A Non Governmental Organisation (NGO) established to provide free healthcare or other social services in underserved communities may receive donations, grants and membership contributions without necessarily becoming a taxable business. But what happens when that same organisation begins selling training programmes, consulting services or products to raise money?
The Nigeria Tax Act 2025, which took effect on January 1, 2026, maintains tax exemptions for organisations engaged in educational, religious or charitable activities of a public character, provided the profits or gains are not derived from a trade or business carried on by the organisation.
The distinction is important because the Act defines “trade or business” broadly as any activity or venture from which income is generated, regardless of the scale or period for which it is carried on.
That means an organisation does not necessarily lose its tax protection simply because it receives money. Donations, family support and grants used to advance its charitable objectives are different from income generated through a commercial activity.
However, an NGO that earns income from a business activity could face tax obligations on that income.
