CSOs and the obligation to pay tax

Bernard Okri In recent times, the Nigerian Media reported that Civil Society Organisations (CSOs) kicked against payment of tax stating that the law exempts them from paying taxes.

Whereas the law provides some concessions to CSOs, it is important to note that there are also tax obligations they need to fulfil. A Civil Society Organisation (CSO) is described as one that includes organisations, institutions and companies engaged in ecclesiastical, charitable, benevolent, literary, scientific, social, cultural, sporting or educational activities of a ‘public character’.

Public character appears herein in quotes because it is a phrase that has been and is greatly misconstrued. However, public character as expressed in the section means that the company is open to the public and every member of the public is allowed to access it, irrespective of status.

CSOs are required by law to register as an entity, based on their location and scope of operation. They can register based on local government level, state level or national, owing to their scope.


And on each level the requisite tax obligation takes effect. A CSO registered at the local government level shall be registered under the relevant provision of the Local Government Edict to operate as a community based CSO. The  CSO is required to conform to the provision of the edict in conducting its activities. It may not conduct activities outside the jurisdiction of the local government area.

A CSO may also be registered as a state based CSO, empowered only to operate within that particular state.


A nationally recognised CSO is that which is registered with the Corporate Affairs Commission (CAC). Its operational jurisdiction may cut across the entire country. At a webinar jointly organised by the Federal Inland Revenue Service (FIRS), Joint Tax Board (JTB), European Union funded/British Council managed Agents for Citizen Driven Transformation (EUACT) Programme on “Q & A Webinar on CSOs Tax Responsibilities and Compliance,” it was said that “Civil Society Organisations (CSOs) including Non- Governmental Organisations, Religious bodies, Trade Unions, Cooperative Societies etc. have responsibilities to fulfil under the extant tax laws irrespective of the nature of their operations.” Therefore CSOs have the responsibility to file tax returns.

At the webinar, which had an ample representation of CSOs, Director Tax Policy and Advisory Department of FIRS, Temitayo Orebajo in his presentation on tax obligation of CSOs flattened the claim by some individuals that CSOs have no tax obligation.

He said: “There is a penalty for CSOs 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 of being 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 just a one page document.” Besides, CSOs have staff and are required to deduct Personal Income Tax from the salary paid to them and remit the same accordingly to the relevant tax authority as and when due.


This tax type is popularly called Pay-As-You-Earn (PAYE). The CSOs under this situation act as agents of government.

Also, under the Companies Income Tax, section 55 of the law states that: “Every company, including a company granted exemption from incorporation shall, whether or not a company is liable to pay tax under this Act for a year of assessment, with or without notice from the Service, file a selfassessment return with the Service in the prescribed form at least once a year.”

The word “company” here refers to any entity limited by shares, or limited by guarantee, or incorporated or an unlimited company.

Most CSOs fall into the category of incorporated trustees registered under Part C of CAMA, while few others may be companies limited by guarantee. So, they are required to file tax returns.

Whereas section 23(c) of the Companies Income Tax exempts companies engaged in ecclesiastical, charitable or educational activities of a public character from paying tax, the proviso “in so far as such profits are not derived from a trade or business carried on by such company,” can make the CSO/NGO liable to pay tax.


For instance, if a church has a multipurpose hall for hosting of public activities and goes beyond giving it out to its members and rents it to the general public for usage to host marriage receptions, meetings, symposia etc. at a rental fee; then the sum charged on it as rent is to be taxed.

The CSO/NGO in such a situation is liable to pay the tax to the government because it has gone beyond its statutory mandate to transacting activities of a business nature.


*Bernard Okri is the President of the Global Economic Policy Initiative (GEPIn)




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