Under the Finance Act 2021, profits of companies engaged in educational activities will now be liable to companies income tax due to the removal of ‘educational activities’ from the exempt provisions of Section 23(1)(c) of CITA.
Over many years, particularly since the surge in establishment of ‘for profit’ private schools, it has been subject of controversy and debate (due to this previous exemption), whether the profits of such companies would be subject to income tax.
But please note that this provision applies only to schools/organisations engaging in educational activities that are registered/ incorporated as companies. Not all schools or firms engaged in educational activities are incorporated as companies as many of them are still operating under the umbrellas of NGOs and religious bodies, while others are registered as business names. This distinction is necessary, before this provision of the law can be applied.
For further enquiries, discussion, advisory or help around complying with these new laws, please send us an email via clients@vi-m.com. You will be able to access all our explanatory write-ups on each of the major changes to the laws, brought about by the Finance Act 2021 and the practical ways in which they will affect taxpayers going forward, under our website group link – https://www.vi-m/category/Finance-Act-2021.