Although Incorporated Trustees registered under Part F of the Companies and Allied Matters Act (CAMA) 2020 as amended are not for profit and are non-taxable, various laws[1] still stipulate that an entity registered as an Incorporated Trustee under CAMA must comply with certain tax obligations, which include the following:
- Mandatory Value Added Tax Registration with the Federal Inland Revenue Service (FIRS) and periodic VAT filing
Here, Incorporated Trustees are expected to register and obtain a Tax Identification Number (TIN) at the closest Tax Incentive Management Office (TIMO) of FIRS in the geo-political region where the Incorporated Trustee is located. For Incorporated Trustees registered before 2018, requesting a TIN redirection from the FIRS headquarters to the TIMO within its geo-political area may be necessary.
Following the tax registration, an Incorporated Trustee must understand that although goods purchased by an Incorporated Trustee for humanitarian donor-funded projects are at zero rate under the VAT Act, where the Incorporated Trustee procures contracts or purchases goods that are not directly used in humanitarian donor-funded projects, VAT shall apply at the prevailing rate and should be filed with FIRS on or before the 21st Day of the Month following the month of purchase.[2]
However, where there are no such purchases, the Incorporated Trustee is expected to file a NIL return monthly before every 21st day of the following month on a preceding month basis.
At the time of writing, the FIRS had implemented Taxpromax, which is a platform that aids in the facilitation of the e-filing of taxes.
2. PAYE – Pay As You Earn
Every Incorporated Trustee must deduct and remit and remit personal income taxes at applicable rates for emoluments of Trustees, salaries or other remunerations of employees. Here, registration is made to the State Inland Revenue Service. The Incorporated Trustee must ensure monthly remittance is done and the annual returns are filed with the applicable State inland revenue service.
3. Annual returns with the FIRS.
All Incorporated Trustees must file a tax return at FIRS at the end of each accounting year. As stated earlier, the purpose of these returns is not to pay taxes based on profit as this is a non-profit entity[3], however, to meet the regulatory stipulations. CITA[4] provides that every company, including those exempted, is obligated to file a self-assessment return in a prescribed form, whether or not it is liable to pay tax for a year of assessment. The return shall contain the Audited Accounts, Capital allowances and a declaration by the Trustees that the information provided is true and complete and evidence of payment of the whole or part of applicable tax into a bank designated for tax collection.
Failure to comply with the tax requirements could potentially lead to the following:
a. Loss of donation and sponsorship due to non-compliance with extant laws could make an Incorporated Trustee unattractive to international donors.
b. Lack of updated records at the respective tax offices both at the Federal and State level.
By Urechi Ukefi
Disclaimer: The critical items highlighted above are solely for academic purposes and should not be taken as legal counsel. For further information, kindly email info@zuriel.com.ng or u.ukefi@zuriel.com.ng, or contact our office, Zuriel Law Practice, 14a Dasilva Street, Off Ayo Jagun Street, Lekki Phase 1, Lagos.
[1] Companies Income Tax Act (CITA) as amended, Finance Act 2020 as amended, Personal Income Tax Act (PITA) as amended, Capital Gains Tax Act (CGTA) as amended, Value Added Tax Act (as amended)
[2] See VAT Act as amended.
[3] Section 23(1)c of CITA as amended.
[4] Section 55(1)
REFERENCES
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