Ease of Doing Business: Integration of Tax Identification Number on Certificate of Incorporation by Olatoun Orilonise, Esq.

Introduction

The Corporate Affairs Commission (CAC) on the 29^th of June, 2020 issued a public notice informing the general public that Certificate of Incorporation of companies registered under Part A of the Companies and Allied Mattters Act will henceforth carry Tax Identification Numbers (TIN) Issued by the Federal Inland Revenue Service (FIRS) thereby dispensing with the need for companies to apply to FIRS for the Tax Identification Number after incorporation. The CAC noted that this is part of the Ease of Doing Business (EoDB) initiative of the Federal Government championed by the Presidential Enabling Business Environment Council (PEBEC).

Objectives

The ultimate objective of the Corporate Affairs Commission is to ease the burden of newly incorporated companies, the CAC is also focused on achieving the reforms under the EoDB initiative. This means that with this initiative company owners will have to dispense with the need to start a new application for a TIN at the FIRS after obtaining their Certificate of Incorporation.

The CAC in its focus to delivering substantive reforms for the ease of doing business in Nigeria has made system integration possible with the FIRS which allows all information on a registered company to be electronically transmitted to FIRS.

The requirement for TIN for companies has been made mandatory with the Finance Act 2019 and Section 10(1) of the Companies Income Tax Act which provides that;

“Every company shall have a Tax Identification Number (TIN) which shall be displayed by the company on all business transactions with other companies and individuals on every documents, statements, returns, audited accounts and correspondence with revenue authorities including the Federal Inland Revenue Service, ministries and all government agencies.”

The Finance Act has also made it mandatory for a company to have a TIN before they can open a corporate account. Section 10(2) of the Companies Income Tax Act provides that;

“Every person engaged in banking or other financial services in Nigeria shall require all companies to provide their TIN as a precondition for opening a bank account or, in the case of an account already opened within three months of the passage of this Act, the bank shall require such TIN to be provided by all companies as a precondition for the continued operation of their bank accounts.”

With the integration of the TIN on the Certificate of Incorporation companies will find it easier to open their corporate account upon receiving the Certificate of Incorporation instead of waiting 2 weeks or more for the FIRS to issue them a TIN. This also allows business owners to easily request for loans and credit facilities from financial institution.

This new reform is also expected to gain a higher rank for Nigeria in the next round of the World Bank Doing Business Index in which Nigeria currently ranks 131 out of 190 countries.

Conclusion

The integration of the Incorporation and Tax registration process will ease the burden of newly registered companies of registering with the FIRS to obtain TIN. It will also allow the FIRS to improve the accuracy of its database of registered companies operating in Nigeria to improve tax compliance in the country.