This article outlines the legal framework for nonprofit organisations (also known as non-governmental organisations or NGOs) in Nigeria, along with an explanation of their purpose.
See table below.
| S/N | LAW | PURPOSE |
|---|---|---|
| 1 | 1999 Constitution | Right to peaceful assembly and association with other persons without need to register. |
| 2 | Companies and Allied Matters Act (CAMA) 2020 | Registration of Non-Profit Organisations (NPOs) i.e., incorporated trustees and companies limited by guarantee, receipt of annual reports and financial statements of NGOs, investigation of NPOs, mergers, removal of trustees, suspension of trustees and appointment of interim managers, vesting of association’s property to an official custodian; suspension of employees, officers, agents of the association. |
| 3 | Companies Income Tax Act (CITA) of 2004 | • Provisions for corporate tax exemptions • Requirement to file annual income tax returns in line with Section 55 • Requirement to deduct and remit withholding tax from amounts due on contracts, consultancies, etc. • Provides for deduction of Capital Gains Tax where an NGO disposes of its assets at a gain. • Provides for tax relief for organizations that donate to NPOs i.e., companies that make donations to philanthropic organisations can get a tax-deductible donation not exceeding 10% of the total profits of that company for that year. |
| 4 | Finance Act 2020 | Amends several legislations on taxes and other financial matters such as the Companies and Income Taxes Act (CITA). Defines the term “public character” of an organisation or institution, with the aim to clarify entities that qualify for tax exemption status. Before the enactment of the Finance Act 2020, CITA did not include a definition for the term “public character”. |
| 5 | Personal Income Tax Act of 1993 Personal Income Tax (Amendment) Act of 2011 | Provisions for tax deductions from employee earnings. |
| 6 | Taxes and Levies (Approved List for Collection) Act 1998 | Provides for collection of local taxes and levies, which NPOs are obliged to pay. Examples are taxes and levies collected by the Federal government (e.g., VAT), State governments (e.g., PAYE, right of occupancy) and Local governments (e.g., tenement rates, sewage and refuse disposal fees, etc.). Note: Section 1 (2) of the TLA allows the Minister to amend the Schedule to the Act which outlines the taxes and levies. This was amended in 2015 to allow States to collect consumption tax from hotels, restaurants, and event centres (paid for by customers). However, a Federal High Court ruled in 2020 that the amendment contravenes constitutional law-making powers of the National Assembly. |
| 7 | Value Added Tax Act of 1993 Value Added Tax (Amendment) Act of 2007 | Provisions for the payment of tax on the purchase of taxable goods and services. Requirement to file VAT returns. NPOs are not exempt from the 7.5% current VAT rate. However, goods purchased by NPOs for use in humanitarian donor funded projects are zero rated under the VAT Act e.g., medical and pharmaceutical products, baby products, books and educational materials, etc. |
| 8 | Pension Reform Act, 2014 | Requirement for minimum 10% monthly deduction on employee’s salary and 8% minimum employee monthly contribution to Pension scheme/ Retirement Savings Account (RSA). |
| 9 | Federal Inland Revenue Service (Establishment) Act of 2007/FIRS Circulars | • Guidelines on the tax exemption status of NGOs • Issuance of Tax Identification Number (TIN) and tax administration by the Federal Inland Revenue Service. |
| 10 | Central Bank of Nigeria Anti-Money Laundering/Combating the Financing of Terrorism Regulation of 2009. | Regulate AML/CFT obligations of organisations, including NPOs. Checks against Money laundering and terrorist financing by non-financial institutions |
| 11 | Economic and Financial Crimes Commission (EFCC) Act | Investigation of all financial crimes. Requires organisations to obtain a Special Control Unit Against Money Laundering (SCUML) certificate and monitors the inflow of funds into corporate bank accounts, NPOs inclusive. |
| 12 | Money Laundering (Prohibition) Act (MLPA) of 2011(amended in 2012) | SCUML and EFCC also responsible for monitoring, supervising, and regulating the activities of Designated Non-Financial Institutions (DNFIs), which includes NGOs, in line with the MLPA and the PTA. |
| 13 | Prevention of Terrorism Act (PTA) of 2011 (Amended in 2013) | The MLPA provides for money laundering offences, and mandates disclosures and reporting of suspicious transactions. Also provides for criminal liability for directors and employees of NPOs suspected of involvement in suspicious transactions. The PTA describes conducts that constitute terrorism and prescribes punishments for same |
| 14 | Corrupt Practices and Other Related Offences Commission Act, 2000 | Empowers the Independent Corrupt Practices and Other Related Offences Commission (ICPC) to investigate and prosecute fraudulent and corrupt practices by individuals and organisations. |
| 15 | National Planning Commission Act,1993 | Empowers the National Planning Commission to receive and track international aid and monitor projects implemented with donor funds. |
| 16 | The Financial Reporting Council of Nigeria – National Code of Corporate Governance (Not for Profit Organisations Governance Code) | Code aims to promote high standards of corporate governance by Not-for-Profit Organisations (NFPOs). Stresses the need for accountability, transparency, and adequate disclosure of relevant information by NFPOs to relevant stakeholders such as donors, beneficiaries, and regulators. Encourages NFPO’s to comply with its principles or justify non-compliance. |
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