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Register, obtain TIN or be sanctioned, FIRS’ orders CSOs

By Onyedika Agbedo, Ijeoma Thomas-Odia and Eniola Daniel (Lagos) and Lawrence Njoku (Enugu)
18 September 2021   |   4:25 am
The decision of the Federal Government to extend its tax net to Civil Society Organisations (CSOs) in the country has attracted the bashing of some of the concerned organisations.

Federal Inland Revenue Services (FIRS)

• It’s Plot To Cripple Anti-corruption, Human Rights Organisations, Say CISLAC, Others
• CLO Threatens Court, Political Actions
• SERAP Differs, Says FIRS Should Proceed If Backed By Law

The decision of the Federal Government to extend its tax net to Civil Society Organisations (CSOs) in the country has attracted the bashing of some of the concerned organisations.

The Federal Inland Revenue Service (FIRS) had last Thursday directed CSOs to register with the agency and obtain Taxpayer Identification Number (TIN) or face the appropriate sanctions under the extant tax laws.

The Director, Tax Policy and Advisory Department of the agency, Mr. Temitayo Orebajo, who gave the directive in Abuja at a webinar on CSOs tax responsibilities and compliance, said the session was aimed at promoting CSOs understanding and knowledge of their tax responsibilities.

Organised by FIRS and the European Union Agents for Citizen-Driven Transformation (EU-ACT), a Non-Governmental Organisation, the session aims to provide an opportunity for CSOs to engage the FIRS on parts of tax regulations that concern them, and the challenges and bottlenecks they face in their bid to stay compliant.

Orebajo had advised the CSOs to maintain accurate record of employees and proper books of accounts for tax purposes, adding that failure to comply would attract appropriate penalties under the extant tax laws.

According to him, 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 and officers, among others.

Reacting to the development, the Executive Director of Civil Liberties Organisation (CLO), Comrade Ibuchukwu Ohabuenyi Ezike, berated the government for asking CSOs to pay tax, arguing that many CSOs survive through grants given to them by other nations of the world.

His words: “What can I say again of a government or indeed a political class that has woefully failed to deliver democracy dividends to the citizens who stood under rain and sun to elect them into offices – a thieving, irresponsible and shameless political class. This political class which lacks the capacity and ideas with which to harness the abundant economic resources – both natural and man made – that God has freely given to this country is hanging on any sector to source funds for their primordial survival. This is why they are after the civil society, which fought for, and brought this democracy they are enjoying today.

“We risked our lives, our comfort and our fundamental human rights to fight for the restoration of civil rule in Nigeria. Some of our best hands were murdered, detained, tortured, exiled and castrated while in this crusade to free our society and people from military dictatorship and corruption. Some of the beneficiaries of our struggle were working with the military as their agents, urging them to continue in power. Some were too afraid to dare the khaki boys and some ran away from Nigeria in fear of the military.

“Today, they have taken over the rulership of this country and rather than provide the common people with their minimal desires, they are chastising us with satanic repression. God is watching and everything does not begin and end here. These politicians must be very careful and tread softly.

“Civil society community is not a reactionary community and it may not be a tea party for them to fight us. Is it not a shame that Nigerian authorities that have run our country aground economically will be asking the CSO community to pay tax from grants given to them by other nations of the world, some of which are poorer than Nigeria? Nigeria does not give grants to CSOs in Nigeria but is also cap in hands begging from developed nations that fund us. Now, they want us to pay tax from these grants that we get from overseas while they are looting the treasury. What a shameless political class!”

Ezike warned the FIRS against proceeding with the move, saying the CLO would challenge the action up to the Supreme Court if it dares.

He added: “They may have succeeded with other people or groups they intimidated into accepting to have their rights violated. Ours will end at the Supreme Court after which we shall take to political action if we didn’t get victory. This country doesn’t belong to anyone. The rulers hold the government of this country in trust for all of us. Those who find themselves in power today should be very careful and decline from inciting the people to war against them. Power belongs to the people and let it be known to them that our silence does not mean weakness. Politicians in Nigeria should let the sleeping lions lie.

“CSOs in Nigeria reject this proposed impunity, wickedness and economic sabotage against our people. They cannot render services to our citizens and now want to stop the CSOs that are doing this for the people from doing so. It can’t work; we shall resist this obnoxious policy to the last. CSOs across Nigeria should start getting set for this campaign for us to determine who owns papa’s land.”

