FIRS threatens to sanction CSOs that fail to register for tax, obtain TIN

The Federal Inland Revenue Service (FIRS) has called on Civil Society Organisations (CSOs) to register for tax purposes and obtain Taxpayer Identification Number (TIN), threatening to bring down appropriate penalties under the extant tax laws upon them if they failed to comply.

Director, Tax Policy and Advisory Department, FIRS, Temitayo Orebajo, who gave the charge, said all CSOs are expected to register for tax purposes and obtain TIN.

According to Orebajo, although the goods purchased by NGOs for use in humanitarian donor-funded projects had zero VAT, the NGOs are not exempted from VAT where the organisation procures contracts or purchases goods that are not directly used in humanitarian donor-funded projects.

The FIRS director spoke at a virtual event on CSOs tax responsibilities and compliance, organised by the FIRS in conjunction with the European Union Agents for Citizen-Driven Transformation (EU-ACT), a Non-Governmental Organisation, in Abuja on Thursday.

Furthermore, Orebajo maintained that CSOs were statutorily required to maintain accurate records of employees and proper books of accounts for tax purposes, noting that they were required under the Pay As You Earn (PAYE) obligation to deduct tax at source from salaries and other emoluments of their employees, directors, officers among others.

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His words, “The NGO itself is not exempted from VAT where the organisation procures contracts or purchases goods that are not directly used in humanitarian donor-funded projects.

“Likewise, any service procured or consumed by NGO is liable to VAT, except where such service is exempted under the VATN Act.”

According to him, section 25 of the Companies Income Tax Act (CITA) provides tax relief to any company making donations to an organisation listed under the fifth schedule to CITA, however, he noted that such donation must be made out of the company’s profits for the year under review, while the total donation shall not exceed 10 per cent of its total profit for the year under review.

“Donation is not of capital nature, except where the donations are made to universities or other tertiary or research institutions and should not exceed 15 per cent of total profits or 25 per cent of tax payable.

“NGOs requiring to be listed under the fifth schedule to CITA may apply to the Minister of Finance through FIRS,’’ Orebajo added.

Commenting, Mrs Nneka Esomeju of Joint Tax Board, said the rule of minimum wage was exempted from tax, however, she said members of the National Youth Service Corps are to pay tax when other things are added.

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