An appraisal of the statutory tax obligations of non-profit organisations in Nigeria

Abstract

The Non-Profit Organisations also known as Non-Governmental Organisations (NGOs) are an important part of the Nigerian society as  they are quite impactful in many areas of our daily lives. NGOs are usually not profit-making organisations and there have been some  ambiguity in the legislation governing the taxation of NGOs, especially with regard to the definition of the term ‘public character.’ Pursuant to changes introduced to the tax regime under the Finance Act 2020, the Federal Inland Revenue Service recently issued two  Information Circulars, both dated 31st March, 2021 the Circulars detailed the rules that will, henceforth, guide its tax treatment of non- governmental organisations in Nigeria. There are different challenges faced by the Government tax agencies with respect to accessing tax for Non-Profit Organisations in Nigeria. To tackle these challenges, the Federal Inland Revenue  Service created tax obligations of  Non-Profit Organisations in Nigeria. The aim of this paper is to appraise the various statutory tax obligations of Non-Profit Organisations  in Nigeria and also provide recommendations for an effective and efficient taxation of income of non-profit organisations in Nigeria. The  researchers adopted doctrinal legal research methodology using analytical approach with the aid of statutes, case law, textbooks, and  journal article and internet materials. At the end the researchers found among other things that taxation of NGOs in Nigeria is indeed  surrounded with uncertainties ranging from non-direct recognition of NGOs by the relevant corporate and Tax laws to plethora of other  tax challenges discussed in this work. The researchers concluded inter alia that Non-Profit Organisations (NGOs) are vital to addressing  various social, economic, and environmental challenges in Nigeria. It is also concluded that the dynamic nature of their activities  necessitates a clear cut tax legal framework that is both adaptable and specifically tailored to their unique needs. The researchers recommended among others that there is need for periodic review and amendment of Tax Legislation for NGOs and the Strengthening  of the legal and institutional frameworks for effective taxation of NGOs in Nigeria.