A comparative appraisal of the “not for profit” exemption clauses in the tax laws of Nigeria, United Kingdom, United States of America and Australia

Abstract

Tax is a monetary charge imposed by the government on persons, entities, transactions, or property to yield public revenue. Tax therefore embraces all governmental impositions on the person, property, privileges, occupations and enjoyment of the people. The classical function of the tax system is the raising of revenue to meet government’s expenditures. Exempt income is an income liable to be taxed by law but expressly excluded by another provision of the law. Tax exemption therefore, refers to a monetary exemption which reduces taxable income. Tax exemption are granted specifically to not-for-profit organisations in relation to income derived by them, so far as such income are not generated from trade or business. Though, tax exemption has been criticized as a subsidy granted by legislative grace to these organisations performing services that the government would have to perform and that such as subsidy relieves the exempt organisation of tax obligations that other tax payers are often obliged to  assume. This notwithstanding, the objective of this paper is to critically appraise the tax exemptions granted to these organisations in Nigeria. Also, to analyse comparatively the tax exempt status granted to not-for-profit organisations in some selected jurisdictions like United Kingdom, United  States of America and Australia, in a bid to finding out whether tax exemptions in these jurisdictions are automatic, absolute or limited (that is, subject to some conditions or  qualifications).

Keywords: Tax, Tax Exemption, Status, Not-For-Profit Organizations