What Is Education Tax In Nigeria? [Explained]

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Education tax in Nigeria explained - Nigerian tax system

What is Education tax? Education tax in Nigeria is a form of tax introduced by the military government on 1st January 1993 to assist in funding the Education sector.

The assessment and collection of the tax were the sole responsibilities of FBIR. The fund so collected is being managed by the Board of Trustee established for that purpose.

As I’ve said in our post on all types of taxes in Nigeria, this article about education tax will give you more insight into what education tax is all about.

You’ll learn the composition of the board of trustees, functions of the board, uses of the education tax fund and penalties.

Composition of the Board of Trustees of the education tax include;

  • The chairman
  • Eight other members
  • Representatives of the Ministry of Finance and education not below the rank of permanent secretary and;
  • The executive secretary who shall be the secretary to the board of trustees.
education tax in Nigeria

Membership shall reflect the six geopolitical zones of the federation, who shall be persons with considerable experience from both the public and private sectors to represent the business, financial and education sectors.

You should also learn more about value added tax VAT in this detailed post.

Functions of the Board of Trustee

When it comes to taxation in Nigeria, education tax board of trustee perform some major functions.

It is the responsibility of the board of trustee to monitor and ensure collection of tax by the FIRS, and ensures transfer to the education tax fund.

  • They are to manage and disburse the funds to various levels and categories of education.
  • The Board is to monitor and evaluate the execution of projects.
  • The Board also invest funds in appropriated and safe securities.
  • They receive the request and approve admirable projects after due consideration.
  • pdate is given to the Federal Government on its activities and progress through annual and audited report.

Also Read: Personal income tax in Nigeria – explained

Disbursement of Education Tax Fund

educational tax in Nigeria

The Board shall administer, manage and disburse the fund on the basis of

  • Equality among the six geopolitical zone of the federation,
  • Equality among the state within a zone
  • Equality among the local government or area council within a state or the FCT Abuja, respectively

In disbursing the tax, the higher educational sector shall receive 50%, primary 30%, and secondary 20% of the total tax collected within one year.

The distribution of the tax accruing to higher education sector shall be in the ratio 2:1:1 as between universities in Nigeria, polytechnics and colleges of education respectively.

Related: Withholding tax in Nigeria explained

Uses of Education Tax Fund

The fund when disbursed shall be used for the following:

  • Work centers and prototype development
  • Staff development and conference attendance
  • Library system at various levels of education
  • Research equipment procurement and maintenance
  • Higher education book development fund
  • Redressing any imbalance in environment mix as between the higher educational institutions
  • Execution of the nine-year compulsory education programme.

Also check: The taxation of special businesses in Nigeria

Also Read: Tax laws in Nigeria and Nigerian tax system

Offences and Penalties

A person who contravenes or fails to comply with the provision of this Decree is guilty of an offense.

The offences are as follows:

(a) If the tax due is not paid within the time specified (60 days), the Board shall serve on the company a demand note for the unpaid tax, plus 5% of the tax, and;

(b) If a sum demanded in the above penalty is not paid within two months, the company is guilty of an offence.

Where an offence under the Decree is committed by a corporate body or firm or other association of individuals;

  • Every director, manager, secretary or other similar officers of the body corporate;
  • Every partner or the firm;
  • Every person concerned in the management of the affair of the association; or
  • Every person who was purporting to act in the capacity as aforesaid is several guilty of that offense and liable to be proceeded against and punished for the offense in like manner as if he had himself committed the offense

Unless he proves that the act or omission constituting the offence took place without his knowledge, consent or connivance.

Also check: stamp duties in Nigeria explained

Education Tax In Nigeria and Penalties (Summary)

A person who is guilty of an offence under this Decree shall pay a fined of N10,000 or imprisonment for a term of 3 years.

For a subsequent offences, the guilty shall pay a fine of N20,000 or imprisonment for a term of five years or both.

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