Limited by Guarantee company's exempted from CIT & Education tax

    In a tax appeal tribunal between an international business school here in Nigeria and FIRS over payment of company income tax as an educational insitution,The Tax Appeal Tribunal (TAT) seated in Lagos confirmed that the income of a company limited by guarantee, whose object is the provision of educational services is not taxable under the Companies Income Tax Act (CITA). The TAT also held that not being subject to CITA, such companies are also exempted from paying Tertiary Education Tax (TET).

  This decision is in accordance with the provisions of s.23 (1)(c) of CITA which exempts the profits of a company engaged in ecclesiastical, charitable or educational activities of a public character from tax provided such activities are not derived from a trade or business carried on by the company. 

   It is also in line with the CAMA which precludes companies limited by guarantee from carrying on business for the aim of making profits for distribution.This judgement helps to further support the prevailing understanding of the law that companies limited by guaranteeare not subject to tax since they are not expected to carry on business for the purpose of making profit