The Federal Inland Revenue Service, FIRS, has told operators of Non-Governmental Organisations (NGOs), which includes religious bodies that Nigeria’s tax laws do not exempt them from paying tax.
“Nigerian tax laws do not necessarily exempt NGOs from paying taxes. Rather they recognise NGOs as basically no-for-profit entities, which are therefore exempted from paying Income Tax. Where, however, an NGO engages in activities from which it derives profits, then it will be required to pay taxes on such profits, like any other profit-making entity,” said Alh. Kabir Mashi, FIRS Acting Executive Chairman, at a sensitization meeting in Abuja, yesterday.
According to Mashi, who was represented by the Coordinating Director of Modernisation, Mr. Osy Chuke, the only tax from which such organizations were exempted was Income Tax. However, if they got involved in activities that yielded profit, taxes had to be paid to the federal government from such profits and that personal income taxes of their staff had to be paid to the government.
“Also, other than income taxes, NGOs are not exempted from paying taxes such as Value Added Tax (VAT), on goods and services. They are also required to deduct and pay over Personal Income Tax from the salaries and allowances paid to their employees, amongst others,” he said.
A Medium Tax Office has therefore been opened in Abuja to handle NGOs’ tax issues.
Coordinating Director, Field Operations Group, Mr. Ajayi Bamidele, who spoke earlier at the meeting noted that NGOs were exempted from some taxes, in recognition of their contributions in the society, but some operators mistook the exemptions to cover all taxes.
“It was found that there is little awareness about tax obligations of NGOs in Nigeria, even where these NGOs carry out business activities.
“There is this erroneous belief among operators that as tax exempt organizations, they are exempted from all tax obligations, including filing of returns.
“This assumption is not correct and I think this is what led to the proliferation of organizations doing business but registered as NGOs in all manners of human endeavours in Nigeria,” Bamidele said.
The sensitization meeting is expected to have shed more light on why the FIRS have been pushing for religious bodies and other NGOs to pay tax, and the kind of tax they need to pay.