The Electronic Tax Clearance Certificate

The Electronic Tax Clearance Certificate (e-TCC) is a new system of issuing tax clearance certificates in Lagos State. It replaces the old paper and manually processed Tax Clearance Certificate (TCC). The e-TCC is a project embarked upon by the Lagos State Government to remove the abuses, which characterised the administration of the old TCC in the state. The abuses included:

• Lots of fake Tax Clearance Certificates (TCC) in circulation

• Loss of revenue by the State due to large scale fraud and malpractices

• Tax evasion

• Delay in issuing TCC to Taxpayers

• Poor identification of taxpayers

Objective
The objective of the e-TCC project is to increase the Internally Generated Revenue (IGR) of the State through:

• Pay As You Earn (PAYE)
• Direct Assessment of Individual Taxpayers
• Capturing of more Taxpayers into the Tax Net

Benefits
The e-TCC project has many benefits to both the State Government and individual taxpayers:

Benefits to LASG	Benefits to Individuals
Identification of Taxpayers	Serves As Identity Card to the Holder
Elimination of fake Tax Clearance Certificates (TCC) in circulation	Data Integrity
TaxPayer Enumeration	Reinforces Taxpayer Assurance that all Payments would be remitted to the Government Coffers by the various Agencies
Attraction of more Taxpayers to the Tax Net	Card is Durable and Portable
Easy Reconciliation of Tax Returns	Provides Easy Access to Taxpayer Payment History
Total remittance of all collected revenues into Government coffers	Eliminates Delay in obtaining TCC

Goals Achieved
Several goals have been achieved in the e-TCC project.They include:

• Development of an Application Form
• Installation of Information Technology Facilities such as Computers, Printers, Internet Access and Generators at the Tax Stations
• Distribution of Customised Terminals/Card Readers to designated places and Tax offices
• Maintenance of Database to Ensure Data Integrity
• Staging of Vigorous Enlightenment Campaigns to Create Public Awareness
• Training of Resource Persons for the Project
• Continuous Cost-benefit Analysis of the Project
• Gathering of Accurate and Timely Taxpayers Data
• Provision of Logistic Support for the Project
• Identification of Project Implementation Team/Committee

Data Capture by Banks
Accurate data supplied by both the banks and taxpayers are crucial to the success of the project. The banks are to:

1.	Capture Accurate Taxpayer Information at the Point of their making Payments at the Banks
2.	Ensure that all Taxpayers Accurately complete the Necessary Fields on the Deposit Slips
3.	Capture Accurate Taxpayer Data before Transmitting them into their Systems and Subsequently to ABC
NOTE	Inaccurate Information from either Taxpayers or Banks will delay the Processing of the e-TCC or outright cancellation of receipt. Banks that Fail to comply with the Foregoing directives would be advised to withdraw from EBS-RCM scheme.

Process Flow
The Process Flow of e-TCC project is as follow:

TaxPayer	Designated Banks	Tax Audit Monitoring Agents	LIRS Headquarters
Remits taxes at a designated bank	Acknowledge remittances made by taxpayers by reporting them to ABC via Internet or diskette	Carry out tax audit of companies to capture all employees and individuals into the tax net	LIRS/ABC distribute e-TCC application Forms, Form A, Form H1, Form L1 and Form H2 to all companies through Tax Stations/Revenue Centres
Obtains receipt from banks	Give additional information to ABC on Taxpayers (if necessary)	Ensure that e-TCC Application Forms of audited companies/individuals are collected, completed and returned to relevant Tax Stations/ABC	Advise all companies to apply for e-TCC on behalf of their employees; also advises self - employed Taxpayers to apply for e-TCC
Applies for e-TCC	Obtains receipt from ABC on behalf of Taxpayers	Ensure that the companies pay the tax liabilities arrived at during the audit process into designated bank accounts and that the companies complete Form H1 while their employees complete Form H2 (supply information in Forms H1 in electronic copy)	In cases of non-compliance, serve the affected companies/individuals with audit notifications
Pays additional assessment ( if necessary)	Deliver receipts to Taxpayers	Advise the companies to apply for Tax Audit Clearance Certificates after the payment of Tax liabilities arrived at during Tax Audit process	Approve the issuance of e-TCC to the applicants
Obtains e-TCC from Tax Station		Tax Monitoring Agents (TMA) ensure that Individuals within their areas of operation apply for e-TCC




