renews/pays his tax clearance, dpr and some other certs yearly. Now he's been given one month ultimatum or else. . . Wht can he do and wht is suppose to mean? He pays yearly, bt yet n2.6m.

I dont quite get you esp your reference to WHT taxes. However here's what i can deduce. The fact that the tax is coming from the state means it's probably about Personal income tax deductions for workers of the company. He probably hasnt been remitting deductions or has failed to deduct them at all. There's room for appeal but the state tax authority has all the cards if he has failed to make remissions for the period.

ifyalways:

I recently bought a registered company without caring about Tax clearance.All was well till I tried opening a new bank account for the company(still maintained the old name).I was made to understand that I needed my tax clearance pin or whatever for the new account.Long and short of it,someone from the bank offered to get me one @ 40K,I refused.Finally went to the tax office and paid 160k.

No you didnt pay 160k for a TIN No! Perhaps you've got it mixed up, it's inconceivable that you'd pay 10k for a Tax identification number not to speak of over a hundred. Mind you TIN generation is free! This is why i have a problem with individuals visiting tax offices; you're game period.
I still think it wasnt just a TIN you got anyway, maybe the company had issues and its history had to be wiped and a new one generated for you or you actually paid for a new tax clearance certificate, if not then you have a genuine Police case if you can prove it.

@Lagerwhenin doubt,
Bros what you've got is an RC No. Which is a six digit number on the top left hand of your certificate of incorporation. You need to visit an FIRS office to get your TIN No.
@Cypost,
You do not necessarily need a consultant to get a TIN no. If their network isnt acting up, you can get it within 24hrs but could take as much as a week when things arent going well. All you have to do is to make a formal application and tender your original cert(for sighting) TIN is FREE just like BAIL IS FREE! Lol, those officers never stop giving you suggestive stares but you can always ignore them. Some ITO's require that you also register for VAT and open a FILE so hiring a consultant may be inevitable.

ajadek:

Pls what's different btw LIRS AND FIRS.then which can cover me throughtout federation,for example , i do busines in lagos state and pay tax in lagos, can that cover me every where in nigeria,

LIRS is the state revenue service responsible for Personal income taxes of residents of the state and 'Enterprises' while the FIRS is responsible for taxes from all registered companies and federal taxes from individuals. You need both set of clearances from the LIRS (personal tax clearance) and FIRS (Company tax clearance) the tax you pay in Lagos to the FIRS covers your company throughout the nation while your Personal income tax remitted to the Lagos state government shows you've been paying your taxes in your state of residence - Just in case.

@lagerwhenindoubt , a TIN that came with CAC? That is utterly impossible as only the FIRS can issue you with a TIN. The CAC only registers companies. I hope the guy who issued the CAC is not a crook? Anyways, I think you should better register a new company, since you have not started trading.

wesley80:

No you didnt pay 160k for a TIN No! Perhaps you've got it mixed up, it's inconceivable that you'd pay 10k for a Tax identification number not to speak of over a hundred. Mind you TIN generation is free! This is why i have a problem with individuals visiting tax offices; you're game period.
I still think it wasnt just a TIN you got anyway, maybe the company had issues and its history had to be wiped and a new one generated for you or you actually paid for a new tax clearance certificate, if not then you have a genuine Police case if you can prove it.

Thank you.
I'm currently out of town but would confirm this asap.
Thank you very much.

A TIN can only be issued by the FIRS and not the CAC. the business registration number issued by the CAC is different from the TIN. You can walk into the FIRS office closer to the registered address for the generation of your TIN. However this should be done not later than 6 months from incorporation or commencement of business which ever is earlier. You will then be required to file monthly VAT returns even without any trading. Failure to do so would lead to the imposition of penalties and interest thereon. For a TCC, its issuance is free if all conditions are satisfied. For a company yet to commence business, one of the conditions is the payment of a pre-operational levy of 25K for the first year and 20k in subsequent years.

