By Grace Udofia
The Federal Inland Revenue Service (FIRS) has mandated Civil Societies Organizations (CSOs) and Non-Governmental Organizations (NGOs) to begin gathering paper work, including number of employees, as they would soon begin paying tax.
Temitayo Orebajo, FIRS Director of Tax Policy and Advisory Department, disclosed this in a webinar in Abuja.
According to Orebajo, the webinar was organized to sensitize CSOs and NGOs on matters of tax responsibilities and regulations that concerns them.
He stated that all CSOs are required to have accurate records of employees and proper books of accounts for tax purposes.
Placing an exemption to some goods, Orebajo explained that VAT on goods purchased by NGOs for humanitarian projects were taxed at zero rate.
“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.
“NGOs are required under the Pay As You Earn (PAYE) obligation to deduct tax at source from salaries and other emoluments of the employees, directors, officers among others,” he said.
He further stated that under Section 25 of the Companies Income Tax Act (CITA), the CITA provides tax relief to any company making donations to an organization listed under its fifth schedule.
He added that donations must be made out of its profits for the year of assessment and total donation shall not exceed 10 percent 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,’’ he added.
