Churches, Schools, NGOs and others: Full list of organisations you may not know are exempt from income tax in Nigeria

• Churches, mosques, NGOs, charities and non-profit schools may qualify for income tax exemptions in Nigeria.

• The exemption generally applies only to income used for their approved objectives.

• Commercial businesses operated by exempt organisations may still be taxable.

• Tax-exempt organisations may still have other tax obligations, including filing returns and paying employee-related taxes.

Many Nigerians assume every organisation operating in the country must pay income tax. However, some organisations are granted tax exemptions because of their public, religious, educational or charitable purposes.

The exemption applies mainly to income generated for those approved purposes, meaning that not every activity carried out by these organisations is automatically tax-free.

Under Nigeria’s tax laws, certain organisations including churches, mosques, schools, charities and some government bodies may enjoy exemptions from income tax when their income is used strictly for their objectives.

However, if these organisations engage in commercial activities, the income generated from such businesses may become taxable.

Here are the categories of organisations that may enjoy income tax exemptions in Nigeria:

Religious institutions are among the organisations that may qualify for income tax exemption.

They include:

• Churches

• Mosques

• Other ecclesiastical institutions

However, the exemption applies only to income used for religious purposes.

For example, donations, offerings and other contributions received for religious activities may be exempt, but income earned from commercial ventures such as hotels, supermarkets, event centres or other businesses may be subject to taxation.

Some educational institutions may also enjoy tax exemptions because of their public or non-profit nature.

They include:

• Public schools

• Public colleges

• Public universities

• Non-profit educational institutions

The exemption is designed to support institutions established for educational purposes rather than organisations operating mainly as profit-making businesses.

Registered charities, humanitarian organisations and public benefit organisations may qualify for income tax exemptions.

This category includes:

• Registered charities

• Foundations established for charitable purposes

• Non-governmental organisations (NGOs)

• Civil society organisations (CSOs)

• NGOs limited by guarantee

Their qualifying income may include:

• Donations

• Grants

• Membership subscriptions

Other contributions meant for their charitable objectives

However, if an NGO runs a commercial business outside its stated objectives, income from that activity may be taxable.

Some registered organisations representing workers and professionals may also enjoy exemptions.

They include:

• Registered labour unions

• Professional unions

The exemption is linked to their recognised objectives and activities.

Certain registered cooperative societies may qualify for tax exemptions.

They include:

• Farmers’ cooperatives

• Credit cooperatives

• Consumer cooperatives

• Housing cooperatives

These organisations are generally established to provide economic support and services to members rather than operate as conventional profit-making companies.

Registered friendly societies and mutual benefit organisations may also fall under exempt categories.

These organisations typically exist to provide support, welfare and benefits to their members.

Some non-profit sporting bodies may qualify for exemptions.

They include:

• Non-profit sports associations

• Amateur sporting organisations

The exemption applies when their income is used solely to promote their sporting objectives.

Some government institutions are also exempt from income tax.

They include:

• Federal Government agencies

• State Government agencies

• Local Government Councils

• Ministries, Departments and Agencies (MDAs)

However, where these bodies engage in taxable commercial activities, income from those activities may attract tax obligations.

Certain state-owned development corporations recognised by law may also enjoy tax exemptions.

These organisations are usually established to support economic development initiatives.

Some approved financial and retirement-related organisations may qualify for tax exemptions.

They include:

• Approved pension, provident and retirement funds

• Pension Fund Administrators

• Approved retirement benefit schemes

• Securities and Exchange Commission (SEC)-authorised collective investment schemes

• Some qualifying Real Estate Investment Trusts (REITs)

• These exemptions are subject to meeting regulatory requirements.

One common misconception is that organisations with income tax exemptions have no tax responsibilities.

This is not always the case.

Many exempt organisations may still be required to:

• Register with the Federal Inland Revenue Service (FIRS)

• File annual tax returns

• Deduct and remit PAYE for employees

• Handle withholding tax obligations

• Comply with stamp duty requirements

• Pay applicable taxes depending on their activities

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An organisation’s tax status depends on how it earns money and what the income is used for.

For example:

A church:

• Tithes and offerings used for religious purposes may qualify for exemption.

• Income from a commercial hotel, bookshop or event centre may be taxable.

An NGO:

• Grants and donations may qualify for exemption.

• Income from paid consultancy services or businesses may attract tax.

A school:

• A non-profit educational institution may qualify.

• A school operating mainly as a commercial business may have different tax obligations.

Tax exemption is not a blanket privilege that allows organisations to avoid all taxes. The purpose of the organisation, the source of its income and how the money is used determine whether the income qualifies for exemption.

While churches, schools, NGOs and other public-interest organisations may receive tax relief to support their activities, commercial ventures operated by these organisations can still fall under taxable activities.