Tithes, offerings and donations made to churches will not be taxed.
The new measures come into effect six months after the Zimbabwe Revenue Authority (Zimra) commissioner General Gershem Pasi told Parliament that the taxman was now focusing on churches after detecting some loopholes in the taxation system.
The taxation follows the mushrooming of many churches championing the gospel of prosperity, with some church leaders even flaunting their wealth.
Some churches are running businesses and making a killing through selling church paraphernalia.
The Anglican Church’s diocesan secretary reverend Clifford Dzawo said all along they were paying tax and the law was likely to impact more on emerging churches.
“As the Anglican Church we’ve been paying income tax and sales tax, but I know that some churches were not paying taxes, especially the emerging ones,” said Rev Dzawo.
Bishop Steven Mangwanya of the New United Apostolic Faith Church said the government must proceed with caution on the tax as most indigenous churches were struggling.
He said if over-taxed some could collapse as they were not making enough money to sustain operations.
“Let’s not look at one or two popular churches. To be honest, most of the indigenous churches that are starting are struggling to find money to pay pastors. They are struggling even to pay an allowance to the pastors to survive,” said Bishop Mangwanya.
The archbishop of Bulawayo Alexander Thomas said he was yet to study the law to grasp its full implications, but felt that “it was all right” to tax church businesses.
He said as the Catholic Church they were unlikely to be affected by the new law as they do not run businesses.
“For me that’s all right (the tax on investments). The church isn’t for business, it’s for the gospel. We don’t have business entities, but we’ve schools and hospitals for charitable purposes,” said Archbishop Thomas.
Presenting the mid-term policy statement reviewing the 2015 National Budget in Parliament in July last year, Finance and Economic Development Minister Patrick Chinamasa announced several austerity measures that include new levies and taxes on churches, imported groceries, fertiliser, and a ban on importation of second hand clothes.
On plans to tax churches, the Minister said the tax would be on their income-generating projects, but said tithes and offerings were exempt.