Zimra descends on churches

THE Zimbabwe Revenue Authority (Zimra) said it will start collecting taxes from churches engaging in business transactions such as selling paraphernalia to their congregants but will exempt churches from Income Tax on tithes, offerings and donations.

The taxman also said churches would be required to pay Pay As You Earn (PAYE) for salaries, wages and allowances to any of their workers. Zimra head of corporate communications Mr Canisio Mudzimu responding to written questions from Sunday News said all churches carrying out any form of trade were now liable to Income Tax.

Over the years there has been a rise in the number of Pentecostal churches throughout the country, some of which are engaged in money generating projects and selling merchandise such as anointed oils, stickers, holy water, and wristbands, among other ornaments. These business activities, according to Zimra, are the ones that would be taxed as they fall outside the general church activities.

"Churches carrying on businesses are treated like any other entities and are liable to Income Tax. This tax is payable on business profits, which is income derived from, or deemed to be from a source within Zimbabwe.

"However, the receipts and accruals of church or religious organisations are exempt from Income Tax only to the extent of donations, tithes, offerings, other contributions by its members, and any other income that is not from trade or investments," said Mr Mudzimu.

He said churches or religious organisations may qualify to register for Value Added Tax if they undertake various trading activities and their annual turnover from the business activities exceeds $60 000. The religious sects are also required to pay Pay As You Earn (PAYE) for the people they are employing.

"Every person who becomes an employer is required by law to register for PAYE within 14 days of becoming an employer. Once a church becomes an employer and it pays any type of remuneration, for instance salary, wage, allowance — among others — to its employees, the church will be required to deduct the correct Employees' Tax or PAYE every month, in accordance with the tax tables, and remit to the Zimra by the 10th day of the following month," said Mr Mudzimu.

He, however, said churches were exempted from paying Capital Gains Tax in the event they sell any of their immovable properties.

"Capital Gains Tax is payable on capital gains realised from the sale of specified assets (immovable property, shares and other securities). It should be stated that a church is exempt from Capital Gains Tax in respect of any sale of specified assets. However, the exemption does not cover a situation where the church carries on a trade through a company or other statutory corporation and the latter sells a specified asset," said Mr Mudzimu.

The clergymen are also required to pay tax for any business transaction they conduct in all the country's economic sectors.

"Please note that any business transaction carried on by any pastor and founder of any church are liable to tax," said Mr Mudzimu.

The announcement by Zimra of its intention to start taxing churches has been received with derision by the church with founder and president of Greater Grace International Church Prophet Moreblessing Rwambiwa of the miracle money fame saying the move was "ungodly and was likely to bring a curse to the nation."

He said the gospel was free but the means that were used to get it to the people were not free.

"The Church is a non-profit organisation. The gospel is free, no one denies that, but the means through which the gospel is spread are not free. The monies that the church is making through selling such merchandise as wristbands, stickers and others is not for the prophets or pastors, it is to provide for the church that which cannot be provided through tithes and offerings. The gospel is free but it is not cheap and most of us do not have fixed salaries, we rely on the goodwill of the church as we have volunteered to work for the church," said Prophet Rwambiwa.