As part of the strategy to drive tax compliance, provision of tax clearance certificate (TCC) may soon become a prerequisite for issuance of National passport (what is commonly referred to as "international passport"). This is according to the statement credited to the Executive Chairman of the Federal Inland Revenue Service (FIRS) at the meeting of the Joint Tax Board (JTB) in Abuja, on Monday, 28 November 2016. This requirement is being planned to apply to both fresh applications and renewals of old passport.
The FIRS Chairman stated this requirement will extend to a number of other services from the government. It is noteworthy that during his tenure as the Chairman of Lagos State Internal Revenue Service, he introduced similar exercise in Lagos State, which makes evidence of tax payment requirement to process anything with Lagos State Government, including clearance after payment of fines following traffic related offences.
Section 85(2) of the Personal Income Tax Act (PITA) requires a TCC to be presented where a person has any dealing with a Ministry, Department or an agency of Government or a commercial bank, and the list of transactions for which TCC is a prerequisite are listed in Section 85(4) of PITA. However, compliance with this provision has not been enforced in many instances and one of such instances is the requirement for guarantors of applicants for a Nigerian passport to present a TCC.
Considering that the provision of Section 85(4) of PITA applies to guarantors of applicants for national passports, it may be necessary to expand the scope of the provision to also cover the applicants. Thus, JTB may recommend to the Minister of Finance to make a regulation to expand the list of transactions covered under Section 85(4) to include applicants for national passports, in line with Section 106(a) of PITA.
It is still unclear when this requirement will become effective. We await further developments in this regard and would update you as more information become available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.