The Tax Clearance Certificate
A Tax Clearance Certificate in Nigerian is also known as Tax Form Z. It is a crucial official document issued by the relevant tax authority to a taxpayer. A tax Clearance Certificate certifies that, the tax assessed on the income (gathered from all sources) of a particular taxpayer for the years just immediately before the current year of assessment has been fully paid.
Obtaining a Tax Clearance Certificate is provided for in the Nigerian constitution by Section 85 of Personal Income Tax Act (PITA). According to Section 85 , relevant tax authority can issue a tax clearance to a person who has demanded the tax certificate whenever the tax authority has properly evaluated the tax assessed on the income of that person and considered the tax payer not defaulting. The income is to be evaluated based the past three years immediately preceding the current year of assessment. If the tax is considered fully paid or seen that the taxpayer is not liable to pay tax for any of those three years, then the tax authority can issue a tax clearance within two weeks of demand, The Tax authority is also well within their rights to deny a demand for a Tax Clearance Certificate as long as there are reasons for the denial. According to the constitution, payment of the current year shall not be made a condition for the issuance of a Tax Clearance Certificate, unless the applicant is leaving the country finally.