Tax Stations	Tax Authority	Alpha-Beta Consulting Limited (ABC)
Cross check submited form to ensure the correctness and accuracy of all documents attached to e-TCC Form by an applicant	Determines level of compliance by Taxpayers	Acknowledges tax remittances from Banks
Ensure that adequate remittances have been made by an applicant or on behalf of an applicant based on Forms H2 and A	Raises additional assessment (if necessary)	Delivers taxpayers receipts to the Banks
Confirm adequacy of remittances especially of the current year by the Audit unit	Forwards Taxpayer Application Forms to ABC	Collects approved application forms, Form H1 and Form H2 from Tax Stations for processing
Make additional assessment if necessary and ensure that payment is made by the applicants	Advises ABC to produce e-TCC for Taxpayers	Captures the data of all Applicants into e-TCC database using the completed application forms, Form H1 and/or Form H2
	Receives processed card from ABC	Follows up the collection of e-TCC application forms, Form H1 and Form H2 with companies which fail to submit at Tax Stations
	Issuing Authority completes the Official section of e-TCC Application form	Produces e-TCC for applicants and uploads tax remittance history on the card chips
	Delivers processed cards to applicants	Delivers fully processed cards to Revenue Centres and relevant tax offices/companies

Guidelines For Application
A set of guidelines for both Pay As You Earn (PAYE) and non-Pay As You Earn applicants for the e-TCC has been outlined

PAYE Applicants	Non-PAYE Applicants
PAYE applicants are to:	Non PAYE applicants are to:
Complete Form A obtained from the Lagos Internal Revenue Service (LIRS) at the beginning of the year	Complete the e-TCC application form obtainable from designated centres in the state such as:
Complete the e-TCC application form obtainable from designated centres in the state such as:	Tax Stations/Revenue centres
Tax Stations/Revenue centres	LIRS headquarters, or,
LIRS headquarters, or,	Downloaded from the EBS-RCM website (www.lasg-ebs-rcm.com)
Downloaded from the EBS-RCM website (www.lasg-ebs-rcm.com)	Attach photocopy of Assessment Notice
Attach completed and certified Form H2 and passport photographs with name written at the backside	Attach photocopy of Receipt as evidence of tax remittance
Submit the documents to the Tax/Revenue centre where the employer is registered	Attach passport photograph with full names written at the back
Check back after 7 working days to collect e-TCC	Submit all documents at the Tax Station/Revenue Centre where taxpayer is registered
	Check back to collect card after 7 working days

Provision of Infrastructures
The State Government provides the following infrastructures at the Tax Station

• Computers
• Printers
• Generators
• Internet Access

Note Where the State Government fails to provide the above facilities, ABC would provide them in order not to delay the project

e-TCC Customisation
The card has the following features:

• A hybrid card system comprising a smart chip on the front and a magnetic strip at the back
• Carries a picture of the taxpayer and the logo of the State and the Coats of Arms
• Interfaces with terminals on database through web-enabled and customized Application Programming Interfaces (API) running on window 2000/XP

Publicity and Enlightenment Campaigns
The Lagos State Government stages public enlightenment and awareness campaigns to educate and enlighten the public on:

• The introduction and continuous use of e-TCC as a replacement for the paper-based TCC
• Importance of supplying accurate information by taxpayer when completing the e-TCC application form, the deposit slips at the designated banks when remitting taxes.

e-TCC sample card