By Katherine Abayomi
Nigeria’s National Assembly has passed the Nigerian Tax Reform Bills into law, marking a significant shift in the country’s fiscal landscape. The legislation comprises four executive bills: the Nigeria Tax Administration Bill 2024 (HB-1756), Nigeria Revenue Service Establishment Bill 2024 (HB-1757), Joint Revenue Board Establishment Bill 2024 (HB-1758), and Nigeria Tax Bill 2024 (HB-1759).
These laws aim to reform Nigeria’s tax system by expanding the tax base, mandating disclosure of tax-relevant information, simplifying collection processes, and unifying tax administration across federal, state, and local governments. The bills have been transmitted to the President for assent as required by law.
For non-profit organizations (NPOs), which primarily operate in Nigeria as non-governmental organizations (NGOs), the new laws present a mix of opportunities and challenges. Key areas of concern include fundraising, regulatory compliance, audits, tax exemptions, certifications, and financial reporting obligations.
While there is optimism that domestic philanthropy could thrive under the revised tax regime, concerns have been raised about increased compliance burdens, stringent audit requirements, discriminatory exemption criteria, and potential policy confusion. These issues could impact the freedom of association and limit the ability of non-profits to operate effectively. Legal ambiguities, possible conflicts with existing national laws, constitutional provisions, and international agreements ratified by Nigeria have also been highlighted.
Spaces for Change (S4C), a non-governmental organization, has issued a policy brief advising non-profits on how to navigate the new environment, capitalize on emerging opportunities, and build sustainability amid economic uncertainty. The brief also flags clauses in the bills that may require further policy clarification or legislative review.
According to S4C, the new laws consolidate, repeal, and replace a wide array of existing tax provisions, positioning the newly enacted statutes as the definitive legal framework for taxation in Nigeria.
One provision allows tax relief for public and private companies that donate to recognized charitable, educational, and scientific causes. Recipient organizations are required to issue certificates of donation, which companies can submit to tax authorities to claim relief. However, donations made by individuals are excluded from such tax-deductible reliefs.
Other exempted items include the income (grants, donations, contributions, etc.) of NPOs and capital gains from the disposal of their assets, provided certain conditions are met. The laws also introduce clearer rules requiring NPOs to disclose tax-relevant information and classify their income streams into taxable and exempt categories.
Humanitarian donor-funded projects, development financing, and services provided to diplomatic missions are exempt from value-added tax (VAT).
Revenue and income classifications have now become mandatory. Income derived from related commercial activities—such as leasing, consulting, and sales—will be subject to taxation, even if operated by a non-profit. Gains from income-generating ventures tied to NPO assets are also taxable, necessitating stronger documentation and compliance mechanisms.
Civil society organizations are urging tax authorities to extend tax-deductible reliefs to private individuals who contribute to charitable causes. They argue that this step could encourage domestic giving, reduce reliance on foreign aid, and ensure timely humanitarian assistance to vulnerable populations.
Further calls have been made for legislative amendments to eliminate discriminatory provisions against foreign-registered non-profits operating in Nigeria under various agreements and legal frameworks.
S4C also insists that VAT exemptions should apply to all charitable activities conducted within the not-for-profit space, not just to humanitarian donor-funded projects.
The group emphasizes that tax administration should prioritize the purpose of an NPO rather than its legal form, arguing that the nature of charitable activities—not structural classification—should determine tax status.
They propose that NPOs be automatically granted tax-exempt certificates upon registration with the Corporate Affairs Commission (CAC), eliminating the current cumbersome and rigid certification process.
Finally, S4C calls for the simplification of the annual returns filing process to promote voluntary compliance, reduce administrative burdens, and ease financial and regulatory pressures on non-profits.
