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A tax clearance certificate can be obtained upon request as long as the applying individual has remitted his/her taxes to the EIRS for the three (3) years immediately preceeding the current year of assessment.
TCC is not paid for, but the taxpayer must have fully met his/her tax obligations to the Federal/ State Government for a period of three (3) years before applying for a TCC, upon which the tax authority issues the TCC.
Section 85(4) of the Personal Income Tax Act as amended, lists Tax Clearance Certificate as necessary for, but not limited to the following reasons:
· For doing business or registration of a company with other corporate entities in Nigeria, be it a private or public organization;
· Application for Government loan for industry or business;
· Registration of motor vehicle;
· Application for firearms licence;
· Application for foreign exchange or exchange control permission to remit funds outside Nigeria;
· Application for certificate of occupancy;
· Application for awards of contracts by Government, its agencies and registered companies;
· Application for approval of building plans;
· Application for import or export licence;
· Application for agent licence;
· Application for pools or gaming licence;
· Application for registration as a contractor;
· Application for distributorship;
· Application for transfer of real property;
· Application for allocation of market stalls;
· Confirmation of appointment by Government. (Federal, State or Local Government)
· Contesting for public office in form of election in Federal, State and Local.
· Application for change of ownership of property (Land, house, vehicle etc.);
· Application for a plot of land;
· Any other transactions as may be determined.
With Direct Assessment, a taxpayer can assess him/herself and proceed to pay the calculated tax at designated banks as long as the guidelines to self-assessment are followed.
TCC can be verified by visiting the nearest Revenue Service office or by contacting the service’s call centre.
Yes, the law provides
that excess tax paid by any employee shall be refunded on application by the
employee with the option of electing to use the excess payment to set-off
future tax liability.
Yes, Comprehensive list
of employees with PAYE deductions (remittance schedule) is continuously
submitted on monthly basis each time PAYE is being remitted to EIRS, while
annual returns (form H1) is to be submitted by 31st day of
January of every year by every employer to enable the Tax Authority ascertain
whether the correct deductions and payments of tax have been made for the
previous year (period of twelve months) for all its employees.
Yes, the penalty for failure to file returns according to the Personal Income Tax (Amendment) Act, 2011 is N500,000 for corporate organizations and N50,000 for individuals.
A TCC request can be rejected/denied under the condition where the taxpayer still has an outstanding liability to pay.
The Sixth schedule of
PITA as amended specifies the following as tax exempt:
a) National Housing Fund contributions
b) National Health Insurance Scheme contributions
c) Life Assurance Premium
d) National Pension Scheme
The current rates applicable to the taxable or chargeable income are as follows:
N300, 000.00 @ 7%
N300, 000.00 @ 11%
N500, 000.00 @ 15%
N500, 000.00 @ 19%
N1, 600,000.00 @ 21%
N3, 200,000.00 @ 24%
A TCC shall disclose in respect of the last three years of assessment the following information-
Name and address of Taxpayer
Total assessable income;
Years of Assessment;
Number and date of receipt
Source of income;
Taxpayer Identification Number (TIN);
Date of issuance;
Expiration date ;
Signature of authorized officer/officers, etc
Benefit-in-kind may be
defined as those benefits or perquisites that accrue to a person by reason of
office and/or position he/she occupies. Benefits-in-kind include such benefits
as official car, official accommodation, cooks, gardeners, securities
etc. It is taxable after certain deductions/reliefs are granted.
Direct Assessment is a method under the Personal Income Tax used to assess the income of self-employed individuals to tax.
Personal Income Tax Act
(PITA) as amended defines Gross Emolument as the aggregate of wages, salaries,
allowances (including benefits-in-kind), gratuities, superannuation and any
other income derived solely by reason of employment.
P. A. Y. E. is an acronym for “Pay As You Earn”. It is a method of collecting personal income tax from employee's salaries and wages through deduction at source by an employer as provided by the relevant sections of Personal Income Tax Act (PITA). (S.81 of Personal Income Tax Act Cap P8 LFN 2004)
Tax Clearance Certificate (TCC) is an official document issued by the relevant tax authority e.g. Edo State Internal Revenue Service (EIRS) showing that a taxpayer’s affairs in the three (3) years preceeding the current year are in order.
The Personal Income Tax Act (PITA) as amended provides for Consolidated
Relief Allowance (CRA) of N200, 000.00 subject to a minimum of 1% of gross
income, whichever is higher plus 20% of gross income and the balance shall be
taxable in accordance with the tax rates in schedule six (6) of the Act
The deadline for filing of end of year tax returns for PAYE is the 31st of January of every year
The deadline for filing of tax returns under Direct Assessment is the 31st of March every year.
The due date for remitting PAYE tax is the 10th day of the preceding month after deductions.
Tax Clearance Certificate is issued by the relevant state tax authority to a taxpayer within two (2) weeks of demand for the certificate as long as the taxpayer has satisfied the requirements for issuance of TCC.
The minimum tax rate is 1% of total income. It is applicable where the tax assessed is less than 1% of gross income.
This is treated as
benefit – in – kind. 5% of the value of the vehicle is calculated and added
back to the income of staff and taxed.
When there is an under
deduction of tax in staff salary, the employer of labour is liable for improper
tax deductions with interest and penalty.
By residency rule, an employee’s PAYE tax is payable
to the tax authority of the state of his/her residence. It is therefore the
duty of the employer to deduct and remit it to the tax authority where the
employee is resident. If the employee is resident in Igarra, the tax authority
that is entitled to his PAYE tax is the Edo State Internal Revenue Service. If
he is however resident in Okene, Kogi State the tax authority will be the Kogi State Board
of Internal Revenue.
does not differ because the rates used for computation are the same.