Tax Talk: Tertiary Education Tax in Nigeria
YBTC News—The tax net is not only wide but all-encompassing and just like religion, it impacts on every aspect of human life.
Although, like you have most likely contributed to, the tax man is a victim of incessant criticisms and often erroneously perceived as an agent of doom sent to milk us dry of our incomes in the name of civic responsibility.
Nevertheless, apart from the guiding principles of taxation encapsulated in its canons which uncovers the progressive motives of the tax man, the beauty of taxation is also evident in its underlying purports; for the good of all of us.
One of the many taxes that attest to this is the Tertiary Education Tax. Well, the significant thing about tertiary education tax is that it has long term impacts as it helps to strengthen the educational institutions for generations to come.
WHAT IS TERTIARY EDUCATION TAX?
Tertiary Education Tax (formerly known as Education tax) is the tax levied on all companies registered in Nigeria with respect to their assessable profits. Tertiary education tax also applies to companies subject to tax under the Petroleum Profits Tax Act. The determination of assessable profit of a company shall be ascertained in the manner specified in the Companies Income Tax Act or the Petroleum Profits Tax Act as the case may be.
The levy paid by resident companies in Nigeria as tertiary education is pegged at the rate of 2% of their assessable profits for each year of assessment.
HOW IS TERTIARY EDUCATION TAX ADMINISTERED?
Just like every other taxes, tertiary education tax has its regulating legislation. Before now, it used to be Education Tax Act Cap. E4 Laws of the Federation of Nigeria, 2004 and Education Tax Fund (Amendment) Act No. 17, 2003 but owing to the enactment of TERTIARY EDUCATION TRUST FUND (ESTABLISHMENT, ETC) ACT, 2011, the two previous Acts were repealed and the Tertiary Education Trust Fund was established – charged with the responsibility for imposing, managing and disbursing The Education Tax to public tertiary education institutions in Nigeria; and
for related matters.
The body responsible for the assessment and collection of tertiary education tax is the Federal Inland Revenue Service (FIRS) The FIRS gives assessment notice to companies liable to pay tertiary education tax and the tax is therefore payable within two months of this notice. The obtainable thing in practice is that companies pay this tax on a self-assessment basis alongside their company income tax or petroleum income tax as the case may be.
It must however be noted that by virtue of section 7 of the TETFund Act 2011, the Board of Trustees is obliged to administer the funds as collected by FIRS. And the administration of the funds shall be in pursuance of achieving the purpose of the Act in respect of the provision or maintenance of essential physical infrastructure for teaching and learning; academic staff training and developments; and any other similar needs incidental to achieving this objective as deemed fit by the Board of Trustees.
Be that as it may, in the event of breach for a first offence, the offender is liable to imprisonment for a term of 6 months or to a fine of up to N1,000,000.00 or both; and for a second and subsequent offence to imprisonment for a term of 12 months or to a fine of up to N2,000,000.00 or both (see generally section 11 of TETFund Act 2011).
Thanks for joining us for this week’s edition. Next week, we’ll look into Stamp Duties and we finally draw the curtain on tax types.
Till then, we look forward to your questions, contributions and recommendations.
Enjoy the rest of your week!