Please note that the above payment only applies to registered companies. Registered business names (individuals, partnerships) do not need to obtain TCC from the FIRS but the state board of internal revenue where they are located. For more information you can contact me on topdogs85@yahoo.com

Pls what's different btw LIRS AND FIRS.then which can cover me throughtout federation,for example , i do busines in lagos state and pay tax in lagos, can that cover me every where in nigeria,


LIRS is the state revenue service responsible for Personal income taxes of residents of the state and 'Enterprises' while the FIRS is responsible for taxes from all registered companies and federal taxes from individuals. You need both set of clearances from the LIRS (personal tax clearance) and FIRS (Company tax clearance) the tax you pay in Lagos to the FIRS covers your company throughout the nation while your Personal income tax remitted to the Lagos state government shows you've been paying your taxes in your state of residence - Just in case.

If you are an individual with a registered business name, you only require a tax clearance from LIRS and not the FIRS. Your taxes should go to the LIRS as you are resident in Lagos State and not the FIRS. The only tax that should go to the FIRS is VAT which is not your tax in effect as you are only a collecting agent for government. The FIRS used to issue VAT certificates but havent done so in recent times. The purpose of obtaining a TIN from the FIRS is to facilitate the remittance of VAT collected. YOU DONT NEED AN FIRS TCC. Dont be deceived otherwise.

''Step 6. Your consultant will give you several forms to fill. You will be guided as you fill the forms. However, it is important that you read through the forms as most of the information you reveal in it are confidential and so you will not want to give out something that might implicate you because it is wrong. You will also be told to provide copies of your letter head. These copies are used for correspondences with the tax authority which will typically include your application for tax clearance certificate. [size=8pt][size=8pt][size=8pt]You will also need to give your consultant your Certificate of Incorporation and Memorandum and Articles of Association (often called MEMAT). You will also give the tax man a copy of the personal tax clearance certificate of your MD or/and any Director which you will obtain from the state inland revenue service[/size][/size][/size]. For example, in Lagos it is obtained from the LIRS.''

Seun, kindly shed more light on the bold portion above- If I happen to be a Federal Govt worker, and I'm the Lead director of the newly incorporated XYZ Ltd, how do I retrieve my Personal Income Tax documents from my Finance dept to tender to the tax consultant, knowing well the several complicated or almost impossible process you re poised to be dragged too, not forgetting that as a public servant, trying to run your stuff codedly, that's tantamont to unecessarily exposing yourself and it may give your distractors a gateway to work you a query.

Thank you.

Good info.

Let me state this fact clearly.

Please do not hand your tax tax computation into the hands of the revenue office worker else you will regret doing so, I am saying this without exclusion to any , because they will run you down and ruin your firm. Anybody suggesting that you just walk into any revenue office and do this or that is note giving the right advice at least as far as Nigeria tax board offices are concerned. Let the person do so and then have the experience

There are a whole lot thing involved during initial tax filling and registration and you have to get it right right from the onset else you continue paying how you started it.

Get a consultant to manage you tax affair and you will be shielded from the extortionist tendencies of the taxman; and if you cannot afford to get a tax consulting firm; look for a friend , a relation or any body who works in a tax firm and consult with him on individual level. Proper advice before you start all your tax filling is indispensible and all effort must be made to get right.
Tax issue are serious, it can ruin one business if not properly handled. I work in tax consulting firm and I know what I am saying

Below is the list of documents needed for registration as a tax payer

1.Registered address
2.Business address
3.Nature of business
4.Date of incoporation

5.Date of commencement
6. Proposed name and address f banker
7. Proposed name and address of auditor
8. Name and address of directors
9. Proposed accounting date of the company
10. statement of affairs

In addition to above , you need
a.Memo and article of association
b.certificate of incorporation


Also know about the new Personal Income Tax Regime

before
First N30,000 taxed at 5%
Next N30,000 taxed at 10%
Next N50,000 taxed at 15%
Next N50 000 taxed at 20%
Above N160 000 taxed at 25%

Now:

First N300,000 taxed at 7%
Next N300,000 taxed at 11%
Next N500,000 taxed at 15%
Next N500,000 taxed at 19%
Next NI, 600,000 taxed at 21%
Above N3, 200,000 taxed at 24%




ireogwu@ijewere.com