Does a Business Name Get a Tax Clearance Certificate in Nigeria?

Many business owners in Nigeria wonder whether a business name can obtain a Tax Clearance Certificate (TCC). Since a business name is not a separate legal entity like a company, its tax obligations differ. However, tax compliance is essential for accessing government contracts, opening corporate bank accounts, and avoiding penalties.

 

This article explains whether a business name can obtain a TCC and the tax requirements involved.

 

 

Understanding a Tax Clearance Certificate (TCC)

 

A Tax Clearance Certificate (TCC) is an official document issued by the Federal Inland Revenue Service (FIRS) or the State Internal Revenue Service (SIRS). It confirms that a taxpayer has fulfilled their tax obligations up to date.

 

 

Who Needs a TCC?

 

A TCC is required for:

 

Government contracts and tenders.

 

Business registrations and license renewals.

 

Opening a corporate bank account.

 

Visa applications and international transactions.

 

 

Can a Business Name Obtain a TCC?

 

Yes, a business name can obtain a Tax Clearance Certificate (TCC), but it is issued in the name of the owner(s) rather than the business itself. Since a business name is not a separate legal entity, its tax obligations fall under the Personal Income Tax Act (PITA) rather than the Company Income Tax Act (CITA).

 

 

Tax Requirements for Obtaining a TCC as a Business Name Owner

 

To obtain a TCC for a business name, the owner(s) must fulfill the following tax obligations:

 

1. Personal Income Tax (PIT) Compliance

 

Sole proprietors and partners must file and pay their Personal Income Tax (PIT) under the self-assessment system.

 

Tax is calculated based on annual profits, with rates ranging from 7% to 24% depending on the income bracket.

 

 

2. Filing Annual Tax Returns

 

Business name owners must file annual tax returns with the State Internal Revenue Service (SIRS) where they reside.

 

The filing deadline is typically March 31st of each year.

 

 

3. Payment of Other Applicable Taxes

 

Value Added Tax (VAT): If annual turnover exceeds N25 million, the business must register for VAT and remit 7.5% VAT to FIRS.

 

Pay-As-You-Earn (PAYE) Tax: If the business has employees, it must deduct and remit PAYE tax monthly.

 

Business Premises Levy: Certain states impose an annual levy for operating a business within their jurisdiction.

 

 

Steps to Obtain a Tax Clearance Certificate for a Business Name

 

To obtain a TCC, follow these steps:

 

1. Register with the State Internal Revenue Service (SIRS)

 

Business name owners must obtain a Taxpayer Identification Number (TIN) from the State tax office.

 

 

2. File Annual Tax Returns

 

Submit income tax returns and financial records to the relevant tax authority.

 

 

3. Pay Any Outstanding Tax Liabilities

 

Ensure all tax obligations, including personal income tax and VAT (if applicable), are settled.

 

 

4. Apply for a TCC

 

Visit the State Internal Revenue Service (SIRS) office and submit a TCC application.

 

Provide required documents, including tax payment receipts and business registration details.

 

 

5. Processing and Issuance

 

If all tax obligations are met, the TCC will be issued, usually within two weeks.

 

 

 

Difference Between Business Name and Company TCC

 

Business Name TCC: Issued in the name of the proprietor or partners under Personal Income Tax.

 

Company TCC: Issued in the name of the company under Company Income Tax (CIT), processed through FIRS.

 

 

Conclusion

 

A business name can obtain a Tax Clearance Certificate (TCC), but it is issued in the owner’s name under the Personal Income Tax system. Business name owners must comply with tax obligations such as filing tax returns, paying personal income tax, VAT (if applicable), and business levies to qualify for a TCC.

 

If you need assistance with tax compliance or obtaining a TCC for your business name, contact us for professional guidance.

 

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