Speaking in the same vein, Founder, Churchill Foundation, Olakunle Oladunni Churchill, said the move would threaten the existence of CSOs in the county.

Churchill said: “This is a controversial issue just like the Rural Grazing Area (RUGA) and the social media bill. I think the government is looking for various means to generate revenue and feel that it’s not benefiting from grants some of the NGOs get from outside the country. But the government must have a rethink on this.

“This move will give the government sweeping powers over civil society to the point of threatening its very existence. This would make it compulsory for all CSOs operating in Nigeria to register with the government and would require them to include details such as the location and duration of proposed activities as well as information on all sources of funding.

“Beyond revenue generation, by extension, this move is aimed at stifling and obstructing the workings of CSOs in Nigeria.”

The Executive Director of Civil Society Legislative Advocacy Centre (CISLAC), Auwal Musa Rafsanjani, also condemned the move, noting that when some people want to undermine the contributions of the non-state actors, especially non-profit making organisations, they would want to create every obstacle to achieve that.

He said: “NGOs and CSOs are not-for-profit and the only rationale they have from being exempted from paying is that they are not making money and they are beneficiaries and contributors.

“Human rights and anti-corruption organisations are not making profit; they are supporting the efforts of the government. So, it is ridiculous for anybody to sit down and say that they want to tax NGOs and CSOs. We are groups that survive on the basis of goodwill from individual and corporate organisations that want to support development process in Nigeria.

“So, they should go to those who are making money and who are not paying their taxes. Even within the government, you will realise that so many government agencies are not taxing people as they should, for instance, water and electricity. So, if the FIRS is looking for money, they know where they should get it.”

He, therefore, advised the FIRS to beam its searchlight on corporate organisations that make money but does not remit taxes to the government.

“We expect that the FIRS should be more transparent too in its activities. Look at their 2021 budget!

“I think that this is a bigger agenda to undermine and cripple anti-corruption and human rights organisations that are demanding for accountability, as they want government to be responsible.

“When you impose those rules, you will indirectly and directly cripple their activity of demanding for accountability with the little resources they have. Otherwise, FIRS knows where to find money and those who should pay. They should stop tax waivers.”

On his part, the Executive Director of Adopt A Goal for Development Initiative, Ariyo-Dare Atoye, argued that unless the FIRS was planning to introduce another regime of taxation, NGOs implementing funded projects had been paying taxes on staff salaries and allowances, withholding taxes on services and purchases like any other corporate entities.

“It will be wicked and unfair to tax the general income of NGOs and still expect them to pay taxes on services and purchases that will be done after.

“The desperation to generate money at all cost by this government should not be a reason to embark on double and exploitative taxation, which is capable of destroying services, businesses and livelihoods.

“The government should listen to expert opinions on how to restructure the country and its economy for wealth creation and easy income generation via a fair tax system,” Atoye said.

For the President of International Solidarity for Peace and Human Rights Initiative (ISPHRI), Comrade Osmond Ugwu there are no provisions under the constitution that stipulates payment of taxes by such organisations.

He told The Guardian in Enugu that CSOs and NGOs thrive under charity, explaining that in their campaigns for funds, they usually state the purpose for such funds and asked whether it was on the “dash money to be spent on charity that they should pay tax”.

Ugwu said: “The recent development in respect to the battle between the Federal government and Rivers State government followed by Lagos State government is now trying to put FIRS scampering here and there to cushion the effect of what may come out of the court ruling over the matter.

“That being the case, it is a violation of certain aspects of the constitution to demand taxes from the NGOs and CSOs. This is because these organisations are charitable organisations and these things are stated in their aims and objectives while being registered with the Corporate Affairs Commission (CAC).

“So, how can you start taxing non-profit yielding organisations? I look at the quest as the extension of the tyranny of the Federal Government to strangulate the NGOs vis-à-vis the civil society because these organisations depend on charity. It is only when people dash them money that they can do their work. There is no law as far as I am concerned that mandates the NGOs to begin to pay tax.

“The question is where do they get the money to pay tax from? Where will you categorise such payment? Is it from the dash money from people to carry out charity and media programmes? Remember that when NGOs apply for funds, they usually write out what the funds are meant to achieve. Taxes are not provided for in the programme of donor agencies or partnering agencies.”

Ugwu stated that CSOs would rise against the move, describing it as “an attempt to close down the democratic space in this country.”

