On 31st March 2021, the Federal Inland Revenue Service (the “FIRS”) released an information circular titled “Guidelines on the Tax Treatment of Non-Governmental Organisations (“NGOs”), which objective was to clarify the meaning of NGOs under applicable laws and treatment of income, operations and activities of NGOs under extant Nigerian tax laws (the “Circular”).

In summary, the Circular specifically restated the definition of an NGO as a not-for-profit association of persons either incorporated as a company limited by guarantee under Part B of the Companies and Allied Matters Act, 2020 (“CAMA”) or an incorporated trustee under Part F of CAMA with the principal object of advancing a given public good and not carrying on business for the purpose of profits distribution to its members. The Circular further noted that the NGOs include organizations, institutions, and companies engaged in ecclesiastical, charitable, benevolent, literary, scientific, social, cultural, sporting or educational activities of a “public character” status. The Circular also resolved the uncertainty bordering on the construction of distribution of assets as distribution of profits, clearly stating that distribution of assets, whether in cash or in kind, for personal use by promoter or members, will be construed as distribution of profits.    

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