The Chairman, Alliance for Economic Research and Ethics (AERE), Dele Oye, on Wednesday predicted that the new tax regime could unlock billions of naira in additional revenue from the country’s vast faith-based economy.
He said the current dispensation will usher a more formal, transparent, and unified tax framework with a potential to attract extra revenues for the government.
Oye is the immediate Past Chairman of the Organised Private Sector of Nigeria (OPSN) and Chairman of the Nigeria-Türkiye Business Council (NTBC).
He said the enactment of the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA) represented the most significant overhaul of the country’s fiscal landscape in decades, with far-reaching implications for religious institutions that have historically operated within a legal grey area.
Oye, in a paper titled, “Harmonising Zakat, WAQF, and Christian Stewardship Under Nigeria’s 2025 Tax Act, pointed out that under the new regime, revenue collection is centralised while definitions of “charitable activities” are tightened, and a digital paper trail mandated for financial transactions.
This, he said, subjected economic activities of churches, mosques, and other faith-based organisations under closer regulatory scrutiny.
However, he noted that while the 2025 Tax Act promotes modernisation and reduces tax fragmentation, its success in the religious sector depends on the professionalisation of institutional financial desks and a collaborative oversight framework between the Nigeria Revenue Service (NRS) and faith-based stakeholders.
He said, “The 2025 Tax Act is not merely a technical adjustment of rates; it is a fundamental reimagining of the social contract between the Nigerian state and its citizens. For decades, religious institutions operated within a gray area of the law, enjoying broad exemptions under the guise of “public character” while occasionally venturing into commercial activities that blurred the lines between sanctuary and shop.
According to him, “The new regime, characterised by the Nigeria Tax Act (NTA) and the Nigeria Tax Administration Act (NTAA), seeks to bring order to this complexity by centralising collection and mandating a digital paper trail for all financial transactions.
“For the devout, this raises a pressing question: how does one balance the ‘Nisab’ of Zakat or the ‘tenth’ of the tithe with the rigorous demands of the Nigeria Revenue Service (NRS)?
“This article delves into the strategic implications of these reforms for Islamic and Christian financial practices. It moves beyond the binary of “God versus Caesar” to explore how faith-based philanthropy can be harmonised with modern tax administration.
“As the digital economy grows toward an estimated $300 billion by 2025, the government’s drive for revenue mobilisation increasingly targets the institutional transparency of all entities, including those previously shielded by religious sentiment.
“By examining the nuances of Zakat deductibility, the tax status of Waqf assets, and the reporting requirements for church-led charities, this study aims to provide a roadmap for compliance that preserves spiritual integrity while fulfilling civic duty.”
Continuing, Oye said, “The transition to the 2025 tax regime marks the formal end of an era defined by legislative proliferation and administrative duplication. Prior to these reforms, the Nigerian tax system was a labyrinth of multiple taxes, with state and federal authorities often competing for the same revenue pools, leading to significant inefficiencies and a high cost of compliance for businesses and non-profits alike.
“The core of the 2025 reform lies in the amalgamation of various tax laws into a unified legislative framework. This consolidation is primarily achieved through the Nigeria Tax Act and the Nigeria Tax Administration Act, which aim to simplify the legal structure and promote fiscal sustainability.
“One of the most significant shifts is the move toward a data-driven administration system. The new laws emphasise the integration of the Tax Identification Number (TIN) with other national identifiers like the National Identification Number (NIN) and Bank Verification Number (BVN).
“This modernisation effort is not just about technology; it is about closing the loopholes that allowed for widespread tax evasion. Under the old regime, the lack of coordination between different tax authorities meant that an entity could claim exemptions in one jurisdiction while generating taxable income in another. The 2025 Act introduces a ‘Cloud Unified Tax Portal’, which serves as a centralised hub for filing returns and managing assessments.”
He said, “For religious organisations, this means that the era of “cash-in-the-boot” financial management is effectively over. Every donation, if it is to be used as a basis for tax exemption or deduction, must now be part of a verifiable digital record.
“One of the primary grievances of the Nigerian taxpayer has been the ‘multiplicity of taxes,’ where a single economic activity could be subject to numerous levies from different tiers of government. The 2025 Tax Act addresses this by establishing a single, unified tax collection process. This centralisation is intended to reduce the administrative burden on taxpayers and eliminate the predatory practices of “touting” that often characterised local government revenue collection.
