The Corporate Affairs Commission (CAC) will now issue its Certificate of Incorporation along with Tax Identification Number (TIN) to businesses that register with it. The agency says it’s doing this in line with the Federal Government’s Ease of Doing Business Initiative.
The CAC made this known in a public notice dated the 29th of June (Monday).
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It means that businesses no longer have to apply to the Federal Inland Revenue Service (FIRS) to get a unique TIN. They will receive it along with the CAC certificate, both of which will be presented to them at the end of the registration process.
Besides integrating the incorporation and tax registration processes, this new system will allow the FIRS to capture more businesses in its tax base. Ultimately, it could enable the nation’s top tax agency to grow its collections.
The CAC has indicated that it will be working with the FIRS to make the process work seamlessly.
Businesses operating in Nigeria are required by law to register with the CAC, to be recognized as legal entities. But while many have kept with this rule, a larger number fail to undertake the next step following incorporation– obtaining a taxpayer identification number from the FIRS.
The integration of both processes ensures that fewer businesses will slip through the cracks between them.
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It comes at a time in which the government is battling to shore up its finances. Revenues from traditional cash cows like the oil industry are running low. There’s been a movement towards tax reforms in recent times; the finance act, signed into law early this year, changes details of the previously existing tax regime.
Over the past couple of years, the FIRS says it has increased its tax collections, mainly by targeting High Net Worth Individuals and larger businesses that have defaulted on tax payments.
However, falling oil prices and the COVID-19 pandemic have combined to depress the government’s revenues.
Authorities will want to emphasize the time and resource savings that businesses will enjoy from the new policy. But it could also help their tax reform agenda as well.
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