The Corporate Affairs Commission (CAC) issued a public notice on 29 June 2020, to notify the public that henceforth, Tax Identification Numbers (TIN) issued by the Federal Inland Revenue Service (FIRS) will be included on Certificate of Incorporation of companies registered under Part A of the Companies and Allied Matters Act (CAMA). Further, the CAC indicated that the requirement for companies to apply for the issuance of TIN from the FIRS after incorporation is no longer required. This move is in furtherance to the Ease of Doing Business Initiative which is a major focus of the Federal Government of Nigeria driven by the Presidential Enabling Business Environment Council (PEBEC)
Review of the Legal Basis
Based on the Finance Act 2019 which came into force on 13 January 2020, companies are required to display their TIN in all business dealings with other companies and individuals as well as on all correspondence with the tax authorities, Ministries and Government Agencies. Also, the TIN is a requirement for opening and operating a business bank account in Nigeria.
However, companies are required to register with the FIRS upon commencement of business and not incorporation. Further, the Finance Act 2019 specifies that the date of commencement of business is the earliest of the dates a company performs any of the following activities:
- begins to market or first advertises its products or services for sale
- obtains an operating license from a regulatory authority in Nigeria
- first sale or purchase
- executes its first trading contract after incorporation
- issues or receives its first invoice
- delivers or receives its first consignment of goods or
- first renders services to its customers
This initiative is laudable as it would positively impact the ease of doing business in Nigeria. Companies would no longer go through additional documentation scrutiny to obtain a TIN from the FIRS.
However, companies may encounter the need for a redirection of their TIN to the FIRS office closest to their place of business in a situation where the TIN issued along with the certificate of incorporation does not fall under such FIRS offices’ jurisdiction.
We however expect increased synergy between the CAC and FIRS and the deployment of technology to ensure that the need to generate a TIN does not unnecessarily prolong the timeline for issuance of certificate of incorporation.