“The new tax law may yet prove to be a friend. But right now, for too many organisations working quietly in the margins of Nigerian society, it feels very much like a foe”.
BY BEST GREEN NWACHUKWU
In January this year, a new tax regime quietly took effect in Nigeria. No protests greeted it. No civil society coalition issued a press statement. No hashtag trended. And yet, buried inside the Nigerian Tax Act 2025 is a provision that could reshape the operating environment for nonprofits in this country more significantly than anything the sector has faced in recent memory.
The provision is this: income tax exemptions previously enjoyed by not-for-profit organisations are now limited to income not derived from commercial or unrelated business activities. In plain language, if your NGO generates any income that is not directly tied to your charitable mandate, you may now owe tax on it. Additionally, nonprofits must maintain detailed, transparent records proving that all funds are used exclusively for charitable purposes, and their annual returns must demonstrate the same.
On the surface, this sounds reasonable. Accountability is good. Transparency is good. Nobody serious is arguing that organisations should hide behind nonprofit status to run profitable commercial ventures tax-free. That loophole, where it existed, deserved to be closed.
But the devil, as always, is in the implementation.
Here is what concerns me. The Nigerian NGO sector is not a monolith. At one end, you have large, well-resourced international NGOs with dedicated compliance teams, legal advisers, and finance departments that can absorb a new regulatory requirement without breaking stride. At the other end, and this is the majority, you have small to mid-sized indigenous organisations running on skeleton budgets, staffed largely by passionate people who wear five hats each, and who have never had the luxury of a full-time accountant.
For this second group, the new tax law does not arrive as a policy adjustment. It arrives as a threat.
Many of these organisations generate modest income from training programmes, consultancy services, or resource centres, activities that are closely related to their missions but may now fall into a grey zone under the new legislation. A women’s empowerment NGO that charges a small fee for skills training workshops, is that income charitable or commercial? A youth development organisation that earns revenue from a printing press used primarily for programme materials, how does the tax authority classify that? These are not hypothetical questions. They are the daily realities of hundreds of civil society organisations across Nigeria, and the answers are not yet clear.
What makes this more concerning is the timing. The new tax law has landed in the same season as a global funding contraction. Nigerian NGOs are already navigating reduced international grants, a weakening naira, and rising operational costs. Adding a complex new compliance burden, with penalties for non-compliance, to this environment is the equivalent of asking someone to swim faster while adding weight to their ankles.
I want to be fair to the government here. The intent behind the reform is not sinister. Nigeria has genuine concerns about money laundering risks within the nonprofit sector, and the legislation aligns the country with international anti-money laundering standards. The requirement to file Currency Transaction Reports for transactions exceeding certain thresholds, for instance, is a global norm. Nigeria is not inventing these obligations, it is catching up with them.
But catching up with global standards without building the local capacity to comply with them is a recipe for selective enforcement and institutional intimidation. And in Nigeria, we know what selective enforcement looks like. It tends to fall hardest on organisations that ask uncomfortable questions of power.
What should happen? Three things.
The Nigerian Network of NGOs and other sector bodies must urgently produce plain-language guidance, not legal jargon, not policy summaries written for lawyers, that helps ordinary NGO practitioners understand what this law means for their day-to-day operations. The sector cannot afford to wait for government to explain the law to them.
Regulators, specifically the Federal Inland Revenue Service, must create a dedicated civil society engagement mechanism. Not a hotline that rings endlessly, but an actual structured dialogue where ambiguous provisions can be clarified before enforcement begins. The cost of getting this wrong, both for the sector and for the communities it serves, is too high.
And lawmakers must monitor implementation closely. The Finance Act process in Nigeria has a history of unintended consequences that only become visible after the law bites. Parliament should be hearing from the NGO sector at least annually on the regulatory environment. If the law is producing perverse outcomes, it must be adjusted.
Nigeria cannot afford to treat its civil society sector as an afterthought. Not now, when government service delivery is stretched thin and the international funding that supplemented it is pulling back.
The new tax law may yet prove to be a friend. But right now, for too many organisations working quietly in the margins of Nigerian society, it feels very much like a foe.
That feeling deserves a serious response, not a circular, not a press release. A response.
…Dr. Best Green Nwachukwu is a strategic communications consultant and public affairs professional based in Abuja.
