There is need for clear tax guidelines for NGOs in Nigeria

Key Points:

• Dialogue demands moratorium on historical NGO tax audits until December 2025.
• 23 of 53 surveyed NGOs approached by NRS, most billed ₦5m to over ₦20m.
• 96 percent hired tax experts, facing severe financial strain and program cuts.
• NRS urged to issue clear, simple guidance on VAT, WHT and donor-funded activities.
• Compliance requires NRS fairness, CITN guidance, CSO accountability and funder support.

By Emmanuel Kwada 

A national policy dialogue on non-profit taxation in Nigeria has called for a time-bound moratorium on routine historical tax audits and enforcement actions against civil society organisations (CSOs), alongside clearer and simpler guidelines to help NGOs understand and meet their tax obligations.

The call was contained in a communiqué issued at the end of the National Policy Dialogue on Non-Profit Taxation in Nigeria, convened by IdeaPlus Foundation in Abuja on August 13, 2026.

The NRS establish a defined transition and regularisation period covering historical tax periods up to December 31, 2025.

The dialogue, themed “Compliance or Constriction? Assessing the Nigeria Revenue Service Tax Drive and Its Impact on the Sustainability of Nigerian Civil Society,” brought together representatives of the Nigeria Revenue Service (NRS), Chartered Institute of Taxation of Nigeria (CITN), civil society organisations, professional and accounting bodies, development partners and other stakeholders.

Participants agreed that taxation remains fundamental to the functioning of the state and that non-profit organisations have legitimate responsibilities to comply with applicable tax laws.

However, they warned that unclear rules, retrospective assessments, penalties, interest and high compliance costs could weaken organisations providing humanitarian assistance, development services, research, social support and accountability programmes.

The dialogue recommended that the NRS establish a defined transition and regularisation period covering historical tax periods up to December 31, 2025.

CBN Headquarters, Abuja

Under the proposal, the period would include a temporary pause or moratorium on routine historical tax audits and enforcement actions, allowing NGOs to voluntarily disclose, clarify and regularise outstanding obligations.

The participants also called for consideration of penalties and interest where non-compliance resulted from uncertainty, misunderstanding or administrative weaknesses rather than deliberate tax evasion.

They stressed, however, that such a measure should not prevent enforcement in cases involving fraud, deliberate tax evasion or other serious violations.

The call followed findings from a survey of Nigerian non-profit organisations covering their experiences with the NRS tax drive between 2023 and 2025.

70 per cent of organisations that faced tax demands received assessments in the range of ₦5 million to above ₦20 million.

According to the research report, 43.4 per cent, representing 23 of 53 surveyed organisations, reported being approached by the NRS during the period.

The organisations reported exposure to tax demands involving withholding tax, Value Added Tax (VAT), withholding VAT, stamp duties and, in some cases, corporate income tax and sectoral levies.

The report said approximately 70 per cent of organisations that faced tax demands received assessments in the range of ₦5 million to above ₦20 million.

It also found that about 96 per cent of NGOs approached by tax authorities sought professional assistance from tax, legal or accounting experts, highlighting the complexity and financial burden associated with compliance.

The survey indicated that the impact of tax enforcement ranged from moderate to very severe, with some organisations reportedly drawing down reserves, cutting or delaying programmes and considering downsizing or closure.

Leadership and staff were also said to have spent significant time dealing with audits, reconciliations and negotiations, resulting in delayed field activities, reduced geographical coverage, postponed training and difficulties meeting donor reporting requirements.

The dialogue identified compliance uncertainty, rising compliance costs, institutional capacity and organisational governance as major challenges facing the sector.

Establish dedicated NGO/CSO desks or focal points to provide taxpayer education, technical clarification.

Participants particularly highlighted uncertainty around VAT, withholding tax, tax refunds, donor-funded and humanitarian programmes, self-sustaining activities and the distinction between public-interest and commercial activities.

They therefore urged the NRS to publish practical, plain-language guidance explaining the tax treatment of NGOs, including clear rules on VAT, withholding tax, refunds, donor-funded activities, humanitarian programmes and self-sustaining activities.

They further recommended standardised and transparent procedures for tax assessments, objections and appeals, with clearly defined timelines and documentation requirements.

The NRS was also urged to establish dedicated NGO/CSO desks or focal points to provide taxpayer education, technical clarification, stakeholder engagement and mechanisms for escalating recurring sector-wide concerns.

The dialogue called for mechanisms that would enable NGOs to obtain authoritative clarification on significant, unusual or new transactions before they are undertaken, arguing that prospective guidance could prevent disputes rather than relying heavily on retrospective assessments.

Participants also urged the tax authority to strengthen risk-based enforcement and regularly engage CITN, CSOs, professional bodies, advisers and funders to identify recurring problems and improve tax administration.

For the tax profession, the dialogue endorsed a proposal by CITN to establish a monthly open virtual technical session on non-profit taxation, where NGOs can raise practical questions and receive professional guidance on emerging tax issues.

Civil society organisations were, in turn, urged to treat tax compliance as a board-level governance responsibility by strengthening financial controls, tax calendars, documentation and record-keeping.

The dialogue also called on funders and development partners to recognise reasonable tax, accounting, legal and compliance expenses as legitimate organisational and programme costs.

One thousand naira notes

Funders were urged to provide adequate budget flexibility for legitimate tax obligations and support tax literacy, professional advice and organisational strengthening.

The IdeaPlus Foundation said the dialogue would support continued engagement among the NRS, CITN, CSOs, funders and professional bodies, with a follow-up stakeholder meeting expected within six months to assess progress.

The communiqué stressed that non-profit status does not provide blanket tax exemption, noting that organisations must distinguish between qualifying non-profit income and tax obligations arising from transactions involving employees, consultants, vendors and other service providers.

The central message of the dialogue was that stronger domestic revenue mobilisation and a sustainable civil society sector should not be treated as competing objectives.

Effective non-profit tax compliance requires collaborative action rather than an adversarial relationship.

The participants called for a predictable, proportionate and transparent tax framework that enables willing taxpayers to comply while protecting the capacity of organisations serving the public interest.

“Effective non-profit tax compliance requires collaborative action rather than an adversarial relationship,” the communiqué stated, assigning the NRS responsibility to administer, clarify and enforce proportionately, while tax practitioners provide professional guidance, CSOs comply with applicable obligations and funders recognise the legitimate costs of compliance.

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