As scarcity of foreign exchange worsens, the Central Bank of Nigeria (CBN) has further tightened the noose on customers of banks through additional requirements.
Specifically, effective this month, customers initiating Form A are requested to submit valid tax clearance certificates (TCCs) covering three years in line with a directive by CBN.
This us despite the fact that even after filling the forms with all the necessary attachments, customers would join the’endless’ queues in banks for at least three months.
Thereafter, the banks begin their rationalization based on what they consider as relevance or preference for their ‘valued customers’.
TCC serves as proof of meeting tax obligations by citizens, and are demanded from those that have businesses with governments at the three levels and it also ensures compliance with the provisions of Section 85 (2) of the Personal Income Tax Act 2004 (as amended).
In Nigeria, this process is usually abused by private sector operatives majorly as civil servants are forced to pay every month through direct deductions at source.
The implication, according to MetroBusinessNews (MBN) is partly to reduce demand pressures that has led to volatility in the foreign exchange market.
More worrisome is the fact that the directive, which banks have commenced implementation could be used as revenue ventures by corrupt civil servants in ministries.
A mail seen by MBN reads: “Effective Thursday, 1 June 2023, customers initiating Form A requests will be required to provide a valid Tax Clearance Certificate (TCC) for the three years immediately preceding the current year of assessment.
“This is in addition to uploading all other required documents on the Central Bank of Nigeria (CBN) Trade Monitoring System (TRMS) portal for Form A requests. This also applies to all requests currently awaiting FX allocation regardless of the stage on the TRMS portal.”
Despite the envisaged inconveniences, the banks insisted the new regulation is mandatory.
They added: “We understand that this may cause some inconveniences and we sincerely apologise for any strain that this may cause you. However, we are mandated by law to comply with tax regulations to maintain the integrity of the financial system.“
Another message from another bank reads, “In line with the directives of the Central Bank of Nigeria (CBN) and compliance with the provisions in the Personal Income Tax Act, the submission of your Tax Clearance Certificate (TCC) is now mandatory for the following Form A requests.
- School Fees Payment
- Medical Bill Payments
- Personal Travel Allowance (PTA)
- Personal Home Remittances
- All other Foreign Exchange transactions for individual customers
It is important to submit your Tax Clearance Certificate (TCC) to ensure the smooth processing of all requests stated above.”
However, further investigation show that the new directed has further compounded the challenges of customers as they are further exposed to sharp practices perpetuated by ministry as well as internal revenue staff who have before now turned tax clearance requests by politicians and public office seekers into money-making avenues.
The endemic corruption is pervasive in all the Ministries, Departments and Agencies, including education, where some ministry staff in the office are demanding gratification from their colleagues who on the field teaching.
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“Unless government takes further steps to monitor procurement of the TCCs, it will further embolden the endemic corruption as those in the offices are demanding gratification for the certificate, which is a mere confirmation of what we are contributing compulsorily. In an ideal clime, all civil servants are supposed to have code to log in, and this is supposed to be automatic. But what we are experiencing here, even before this directive for some people that had reasons to request for the certificate in the past, was nothing but corruption as the certificates or letters are not usually given free,” laments a civil servant in one of the states in the South West.