The Federal Inland Revenue Service (FIRS) has advised all Civil Society Organisations (CSOs) to register for tax purposes and obtain Taxpayer Identification Number (TIN),saying failure to comply would attract appropriate penalties under the extant tax laws.
Mr Temitayo Orebajo, Director, Tax Policy and Advisory Department of the agency,who gave the advicevat a webinar on CSOs tax responsibilities and compliance, said that the CSOs were statutorily required to maintain accurate record of employees, proper books of accounts for tax purposes.
Orebajo said that VAT on goods purchased by NGOs for use in humanitarian donor funded projects was at zero rate under the value added tax.
“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,” he said.
He explained that NGOs were required under the Pay As You Earn (PAYE) obligation to deduct tax at source from salaries and other emolument of the employees, directors, officers among other.
He added that the obligations under the Companies Income Tax Act (CITA) in section 25 of CITA provides tax relief to any company making donations to an organization listed under the fifth schedule to CITA.
According to him, such donation must be made out of its profits for the year of assessment and total donation shall not exceed 10 per cent of the total profits of the company for the said year of assessment.
“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 said.