Also speaking, President of Civil Rights Realisation and Advancement Network (CRRAN), Mr Olu Omotayo, said various attempts had been made in the past to regulate the activities of CSOs by the Federal Government, arguing that the current move has no constitutional backing.

Omotayo, who added that the FIRS lacked powers to impose taxes, stressed that NGOs and CSOs were exempted from payment of taxes, adding that there was no provision in the 2020 Allied and Company Matters Act that asked such organisations to pay taxes since they don’t make profits.

The Human Rights lawyer added: “The issue of tax is regulated by law and that is what led to the current problem between the Federal Government and Rivers State government. What the governor of River State is saying is that the issue of tax is a constitutional matter and that there are items on the concurrent list and those on the exclusive list.

“If it is not stated on the Exclusive List, you cannot make legislation about it. If there is no law in force on an aspect, you wait until that law is made. The FIRS does not have power to make laws on who should pay tax. If you have such law, you send it to the National Assembly, who in trying to make such law will ensure that it is in consonance with the provisions of the constitution. So, it is not as easy as they are thinking. The law on taxation is different and there is no enabling law that gives the FIRS such power to enforce taxes on CSOs. Since there is no such provision under the constitution; for you to now make such provision, you must go through the National Assembly.”

Omotayo added: “CSOs and NGOs are exempted from tax payment because the law that guides them is contained in the Companies and Allied Matters Act. Under the law where they are registered it is provided that their incomes are not subject to tax; that their income is channeled towards their work; that they are not share-holding companies that declare profit at the end of the year. The grants they get are what they use for their work. If they say they are relying on the law, it is a contradiction. We have a new Companies and Allied Matters Act, 2020 and I have not seen where the law supports what they are referring to. That is why the NGOs and CSO are registered under Part C of the constitution. Why the law exempted them is because they are not an income generating organisation. What they are doing is simply engaging in charity, not a business. So, it is a contradiction to tax such organisations.”

The Executive Director, Centre for Nonviolence and Gender Advocacy in Nigeria, Asmau Benzies Leo, also argued that NGOs and CSOs are not for profit and therefore should not be tasked.

“NGOs and CSOs are not for profit; so why should they be taxed? Just like churches, they do a lot, sometimes even more than the government. They build schools, roads and help the less privileged.

“For me, NGOs and CSOs should not be taxed because they offer complementary services to the government. Where government cannot reach, they complement. There are hard to reach communities that do not have the presence of government facilities, but you will find missionaries, NGOs, CSOs, faith and community based organisations rendering services. Left to the government some of those people might not have access to healthcare, basic infrastructure.

“So, instead of taxing them, there should be provision for them to offer voluntary services with what they have. We know that some access funds from donor agencies outside the country, but these funds are not meant to service the needs of the NGOs but the needs of the people in the communities. So, if you tax them, you are taking away what belongs to the community.”

She urged the government to look at the bigger picture and not consider the impression in some quarters that some NGOs enrich themselves.

“We cannot exonerate everybody and say it doesn’t happen but let us look at the bigger picture. There are CSOs and NGOs doing a whole lot in this country. There is no aspect of our national life we don’t find them participating. You find them in governance, peace and security, health, education and development sectors. Sometimes they are there ensuring that government do their part in terms of tracking budgets, holding leaders accountable and so it will be discouraging to see that the monies meant for the poor through these CSOs are used for taxes.”

The Executive Director of Socio-Economic Rights and Accountability Project (SERAP), Adetokunbo Mumuni, however, submitted that the FIRS should go ahead with the move if the law backs it.

He said: “If they have a right to do it under the law, they can proceed. So, the question should be: Are they exercising the right under a known law? If they don’t have the power and right, their first challenge will be that there will be people to take them up in court.

“I believe that it is the responsibility of all Nigerians to follow the law and so under no circumstance should anybody disobey the law. That will be irresponsible, ungodly and going against the spirit of the Nigerian nation. I am for adherence to the law.

“Let me say this, if you are an NGO or a CSO, you exist as a registered and incorporated body, hence you have the responsibility to obey and uphold the law. It is when the law is not properly followed that there will be issues

“An NGO exists because the law exists. So, if you exist and are recognised by the law, you should also be ready to comply with all the laws that are supposed to regulate your activities. It will be illegal and unconstitutional to go against the laws that guide your activities.”