The federal government has said that civil society organisations (CSOs), including non-governmental organisations (NGOs), cooperative societies and other eligible companies, have responsibilities under the tax laws to fulfil their financial obligations, irrespective of the nature of their operations.
The Federal Inland Revenue Service (FIRS) said this during a webinar it organised with the Joint Tax Board (JTB) and European Union, British Council-managed agents for Citizen Driven Transformation (EU-ACT) programme.
The executive chairman of the FIRS, Muhammad Nami, represented by the coordinating director of the Compliance Support Group of the organisation, Dick Irri, said they would continue to partner with stakeholders, such as the co-organisers of the programme, in their drive to help educate taxpayers on their responsibilities.
He said civil society organisations and other like-minds had the responsibility to file tax returns and statement of affairs, and that tax authorities would demand payment of taxes from them and others in consideration, only when they engage in businesses and make profits.
The director, Department of Tax Policy and Advisory of the FIRS, Temitayo Orebajo, in his presentation on tax obligation of CSOs and non-governmental organisations, refuted claims by some individuals that civil society organisations had no tax obligation.
“There is a penalty for CSOs and others affected, for not filing; and there is a penalty for late filing. Whether you (CSOs) have something to do or not, you have the responsibility to file. After one year, you are registered. In order not to run afoul of the law, you need to go and file, at least your statement of affairs. It may be one page document,” Orebajo said.
He said NGOs and CSOs include organisations, institutions and companies engaged in ecclesiastical, charitable, benevolent, literary, scientific, social, cultural, sporting or educational activities of a public character.
“All CSOs are expected to register for tax purpose and obtain a Taxpayer Identification Number (TIN). The following documents are required for tax registration: A copy of the registration certificate issued by the Corporate Affairs Commission (CAC) or any other instrument of registration; certified true copy of memorandum and articles of association, constitution or rules and regulations governing the CSOs; list and profiles of the trustees/board members nominated, and other relevant documents,” he said.
Another panellist and deputy director of the Tax Policy and Advisory Department, Olatunji Olabode, said that CSOs and others affected should file returns and pay taxes (where applicable) at MTOs close to them or use the TaxPro Max Solution.
“Section 55(1) of the CITA mandates every company in Nigeria, including CSOs, to file annual tax returns. A tax return comprises an audited account, tax and capital allowances computations and a true and correct statement in writing, containing the amounts of its surplus from each and every source computed; a completed self-assessment form; particulars, as may be required in the form with respect to profits, allowances, reliefs, deductions required; a declaration, to be signed by a trustee, director, secretary or any authorised person of the organisation that the information contained in the return is true and correct; the period for filing returns shall be as stipulated in the relevant tax laws,” he said.
A representative of the JTB and its head of the legal unit, Nneka Esomeju, said CSOs who were registered as individuals or business names, or any other law at the sub-national level, should also comply and fulfil their tax obligations under the Personal Income Tax Act and relevant with the State Board of Internal Revenue.
She said, “If any civil society organisation is not registered or overseen by the FIRS, they should register and file their returns and pay taxes (where applicable) to the State Board of Internal Revenue. Not being registered with the FIRS or the CAC does not mean that you are exempted from taxes.”
She also clarified that “any individual who earns income beyond the threshold of the minimum wage should pay taxes, irrespective of the status of the individual.”
Also, the EU-ACT national programme manager, Damilare Babalola, said they were interested in ensuring there is an open space for CSOs, NGOs and others to thrive.
“We have had several instances where non-profit organisations are not complying to tax. We also heard from the other angle that these tax obligations are not clear.
“So the idea is to bring both players to the same table, where the opportunity is provided for the duty bearers to explain what taxpayers are supposed to be doing,” he said.
CSOs react
Reacting to the development, some CSOs urged the FIRS to reconsider its new tax drive. They said compliance with the organisation’s tax policy and recent directive was not well thought out.
The convener, Coalition in Defence of Nigerian Democracy and Constitution (CDNDC), Ariyo-Dare Atoye, said NGOs with the TIN had been paying taxes on staff salaries and allowances, withholding taxes on services and purchases like other corporate entities.
“Maybe the FIRS is planning or about to introduce another regime of taxation, which may be healthy and could severely impact negatively on the income of the NGOs. For instance, it will be wicked and unfair to tax the general income of NGOs and still expect them to pay taxes on services and purchases that will be done after. The desperation to generate money at all cost by this government should not be a reason to embark on double and exploitative taxation, which is capable of destroying services, businesses and livelihoods, including making NGOs’ work very difficult.
“The government should listen to experts’ opinions on how to restructure the country and its economy for wealth creation and easy income generation via a fair tax system,” Atoye said.
Also, the director, Health for Mother Earth Foundation (HOMEF), Nnimmo Bassey, an architect, said, “This is not new. We have had TIN for some years now. It doesn’t necessarily mean you are paying any tax beyond something like Value Added Tax (VAT), which we pay at the point of procurement of certain goods.
“Already, non-governmental organisations have been making returns and having annual tax clearance. I think it helps the system to keep tabs on financial flows in charity circles.”
On his part, the executive director of the Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Rafsanjani, who is also the head of Transparency International, Nigeria said, “If this development is meant to undermine and frustrate civil society organisations that are genuinely advocating responsible, transparent and accountable governance in Nigeria, it will surely not work.”
Rafsanjani, who was also recently appointed the chairman, Board of Trustees of the Amnesty International, Nigeria, as well as the Transition Monitoring Group (TMG), said it was important for them to understand the key issues.
“Civil society organisations are exempted from paying VAT, or better still, they have zero VAT charge; and this is clear, going by the law. This is because they don’t generate revenue. It is also important to note that CSOs are expected to deduct PAYE from salaries of their employers, as well as withholding tax from consultants who carry out studies.
“This is also clear by law as these employees are not exempted from paying tax. And this is where the need for TIN comes so that these PAYE taxes can be remitted appropriately and tracked as it stands.
“Civil society organisations like the CISLAC currently have these in place in compliance with the law. It is important that no official or citizen confuses these two. And I want to believe the FIRS official made an error or was quoted out of context, as the law on this is clear.
“The public relations or media department of the FIRS should sensitise the public on these issues so as not to create confusion. From my own understanding and available official quotes of the FIRS, the request for TIN is not new.
“The CISLAC has TIN and we remit. I think it is important not to lump up VAT and PAYE. They are all taxes, but they are different. The FIRS, on its part, also needs to properly sensitise the media and citizens on these differences,” Rafsanjani said.
