Tax clearance certificate process

The situation

The contractor files returns, completes inspection and then obtains a clearance certificate.

The law

• Income Tax Law Executive Bylaws: 5% tax retention: Public and private contract owners retain 5% of each payment to contractors and suppliers until a tax clearance certificate is shown; final payment at least 5% of contract value
• Income Tax Law and Executive Bylaws: declaration and payment: Declaration due by the 15th day of the 4th month after year end; 60 day extension possible; tax paid with the return or in four instalments on the 15th of the 4th, 6th, 9th and 12th months

What it means for you

The contractor files every tax declaration, completes the mandatory inspection, settles any assessment and then applies for clearance. Late filings and open inspections delay the certificate and the release of retained money. Keep all years current.

What to do

1. File all returns.
2. Complete inspection.
3. Apply for clearance.
4. Present it to clients.

Related

• Unclaimed retention after five years
• Final payment of at least 5%
• Retention return for contract owners
• Is retention a withholding tax
• Franchise royalties and retention
• DMTT tax card and government retention