Comply with FIRS directive to identify fake Tax Clearance Certificates

This certainly must have motivated the Federal Inland Revenue Service (FIRS) to wake-up in its revenued bid of checking fake tax Clearance Certificate (TCC).

We have to recognise that a legal status and administrative procedure for the issuance of Tax Clearance Certificate (TCC) as an authorised way of recognising tax compliant Nigerians, co-operations, institutions cannot be compromised.

This perhaps therefore explains why the FIRS made efforts to address the issue of fake TCCs, by including certain security features in its own documents.

Such security features include the certificate having as an imprint, bold form, the Nigerian Coat of Arms and a glazed round security mark with the inscription "Federal Inland Revenue Service".

What more do you look out for? The Service publicised last week that within the security mark on the certificate, you will find the Nigerian Coat of Arms inside; a hexagon with the FIRS written beneath.

According to Section 24 of the Nigerian Constitution, "it shall be the duty of every citizen to declare his income honestly to appropriate and lawful agencies and pay his tax promptly."

That is why the FIRS notified that it has taken the responsibility of proper administration of Tax Clearance Certificates.

This is because in the FIRS Establishment Act 2007, it is the responsibility of the Service to properly administer all Federal Tax Laws, issue a public notice on the legal status and the administrative procedure for the issuance of TCC.

A special purpose unit has been set up by the Service to verify TCCs issued. This is in pursuance of powers granted by The Service Establishment Act 2007 to investigate or cause investigation to be conducted to ascertain any violation of any tax law whether or not such violation has been reported to the Service. What is expected of you with regard to this effort? You have been asked by the FIRS to send copies of all TCCs you received as a person or institution.

Under the Companies Income Tax Act, Cap C21 and the Personal Income Act, Cap P8 laws of the Federation of Nigeria, 2004, the FIRS has the sole authority to issue company TCC.

Likewise, under the Personal Income Tax Act, Cap P8, Law of the Federation of Nigeria, 2004, the FIRS issues TCC for persons resident in the Federal Capital Territory as well as members of the Nigeria Police Force, staff of the Ministry of Foreign Affairs and non-resident individuals.

Though, each State's Internal Revenue Board (SIRB) issues TCC, but it is only for personal income tax for persons resident within the state. TCC is meant to disclose in respect of the last three years of assessment: chargeable income or total profit, tax payable, tax paid, and tax outstanding or alternatively, a statement to the effect that no tax is due.

According to FIRS, the TCC is used and admitted as evidence of income tax payment for three consecutive preceding years.

For those issued Restricted TCCs which demonstrates some, but not full payment of taxes, the period of restriction is to be used to properly verify returns and ascertain that information provided is complete and correct. For instance, the FIRS said that in the case of Personal Income Tax, tax payable is not limited to taxes from employment only, but on income from all sources.

Regardless of whether a TCC is issued or not, the FIRS of the relevant Tax authority can by law review the tax paid in the previous years to determine whether or not the correct tax has been properly paid. This is in line with the routine functions of all tax offices world wide.

For Value Added Tax (VAT), though you may not have heard, but you may be interested to be informed that the registration certificate that is issued is not a Tax Clearance Certificate.