The Corporate Affairs Commission has announced the addition of tax identification number to the certification of incorporation.
Business owners will no longer need to apply to the Federal Inland Revenue Service (FIRS) to get their tax identification number (TIN).
The certificate of incorporation is akin to a birth certificate. It is issued by the Corporate Affairs Commision (CAC) to validate the existence of a company and its right to do business. Every legitimate Nigerian company is registered under the Companies and Allied Matters Act (CAMA) 1990. The same Act established the CAC.
The TIN is a 14-digit number assigned to all taxpayers by the FIRS. In 2011, the Central Bank of Nigeria issued a directive mandating businesses to provide their TIN to open or continue to operate a corporate bank account. This made TIN an important part of the company registration.
While issuing TIN and certificate of incorporation together seem link a no-brainer, it would indeed streamline the process of setting up a company.
Before now, business owners wait for two weeks after registering their company with the CAC to receive their TIN from the FIRS. And most times, they don't. So they would have to call Oluyemi Ojudu or send an email to the help desk of FIRS.
The CAC announced the issuance of TIN and certificate of incorporation on Twitter. It said the new development is part of the Ease of Doing Business initiative of the present administration. The Presidential Enabling Business Environment Council (PEBEC) champions the initiative.
"This is to inform our esteemed customer that as part of the Ease of Doing Business Initiative, Certificates of Incorporation of Companies registered under Part A of CAMA [pdf] will henceforth carry Tax Identification Numbers issued by the Federal Inland Revenue Service (FIRS)", the statement reads.
"This has dispensed with the need for companies to apply for the issuance of Tax Identification Numbers from the FIRS after incorporation".
Although the announcement was made on June 29, 2020, the new regime of CAC certificate had been in effect for some weeks.
"[I] registered [my company] some weeks ago and got my TIN", David Adeleke, a media consultant said. "[This is a] great move".
Odun Eweniyi, Co-founder and COO of Piggyvest, remarked that the announcement is a simple move, "but it makes a world of difference during the process of setting up a company".
Many Nigerians joined Eweniyi to laud the CAC for the adding TIN to the certificate of incorporation. One of them said, "Simple. Make life easier for human beings".
It is pertinent to note that between October 2018 and March 2019, the CAC charged a flat rate of ₦5,000 for business name registration. Many micro-, small-, and medium-sized enterprises (MSMEs) used the opportunity to register their companies' name.
The PEBEC, led by Vice President Yemi Osinbajo, is mandated to remove bureaucratic constraints to doing business in Nigeria. But over the past four years, how has the council performed?
How easy is it to do business in Nigeria?
The immediate goal of the PEBEC in 2016 when it launched was to move Nigeria up on the 2018 Doing Business Index. Nigeria ranked 169th out of 190 countries at the time. In the 2018 report, Nigeria moved up 24 places to 145th position.
In the latest World Bank Doing Business report, Nigeria moved up 15 places from its position in 2019 to be ranked 131st out of 190 countries. According to the report, starting business has become easier in Nigeria. It scored the country 86.2% and ranked it 105th in the category of starting a business.
Nigeria has now been named twice among the top 10 improvers on the Doing Business Rankings. But PEBEC has said its mission is "to make businesses work in Nigeria". And "the main barometer for measuring [its success] would be the testimonials of Nigerians themselves".
This is quite a good position to take because World Bank only use Lagos and Kano to rank the country on the Doing Business Index.
There is still a lot of room for improvement to make doing business easier in Nigeria. For instance, business owners still grapple with erratic electricity, double taxation, bad road, and lack of infrastructure.
Meanwhile, akin to the CAC, the National Agency for Food and Drug Administration Control (NAFDAC) is offering MSMEs 80% discount to register their products. The discount began in May and will end in October 2020.