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    Wednesday, May 10, 2023

    Banks Demand Tax Clearance Certificate on FX Transactions

    The federal and state governments have mandated commercial banks as well as Ministries, Departments and Agencies of Government (MDAs) to henceforth, implement the demand for a valid Tax Clearance Certificate (TCC) as a prerequisite for carrying out any business transaction with individuals and organisations in the country.

    It was gathered that the drive, which was in line with the provisions of Section 85 of the Personal Income Tax Act (PITA), 2011 (as amended) and Section 31(5) of the FCT-IRS Act, 2015, had already taken effect in the Federal Capital Territory and other parts of the country.

    To this effect, some banks had already conveyed the development to their customers through text messages seen by THISDAY.

    According to a publication by the FCT- Inland Revenue Service which was seen by THISDAY, the regulation covers applications for government loans, registration of motor vehicles, applications for foreign exchange or exchange control permission, certificate of occupancy, award of contracts by the government, and its agencies, and registered companies.

    Other transactions subject to proof of TCC include approval of building plans, trade licence, transfer of real property, agent license, pools or gaming license, registration as a contractor, application for distributorship, confirmation of appointment by the government as chairman or member of a public board, institution, commission, company or to any other similar position made by the government.

    Other affected transactions are stamping of guarantor’s form for a Nigerian passport, application for registration of a limited liability company or of a business name, allocation of market stalls, appointment or election into public office, application for change of ownership of a vehicle by the vendor, plot of land, FCTA loan and any other as may be determined from time to time.

    Under the new directive, MDAs, banks, and corporate bodies must ensure all presented TCC go through a rigorous verification process by the issuing tax authority to ascertain their authenticity.

    According to the FCT tax authority, the development was borne out of the need for the service to ensure that all residents of the FCT fulfill their tax obligations as demanded by law.

    The FCT-IRS, further stated that in fulfilment of its mandate to improve revenue generation and ensure compliance, it would carry out a routine monitoring and enforcement exercise monthly, quarterly, or annually, adding that strict sanctions would be meted out to defaulting bodies as stipulated by law.

    In the same vein, it stated that filing annual returns is mandatory for all residents of FCT as it is a pre-condition for the issuance of TCC.

    “Thus, the monitoring exercise will encompass the compliance rate as regards the prompt filing of annual returns as well as the demand for Tax Clearance Certificate (TCC) as a requirement for the transactions listed above,” it noted.

    However, in an update on FX requests and transactions, one of the commercial banks in a text message seen by THISDAY intimated customers that, “In line with the provision of the Personal Income Tax Act (PITA), all banks are now required to sight customers’ Tax Clearance Certificate (TCC) before foreign exchange transactions can be fulfilled.

    “Consequently, all FX and Form A requests will now require a copy of the applicants’ TCC before the request can be completed. This includes PTA/BTA, international school fees, medicals, personal home remittances, and upkeep.”

    James Emejo in Abuja

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