The Impact of Tax Clearance on Access to Government Contracts and Tenders in Nigeria.


In Nigeria’s evolving business landscape, government contracts and tenders represent significant opportunities for companies looking to grow and thrive. Access to these lucrative opportunities is not just about having the right expertise; it often hinges on regulatory compliance, particularly in the form of tax clearance. In this article, we will explore the profound impact of tax clearance on a company’s ability to secure government contracts and tenders in Nigeria.

The Nigerian Business Environment: Nigeria’s business ecosystem is characterized by its diversity, offering opportunities in various sectors such as infrastructure, healthcare, education, and construction. Government contracts and tenders, often funded by public resources, play a pivotal role in driving economic growth and development.

Understanding Tax Clearance: A Tax Clearance Certificate (TCC) is a formal document issued by the Federal Inland Revenue Service (FIRS) and state Internal Revenue Services, attesting to a company’s compliance with tax laws and regulations. The possession of a TCC is not just a regulatory requirement but a significant determinant in securing government contracts and tenders for several reasons:

  1. Eligibility Requirement: Many government agencies and entities require bidders to submit a TCC as part of the qualification criteria. This ensures that only tax-compliant companies are considered for these contracts.
  2. Trust and Credibility: A TCC is a testament to a company’s financial responsibility and ethical financial practices. It instills confidence in government agencies and demonstrates a commitment to compliance.
  3. Risk Mitigation: Compliance with tax regulations reduces the risk of potential tax-related disputes or liabilities that could disrupt contract execution. This makes tax-compliant companies more attractive partners for government projects.
  4. Legal Mandate: Beyond the competitive advantage, tax compliance is a legal obligation in Nigeria. Non-compliance can lead to penalties, legal actions, and potential blacklisting, which can have severe consequences for companies seeking government contracts.

Strategies for Leveraging Tax Clearance for Government Contracts:

To maximize the impact of tax clearance on access to government contracts and tenders, Nigerian companies can consider the following strategies:

  1. Proactive Tax Planning: Engage experienced tax professionals to develop proactive tax planning strategies aligned with your business objectives and contract bidding requirements.
  2. Timely Tax Payment: Prioritize the timely payment of taxes to ensure compliance with tax laws and regulations.
  3. Transparent Financial Records: Maintain transparent financial records and reporting practices consistently to demonstrate financial responsibility.
  4. Collaborative Compliance: Collaborate with accounting firms and legal advisors to ensure consistent tax compliance and reporting.
  5. Continuous Monitoring: Regularly monitor your company’s tax compliance status and TCC validity to ensure readiness for bidding opportunities.


Government contracts and tenders are pivotal in advancing economic growth and development in Nigeria. Access to these opportunities is not just about competence; it is also about compliance, particularly in the form of tax clearance. Nigerian companies that prioritize tax compliance and maintain up-to-date Tax Clearance Certificates (TCCs) are better positioned to secure government contracts, benefit from public investments, and contribute to national development

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.