Tax Clearance Certificate from The Federal Tax Authority

The Federal Tax Authority (FTA) has introduced a new feature on the portal for Tax registered persons to seek a "Tax Clearance Certificate" from the Authority. This feature is available when the person login to their respective portal. 

The details required to be filled in the form are:

1. Trade License number of the Company: The license number automatically appears in the drop down list

2. Reason: The reason for requesting the certificate should be selected from the drop down menu. The following reasons are listed therin as a purpose for seeking the Certifcate:

a. Change ownership

b. Business closing

c. Below voluntary threshold

d. Below mandatory threshold

The above fields 1 and 2 are mandatory information to be provided. Apart from the above the applicant can put in their comments and upload any documentary evidence in the additional fields available on the form.

The FTA is yet to release an official guideline regarding the purpose/use of this Certificate. The foreseen use of such a Certificate is to function as a "No Liability Certificate" that can be used by the registrants to furnish the same to any relevant authorities who may request the same prior to change of ownership of the Company or for cancellation of the trade license. Currently some face a practical difficulty at the time of liquidating their Company as Authorities and Liquidators may require a Tax Clearance Certificate prior to issuing the liquidators report/trade license cancellation. Hence this is a welcome move by the FTA to address the needs of the Tax registrants.

It is also pertinent to note that the trade license detail is a mandatory information and only one of the four reasons (mentioned above) can be selected in the application. This in effect currently limits the issuance of this Certificate to registered Companies alone and for the sole purpose of reasons cited above. Further, no fee has been prescribed/proposed yet for issuance of this Certificate. 

Disclaimer: Content posted is for informational & knowledge sharing purposes only, and is not intended to be a substitute for professional advice related to tax, finance or accounting. The view/interpretation of the publisher is based on the available Law, guidelines and information. Each reader should take due professional care before you act after reading the contents of that article/post. No warranty whatsoever is made that any of the articles are accurate and is not intended to provide, and should not be relied on for tax or accounting advice.