The Executive Secretary/Chief Executive of the Financial Reporting Council (FRC) Mr. Jim Obazee, has described as needless the arguments surrounding plans to get religious organisations in the country to pay taxes and render proper accounts, insisting there is no going back on the policy.
The FRC executive, who made this clarification at the media retreat with Finance Correspondents and Business Editors in Akodo, Lagos, on Saturday, explained that it was no longer business as usual for religious groups and other organisations that fell within the not-for-profit category. He described not-for- profit organisations as entities normally without transferable ownership interests and were organised and operated exclusively for social, educational, professional, religious, health, charitable or any other not-for-profit purposes.
He explained further that the income of not-for-profit, registered under the FRC Act, was exempted from income tax, noting however, that business subsidiaries that were set up by charities were usually treated in the same manner as any other companies. His words: “The income of these business subsidiaries is subject to income tax and should be rightly so reported, accounted and disclosed. This is the practice in the United Kingdom, Singapore and other developed economies of the world,” he said.
He regretted that financial statements presented by these entities in the country were not uniform and comparable, thus making comparison and accountability difficult. To this end, he pointed out that FRC would be meeting with the Federal Inland Revenue Service (FIRS), Corporate Affairs Commission (CAC) and the leadership of the entities to expose the technicalities of the financial reporting requirements.
“It has been noticed that a number of entities operating on commercial lines, within charity are claiming tax exemption on their income on the ground that the totality of the outfits are charitable institutions. The claim when made in respect of an activity carried out on commercial lines is contrary to the intention of the provisions of the law and put the assets of the charitable purpose at significant risk,” he said.