TOWARDS A MORE VIBRANT LEGAL FRAMEWORK FOR TAXATION OF NON-GOVERNMENT ORGANIZATION IN NIGERIA

Abstract

Tax is a compulsory contribution to support the government which is levied on persons, property, income, commodities, transactions at a fixed rate most proportionate to the amount on which the contribution is levied. Non-governmental Organization (NGO) is a voluntary group of individuals or organization, usually not affiliated with any government, that is formed to provide charitable, religious, cultural and other incidental services to the people. The aim and objective of this paper is to examine the extant legal framework on the taxation of income of non-governmental organizations in Nigeria. With the evolution of the modern society and governance built on social contract as against the pre-social contract primitive era where life was nasty, brutish and short, came laws and regulations that ordered the behaviour of man in the society; defining his rights, duties and obligations. These laws encompassed taxation which serves as a means of generating funding for use by the people’s legitimate government for the common good of all. Over time, it would appear that the objects of government viz: security and provision of basic amenities and services to aid all round better living condition of people have become so enormous for government to solely accomplish, hence the emergence of friendly organizations such as Non-Governmental Organizations (NGOs) which are basically and generally perceived as non-profit organizations that are, among other things, charity-oriented with the central goal of also providing aids and services that improve upon the living condition of people. However, considering that the NGOs enjoy legal personality status which ordinarily designates them as taxable persons and at the same time are, by their very nature, people-oriented both in their objects and activities, it is often wondered whether these organizations are indeed subjected to taxation. If yes, to what extent are they liable to taxes in Nigeria, hence the paper. The authors adopted a doctrinal research methodology in carrying out this study and the approach adopted was analytical with the use of tax statutes, case laws on taxation, textbooks, journal articles, newspaper publications and Internet materials in dealing with the topic. This study identifies possible challenges militating against effective, efficient and proactive NGO taxing system in Nigeria which include lack of legal framework for a clear cut tax for non-governmental organizations, lack of accurate data, non-multiplicity of taxes, discouragement of tax evasion, zero tolerance for tax touting, etc. In conclusion, we proposed measures considered very effective to move the legal framework for taxation of NGOs in Nigeria forward.