No Tax

Should Religious Institutions Be Taxed?

Render to Caesar the things that are Caesar’s and to God, the things that are God’s – Jesus Christ to the Jews. Let every person be in subjection to the governing authorities – Paul to the Romans. Why are our religious institutions not taxed – Nigerians to the Legislature.

The first statement made by Jesus was made in an attempt to separate the church from the state and cultural norms. You see just how conflicted we are when we wonder whether our religious bodies should be taxed? Such conflict probably arising from fear of eternal damnation for questioning the house of God’s submission to earthly authority and at the same time attempting to follow laid down statutes of our society without which we descend into anarchy. The first statement attributed to Jesus was a reply put to the Jews who fervently believed that all power belongs to God and all government on earth exist by divine appointment but were at the time also conflicted as to whether or not to pay tax to Caesar; this they saw as submitting to earthly authority. To effectively subject ourselves to the governing authorities like the Romans, let us literally take pages out of the books of our law.

The laws of the land states that religious/ecclesiastical bodies should be registered under PART C of the Companies and Allied Matters Act LFN 2004(CAMA). Part C requires that these bodies be registered as incorporated trustees and provide that their income be solely applied towards the promotion of their objects, no portion of said income should be directly or indirectly paid by way of dividend, bonus or otherwise to any member of the body excluding payments made in good faith and for proper remuneration to an officer in return for any service rendered to the body. See Section 603 CAMA

A further look at Section 23 Company Income Tax Act, Section 19 paragraph 133rd Schedule Personal Income Tax Act and Section 26 Capital Gains Tax Act shows that these bodies are expressly exempted from taxation. Note that this right of exemption will not cover avenues where such body involves in trade or business. A great example is the case of Sodipo and Macaulay v FBIR NTCLR, p.273, where it was held that the 3rd plaintiff – the exclusive owner of the Methodist Church Mission in Nigeria, was liable to be taxed on the income derived from the use of the building, Wesley House in Lagos. The reason being that the said building was used for commercial purposes and outside the scope of the exemption granted by tax statutes. To clarify what “trade” and “business” in this context means, the Supreme court in Arbico Ltd v FBIR (1996) 2 All NLR 303 states that the word “trade” be interpreted in its widest sense in accordance with its common everyday meaning. Secondly, that an isolated one – off transaction can still constitute a trade.

The above quoted legislations are free from ambiguity. A religious body, not involved in trade and business is not subjected to taxation of its income. What then is the crux of the matter?

As is with most issues bordering on public opinion on taxation, there is a great misconception on the subject. It is simple, people do not understand tax. It is a great tool for nation building yet most Nigerians, even the educated few have limited knowledge of its workings. This is one of the reasons people do not pay tax despite all incentives and punishments rolled out by government to encourage citizens and at the same time implement tax laws. This and the failure of the Nigerian government to utilize taxes generated to the betterment of society. When the law says religious bodies are excluded from being taxed, it does not mean that these bodies are shielded from remitting all forms of payments due to the government; in reality, there are other types of taxes that such bodies are required to pay as bodies or associations registered under the laws of the land. For example, these bodies are required to file tax returns. Another of such tax is the Personal Income Tax. Remember that Section 603 CAMA makes provisions for payment or proper remuneration made in good faith to an officer of the body in return for any service rendered. This payment made to the officer is taxable under the PITA. Therefore, the employees of these bodies are required to pay their personal income tax from whatever remuneration received from such bodies.

These bodies also pay Value Added Tax (VAT) deductible from value added on a product during manufacturing and production. Exceptions being made in respect of items listed in the Schedule to the Act and humanitarian services where they enjoy zero VAT.

Let us further cast a light on the Capital Gains Tax. CGT is a tax payable on the profits on the disposal of assets. That is, the profit realised by the owner of a property when he or she disposes a capital asset or a price that is higher than the purchase price. For example, if you buy a land at 5 million naira and later sell the same land at 20million, you are expected to pay the CGT based on that. CGT rate in Nigeria is 10%. Under the law, religious bodies are one of the association’s exempted from payment of CGT-Section 26 Capital Gains Tax Act. It is no longer secret that certain religious bodies in Nigeria are owners of property who buy and sell these assets. It is my opinion that in this regard, such religious bodies should be taxed under the CGT for profits made as the law expressly stated that any profit from trade and business is liable to tax.

It is pertinent to be subjective in theses matters. While we clamour for these bodies to be taxed, let us not forget that religious bodies carry out various humanitarian services socially and economically to impact society positively. Some have argued that these bodies should respect obligations of the state for the advantages they enjoy through the state. To some extent, these bodies do respect obligations of the state. They respect obligations by remitting taxes where due, they respect obligations by giving back to the communities they find themselves in. Can they do more or should they do more is a question of morality and we have seen from past political climes of the English, the Greeks, the Romans and even present day Nigeria that any mixture whatsoever of state and church, law and morality has resulted in more cons than pros.Checking the pulse of the public to ascertain where this clamour stems from, one would clearly see that this agitation arises from the misconception that these bodies do not pay taxes whatsoever and secondly from the incessant display of huge wealth by principal officers of these bodies. Nigerians simply want to know if the private jets, premium secondary and higher institutions of learning, residential estates, recreational theme parks, bakery, publishing house and various other ventures are properly taxed; and rightly so, for without our taxes how will our government run effectively.

Rather than allowing our judgement be clouded by emotions, we should opt for a democratic approach and follow our statutes to the letter. Where we as a people feel that these laws made for us and by us no longer adequately address that which it was made for, we may now call for a change or expansion of such laws through our democratically elected officials.

Flowing from the statutes, it is my humble opinion that these bodies should not be taxed, except they engage in trade and business.

Article by Ene Omoha Esther (Esq.) 08157561204

Leave a Reply

Notify of


We at QuickFixLaw, believe that everyone deserves to have easy access to legal services and free legal information.


QFL White logo


Recieve our latest news straight to your inbox

© Copyright 2020 All Rights Reserved. Designed by Deft Packet Ltd.


QuickFixLaw provides information, simple and convenient legal services only. QuickFixLaw is NOT a law firm or a substitute for a lawyer and does not provide legal advice, legal representation or lawyer referral service nor the use of our sites create a lawyer-client relationship. Please contact your lawyer for legal advice