By Jeph Ajobaju, Chief Copy Editor
Civil Society Organisations (CSOs) – non-profits engaged in civil liberty and human rights causes – are to register with the Federal Inland Revenue Service (FIRS), obtain Taxpayer Identification Numbers (TINs), and pay tax.
This is part of Muhammadu Buhari’s drive to generate revenue to pay off Nigeria’s N35.465 trillion debt as of half year ended June 30 (H1 2021), a figure disclosed on Tuesday by Debt Management Office (DMO) Director General Patience Oniha.
The debt excludes $4 billion and €710 million for which the President requested approval from the National Assembly (NASS) on Monday to borrow from bilateral and multilateral organisations to fund the 2021 budget deficit.
Oniha disclosed the latest debt profile to journalists at a virtual conference, saying Nigeria risks debt sustainability problem if it fails to grow revenue which places the country in the poorest category among its peers.
“We should focus on revenue. The good thing about it is that the Minister of Finance, Budget and National Planning has started a programme aimed at growing the revenue profile. We must discipline ourselves to follow through to grow our revenue.
“If we continue to borrow and do nothing about growing our revenue base as other countries have done, we may have a debt sustainability challenge,” she said.
Social media tax also coming
Buhari is also eager to lift his Twitter ban, not because he cares about public opinion, but because he wants to use Twitter and other social media platforms to impose more tax on Nigerians who are already groaning under his consumption tax burden.
FIRS Chairman Muhammad Nami had last week urged the NASS to amend the Finance Act to capture online activities in the tax net.
He made the plea to the Senate Joint Committees working on the Medium Term Expenditure Framework and Fiscal Strategy Paper and heads of federal revenue generating agencies.
Nami said apart from targeting social media businesses, the proposed Finance Act amendments would also affect the Stamp Duty Act as some of the provisions are obsolete.
“You are aware of the issues of digital economy and the challenges of policing the digital tax payers like Twitter and Facebook,” he told the lawmakers.
“So, we are going to come up with the rules and provisions that the National Assembly will passionately look at and approve for us so as to bring them to the tax net. We want to see a way of taxing online activities and businesses.”
FIRS Tax Policy and Advisory Director Temitayo Orebajo included CSOs in Abuja on Thursday at a webinar on tax responsibilities for CSOs, reported by the News Agency of Nigeria (NAN).
The webinar was organised by the FIRS and the European Union Agents for Citizen-Driven Transformation (EU-ACT), a Non-Governmental Organisation (NGO), to educate and engage CSOs on tax regulations that concern them.
CSOs to keep records for tax purposes
Orebajo said all CSOs are to keep accurate records of employees and proper books of accounts for tax purposes, warning that failure to do attracts penalties.
However, Value Added Tax (VAT) on goods purchased by NGOs for humanitarian projects have zero tax
His words: “The NGO itself is not exempted from VAT where the organisation procures contracts or purchases goods that are not directly used in humanitarian donor funded projects.
“Likewise, any service procured or consumed by NGO is liable to VAT, except where such service is exempted under the VAT Act.
“NGOs are required under the Pay As You Earn (PAYE) obligation to deduct tax at source from salaries and other emolument of the employees, directors, officers among others.”
Orebajo reiterated that Section 25 of the Companies Income Tax Act (CITA) provides tax relief to any company making donations to an organisation listed under the fifth schedule of the CITA.
Donations must be made out of the profit for the year of assessment and total donation shall not exceed 10 per cent of total profit, he explained.
“Donation is not of capital nature, except where the donations are made to universities or other tertiary or research institutions and should not exceed 15 per cent of total profits or 25 per cent of tax payable.
“NGOs requiring to be listed under the fifth schedule to CITA may apply to the Minister of Finance through FIRS.”
CSOs criticise social media tax
Civil Society Legislative Advocacy Centre Executive Director, Auwal Rafsanjani, has cautioned the FIRS against doing anything that would affect the businesses of young Nigerians struggling to survive, per reporting by The PUNCH.
“There are many avenues which the FIRS can explore in order to generate income. It should not impose additional burden on young Nigerians who are just struggling to survive and making use of social media to transact their businesses,” he said.
“The FIRS should concentrate on taxing companies that are making profits from adverts and not individuals that subscribe to those social media platforms.
“Individuals who subscribe to those platforms and showcasing their businesses there should not be taxed. The tax should be on corporate entities that are making profits.”
Women Advocates Research and Documentation Centre founding Director, Abiola Akiyode-Afolabi, described the move as another plot to shut social media against the people.
“The government can’t make money on everything when it’s not giving people back.
While taxation in theory is progressive, Nigeria should follow best practices.
“This is another attempt to shut down the space against the people. This attempt should be resisted; the government should focus on providing good governance for her people, not targeting people for more hardship and exploitation,” she insisted.
