Supreme Court Affirms Taxability of Private Schools

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11 Sep 2026 2 min read

Overview

In a landmark judgment delivered on 19 June 2026, the Supreme Court of Nigeria dismissed the appeal filed by Best Children International School Limited against the Federal Inland Revenue Service (FIRS), upholding the concurrent findings of the Federal High Court and the Court of Appeal. The apex court, in Suit No: SC.38/2019, definitively resolved the question of whether private educational institutions operating as companies limited by shares are entitled to tax exemption under Section 23(1)(c) of the Companies Income Tax Act (CITA), Cap. C21, Laws of the Federation of Nigeria, 2004.

The Appellant, Best Children International School Limited, is a private limited liability company incorporated under the Companies and Allied Matters Act. The company operates primary and secondary educational institutions in Abuja and generates revenue primarily through school fees paid by students. Following a demand for Company Income Tax by the Respondent, the Appellant instituted proceedings at the Federal High Court seeking judicial review and an order prohibiting FIRS from imposing or enforcing tax liabilities against it, arguing that its profits were statutorily exempted under Section 23(1)(c) of CITA. The Federal High Court dismissed the Appellant's suit, holding that the company did not qualify for tax exemption because, as a company limited by shares, it was registered as a profit-making venture rather than an educational institution of a public nature. Dissatisfied, the Appellant appealed to the Court of Appeal, which unanimously affirmed the trial court's decision. The Court of Appeal held that the Appellant failed to demonstrate that its educational activities were of a "public character" or that its profits were not derived from a trade or business.

Contents

The Supreme Court's Decision
Delivering the lead judgment, Hon. Justice Moore Aseimo Abraham Adumein, JSC, with the concurrence of Justices Mohammed Lawal Garba, Tĳiani Abubakar, Haruna Simon Tsammani, and Habeeb Adewale Olumuyiwa Abiru, dismissed the appeal for lacking merit. The Court adopted a sole issue for determination: "Whether or not the appellant is exempt from payment of corporate tax by virtue of Section 23(1)(c) of the Companies Income Tax Act.

Practical Implications for Private Educational Institutions

This judgment establishes the following principles with significant implications for the education sector and tax administration in Nigeria:

1. Private schools operating as companies limited by shares are not automatically exempt from Company Income Tax. The mere provision of educational services does not confer exemption unless the institution can prove that it is of a "public character" and that its profits are not derived from a trade or business.

2. The burden of proof rests on the claimant. Any company seeking to rely on tax exemption provisions must present credible evidence to establish its qualification, including the nature of its
incorporation, its profit distribution policies, and the public character of its activities.

3. Companies limited by guarantee, rather than by shares, are better positioned to claim the exemption, provided they can demonstrate that they are non-profit entities and that their activities are genuinely of a public character.

4. The decision reinforces FIRS's enforcement powers and serves as a warning to profit driven entities attempting to shelter under statutory exemptions intended for charitable, ecclesiastical, and genuinely non-profit public institutions.