This is evidenced in the challenges relating to reducing level of corruption to the barest minimum, tax evasion, government delay in implementing recommendations following periodic review of the tax system, and provision of adequate infrastructure for effective tax administration and manpower development, among others.
This challenge is not different when it comes to a tax payer holding Tax Clearance Certificates (TCC) issued in another State and willing to use it in other states for transactions requiring same.
Contrary to the provision of the law, experts say this issue is as seemingly difficult as an elephant passing though the eye of a needle, a development which further queries the role of Joint Tax Board (JTB) in curbing multiplicity of taxation across the country.
Following its establishment in 1961, the Joint Tax Board is supposed to contribute to the advancement of the tax administration in Nigeria, especially in the area of harmonisation of Personal Income Tax (PIT) administration throughout Nigeria. With this role in mind, tax payers may now ask: Of what relevance is Tax Clearance Certificates in another jurisdiction away from where it was issued?
By definition, “Tax clearance certificate is a written confirmation from revenue authorities that person’s tax affairs are in order at the date of issue of certificate. In some instances, a certificate may be issued to a customer who has tax arrears provided such arrears are covered by an installment arrangement that has been agreed by revenue,” said D. Asada in his report ‘The relevance of tax clearance certificate in Nigerian democracy.’
Jacob Babalola Okele, a chartered tax expert, said: “It seems the Joint Tax Board (JTB) which is the umbrella body of State Internal Revenue Services throughout the federation, including the Federal Inland Revenue Service, is ignoring complaints from the citizenry that some states are refusing to accept tax clearance certificates from other states for transaction in their state.
“Example, a Kaduna State resident has a land transaction in Lagos State; the latter usually insists that the Kaduna resident tax payer must pay personal income tax in Lagos State. This has been happening for years and the JTB does not appear to have addressed this issue at its periodic meetings,” Okele told participants recently at a lecture titled ‘Reforms in the Nigerian tax system from 1938 to date – challenges and prospects.’
TCC is produced when applying for certificate of occupancy; building plans; trade licence; real property; applying 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 award of contracts by government, its agencies and registered companies; among others.
Accordingly therefore, taxation in Nigeria is enforced by the three tiers of government- that is, federal, state and local governments, each with its spheres clearly spelt out in the taxes legislations.