ISERH M&E Officer Reports On Payment Of Tax By Non-Governmental Organizations (Realities And Misconceptions)

Monday 25-Mar-2019, 10:41PM / 155

ISERH M&E Officer Reports on Payment of Tax by Non-Governmental Organizations (Realities and Misconceptions)


On Wednesday, 11th of July, 2018, there was an interactive session on tax obligations for non-governmental organizations held at the office of Federal Inland Revenue Service (FIRS), opposite Union Bank Plc., Secretariat Agodi, Ibadan. Many NGOs were represented among which ISERH was the only organization from Osun State at the gathering. The session commenced at 11:30am by Mr. Awolola M. O., the FIRS Assistant Director. The Director enlightened us about the importance of tax payment by every citizen of Nigeria engaging in any profitable activities, be it as an individual or cooperate entity. He reiterated the fact that NGOs are charitable establishments and consequently, they are exempted from payment of tax, though wrongly misconceived by many people. He said, however, once the main purpose of establishing any NGO, Church, Mosque and so on, is extended to building Chalet, Guest house, event center, etc., for generating funds into such establishment, or publishing and sales of books to their members or other people, either at a subsidized rate or not, should be well-understood that payment of tax is compulsory on such organization.

Mr Awolola explained further that indirectly every NGO are to pay taxes, though not from her pocket if the NGO is solely not-for-profit making, by helping government in several ways of tax collections. Tax obligations of NGOs that must be met by them are to register and obtain Taxpayer Identification Number (TIN) free of charge from the Medium Tax Office (MTO), Abuja or the nearest tax office to their registered address, as soon as they are registered by the Corporate Affairs Commission(CAC); file tax returns (which must be filed either it operates as a Not-for-profit or not, where all the activities carried-out by it are clearly shown) on or before the due dates; keep accounting books and records of transactions appropriately (Annual financial statement must always be made readily available); and cooperate with any authorized officer of the FIRS while on official business.

Other returns expected of NGOs such as Personal Income Tax Returns (PIT) by promoters of NGOs, Pay-As-You-Earn (PAYE) Returns which are to be deducted from employees' salaries and remit same monthly to the appropriate tax authority with accompanying schedule, Value Added Tax (VAT) Returns on goods and services consumed but are entitled to refund on items purchased exclusively for their humanitarian donor-funded projects of activities and Withholding Tax (WHT) Returns from the payments made to contractors/suppliers/providers of service and remit same to the appropriate Tax Authority where all mentioned with their details.

Conclusively, Alhaji Idris, the Tax Controller, Medium Tax Office, Ibadan, built on the information disseminated by the first speaker by explaining further that every NGO must obtain its TIN, fill the Tax Return and VAT forms and submit to FIRS or MTO (Nil must be written if no VAT is observed) while non-compliance attracts N5,000 fine per month. Other penalties were thoroughly discussed by him. He also said that immediately an NGO is duly registered, VAT, Withhold Tax and others become obligatory. Every NGO is encouraged to visit the FIRS office or the nearest MTO for anything that requires more clarifications.

The session ended by 3:00pm after all the questions, contributions and comments by the 26 participants (ISERH's representative inclusive) were addressed.

Signed,
OLAYEMI, Saheed Adewale.
ISERH Monitoring & Evaluation Officer

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