Taxation of Religious Bodies


Tax can be viewed as synonymous with the words, ‘duty’, ‘levy’, ‘toll’, ‘dues’, ‘excise’ and ‘monies’, to be imposed on every citizen, corporate person, etc residing within a particular jurisdiction or control of the government of a state.

The term ‘TAX’ is popularly defined in the landmark Australian case of MATTHEWS V CHICORY MARKETING BOARD (1938) Vol 60 CLR 263 as:

‘A compulsory extraction of money by a public authority for a public purpose of raising money for the purpose of administering government budget by means of contribution from individuals’

Tax is enforced by the government as a means of funding its activities. Tax imposition, collection, enforcement and Utilization are authorized and draw validity fundamentally from the stipulations of the generally accepted grundnorm being the Nigerian constitution 1999 (as amended 2011). It is a federal offence not to pay taxes and in many instances tax returns are demanded of an individual to ensure taxes are being paid.

Religious organizations are viewed as unique entities under the law because of their nature, purpose and activities. They are entitled to special protections and exceptions. Some of the exceptions have existed for much of the nation’s history, originally devised for Christian churches but expanded to other faiths as the nation has become more religiously diverse.

From time immemorial, there has been a lot of controversy surrounding the issue of taxation and religious institutions (religious institutions in this situation referring to churches and mosques). The current situation of their exemption from paying taxes has been debated by a scholars. How come churches do not pay tax and yet they earn so much? Would taxing the churches amount to double taxation? Would lifting the blanket of tax exemption be inequitable and unjust? Or would the economy be bedevilled by this action? Would taxing the religious institutions cause be seen as a victimization of these religious bodies? All these and more are the questions arising from tax exemptions of religious institutions.

The Pointer Newspaper of Saturday, September 12, 2015 in a story entitled “RELIGIOUS INSTITUTIONS TO PAY TAX ON INVESTMENTS,” Barrister Frank Nwugo, a member of the Delta State Board of Internal Revenue stated thus:

“Sometimes I hear people ask whether it is lawful for religious institutions to pay tax, why not? The personal income tax law of the Federation, Section 73 talks about the exemption clause which specifies ecclesiastic industries- their earnings; offerings, tithes and perhaps donations. But a church that owns land, for instance, must pay tax for that land. The reason is because that land by law of the Federal Republic of Nigeria does not belong to that church, but the government. Ground rent again, for instance, is an indirect tax. If you have land whether it is for an individual or corporate body, then, you must pay tax for that land. The exemption clause, as I told you earlier that applies to the ecclesiastic, has nothing to do with ground rent. Any church for instance, that owns a school must pay tax for that school and the earnings of that school must be paid for. Even the bible records that Jesus Christ Himself paid Tax”

He concluded that churches will henceforth be taxed for investments such as school, vehicles, business outfits, and land acquisition. He added in his last paragraph that, “even Jesus Christ himself paid tax.”

Also A former Minister of State for the Interior, CHIEF DEMOLA SERIKI, says that churches and mosques that own businesses should pay tax to the government. He said religious bodies, especially churches, had built large business empires including universities but many of them were not paying tax.

The ex-minister said:

“the wealth being made from these businesses was used in buying private jets with the government losing out”.

“Places of worship such as churches and mosques should not pay tax but when they go into investment outside their main focus, they must pay tax. For example, there are some churches that are into importing and exporting and they are benefitting from the economy.”

Argument for the retention of Tax exemption for ecclesiastical bodies has been that the tendency to impose double taxation on Nigerians is unacceptable. This is so because individual members of churches and mosques pay their taxes to the government. How will they now pay tax a second time at their places of worship? If we go by what was published in The Pointer Newspaper by the tax agent, it becomes double taxation. This is so because people give to the Church or Mosque out of their gains or profit and this is certainly after tax.

Also, religious institutions support the government and complement its effort to make the society safer and better for all and tax exemptions should be seen as a form of encouragement from the government.


The Nigerian constitution which is the ground norm for which all laws of the land gains its legitimacy, provides in Section 24 the duties of the Citizen. Specifically Section 24(f) provides that:

It shall be the duty of every citizen to declare his income honestly to appropriate and lawful agencies and pay his tax promptly.

The Federal Republic of Nigeria has one major law that regulates taxation which is the Personal Income Tax Act. Section 19(1) of the Act read together with the Third Schedule thereto provides clearly that:

“The income of any ecclesiastical, charitable or educational institution of a public character in so far as such income is not derived from a trade or business carried on by such institution, shall be exempted from taxation”.

Similarly, Section 30 of the Tax Code states that:

“Non-stock corporations or associations organized and operated exclusively for religious or charitable purposes shall be exempted from income tax provided that no part of its net income or asset shall belong to or inure to the benefit of any member, organizer, officer, or any person”

Also, some International legislation also specify Churches and other religious organizations, like many other charitable organization’s qualification for exemption from federal income tax. The INTERNAL REVENUE CODE SECTION 501(C) (3) provides that generally ecclesiastical bodies are eligible to receive tax-deductible contributions. To qualify for tax-exempt status, the organization must meet the following requirements:

The organization must be organized and operated exclusively for religious, educational, scientific or other charitable purposes

 Net earnings may not incure to the benefit of any private individual or shareholder.

 No substantial part of its activity may be attempting to influence legislation.

 The organization may not intervene in political campaigns.

 The organization’s purposes and activities may not be illegal or violate fundamental public policy.

Conclusively, it would be legally wrong and inequitable to ask churches to pay tax not considering exemptions provided for them by law, in the United States of America (USA), when a church buys anything as a body or when people donate funds to a church, such resources are given tax exemptions. This is also the practice in Britain. By this concession, the government gives support to churches.

The laws should then be followed strictly especially in the Nigerian state where all these religious institutions contradict all these statutory guidelines and still lay claim to tax exemptions. Institutions established by the church solely for income generation or Organizations who are just acquainted to religious organization should not be included in such Tax exemptions, they should be made to pay Tax and punished when they fail to comply except their Organization is a non- profit entity as held in the case of American International School vs FIRS . However Religious institutions cannot be asked or forced, or punished for non-compliance to tax payment as they are rightly exempted by law.

Aka Oluwatimilyin Akintunde