Court of Appeal affirms educational institutions’ companies income tax obligation

The Court of Appeal (CoA), in December 2018, upheld the ruling of Federal High Court (FHC) on the liability of educational institutions to pay companies income tax (CIT). The judgement arose from an appeal by Best Children International Schools Limited (BCIS/the Appellant) against Federal Inland Revenue Service (FIRS) in respect of the FHC decision that BCIS’ profits do not qualify for exemption under Section 23(1)(c) of Companies Income Tax Act (CITA).


In 2014, FIRS assessed BCIS to CIT and tertiary education tax (TET). BCIS challenged this by instituting an action at the FHC. The FHC decided in favour of FIRS on the premise that BCIS is a company limited by shares (CLS) and thus not an educational institution with public character.

BCIS appealed the decision, urging the CoA to determine the appropriateness of FHC’s reliance on Section 26 of Companies and Allied Matters Act (CAMA) in determining its exemption status under CITA and to provide an injunction restraining FIRS from enforcement of the assessment on the Appellant.

The CoA upheld the FHC decision declaring that BCIS is liable to tax as it was not registered as a company limited by guarantee (CLG). According to the CoA, a CLS is for profit making and must pay income taxes. The fact that BCIS is a school or an educational institution is not enough to exempt it from payment of taxes.

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One thought on “Court of Appeal affirms educational institutions’ companies income tax obligation”

  1. Omozilo says:

    Interesting read. “Educational institutions may no longer be able to enjoy income tax exemption on the basis of carrying out educational activities alone”

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