Liability of an educational institution to pay tax in Nigeria

Abstract

Every registered company in business pay taxes in Nigeria unless it is otherwise exempt. A company is to be entitled to statutory exemptions where it proves that it is a company engaged in ecclesiastical, charitable or educational activities of a public nature. Further, it has to prove that the profits it made are not profits that are derived from trade or business carried on by it. This paper seeks to establish that it is not on all occasions or in all circumstances that a company engaging in an educational activity will hide under any name or object to escape tax obligations to the state. The doctrinal method, analytical and expository approaches were used in reviewing the extant laws on taxation of a registered company, case laws and views of tax experts on the issue were also employed. The work reveals that under extant Nigerian tax laws, companies formed and registered as educational institutions are allowed to carry on business, make profits and distribute the profits except companies limited by Guarantee. Furthermore, being a school or an educational institution is not enough to exempt a company from payment of taxes umless upon meeting up with certain conditions spelt out by law.

Keywords: “Liability”, “Education Tax”, “Exemption