“The unification of VAT administration is a cornerstone of this shift. The 2025 regime seeks to provide clarity and ensure uniform application of VAT provisions across the federation. For religious bodies that operate schools, hospitals, or printing presses, this change is particularly relevant.
“Previously, these institutions might have negotiated informal exemptions with local officials. Now, the law requires a standardised approach where the ‘commercial’ arm of a religious organisation is clearly decoupled from its ‘spiritual’ arm. The unified collection system ensures that while the sanctuary remains a place of worship, the sanctuary’s bookstore is treated as a taxable retail outlet.”
Oye further stated, “The 2025 Tax Act significantly tightens the criteria for what constitutes a “charitable” organisation. Under the previous Companies Income Tax Act (CITA), the definition of “public character” was broad and often exploited. The new reform clarifies that for an organisation to maintain its tax-exempt status, its profits must not be distributed to any individual and must be reinvested solely in the pursuit of its charitable objectives.
“Furthermore, the 2025 regime introduces a mandatory self-accounting requirement for VAT on taxable supplies received by NGOs, including religious associations. This means that even if a mosque or church is exempt from paying income tax on its donations, it must still account for and remit VAT on the goods and services it consumes or provides in a commercial capacity.
“The ‘Profit’ loophole, where large-scale religious investments were shielded from the national purse, is being systematically closed. The state now views these institutions through the lens of their economic footprint, requiring them to demonstrate their ‘public benefit’ through rigorous documentation rather than mere clerical assertion.”
On the Islamic faith, Oye stated, “Islamic finance, rooted in the principles of social justice and wealth redistribution, offers a unique set of challenges and opportunities within the 2025 tax framework. The two primary pillars, Zakat and Waqf, are central to the financial life of the Ummah and represent a significant portion of non-state social welfare in Nigeria.
“Zakat, the obligatory 2.5% alms on qualifying wealth, is a religious duty that many Muslims view as a “divine tax.” In the context of the 2025 Tax Act, the debate centers on whether Zakat payments should be recognised as a tax credit or a deductible expense. If the state’s goal is “fairness,” then a Muslim paying both Zakat and statutory income tax faces a form of “double taxation” that could be seen as a penalty for religious compliance.
“The 2025 Act provides a window for documented religious giving to be treated as a deductible expense, provided the recipient is a registered ‘Company Limited by Guarantee’ or a recognised charitable trust. However, the hurdle remains the Nisab—the minimum wealth threshold for Zakat. In some cases, the Nisab is lower than the government’s tax-free threshold, meaning the religious law is ‘stricter’ than the state law for the relatively poor. For the wealthy, the challenge is proving the payment. The NRS now requires e-invoicing and digital receipts for any deduction to be valid.
“This creates a tension with the spiritual preference for ‘secret giving’, where the left hand does not know what the right is doing. To benefit from the 2025 Act’s provisions, Islamic institutions must adopt professional accounting standards that bridge the gap between spiritual anonymity and fiscal transparency.”
Continuing, he said, “The 2025 Tax Act represents a transformative shift in Nigeria’s fiscal landscape, moving from a fragmented and often opaque system to one characterised by centralisaion, data integration, and accountability. For the religious community, this transition is both a challenge and an opportunity. While the new requirements for transparency and documentation may initially seem like an encroachment on religious autonomy, they also provide a platform for faith-based institutions to formalise their immense contributions to national development.
“Harmonising Zakat, Waqf, and Christian stewardship with the state’s fiscal code requires more than just legal compliance; it requires a theological and institutional evolution. Religious organisations must embrace the ‘Faith-Accountant’ model, ensuring that every naira given in the name of God is accounted for with the same rigor expected by the state. Simultaneously, the state must recognise that religious giving is a vital component of the social safety net, deserving of fiscal recognition and support.
Oye added, “Ultimately, the goal of both faith and the fiscus should be the same: the welfare of the people and the prosperity of the nation. By resolving the clashes between privacy and transparency, and by addressing the concerns of double taxation through innovative policy guidelines, Nigeria can create a harmonious environment where the “Covenant” and the “Code” work in tandem. In this new era, good bookkeeping is not just a statutory requirement; it is a modern form of worship, ensuring that the resources meant for the poor and the community are managed with the highest level of integrity and ’Amanah’.”
James Emejo
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