The Zimbabwe Revenue Authority (Zimra) says it is looking into the country’s churches with the view of establishing clearer taxing boundaries, amid indications most pastors are failing to remit all their dues to the taxman.
Zimra board chairperson Willia Bonyongwe yesterday told the country’s legislators that while the authority did not tax church offerings and tithes, other church business ventures were supposed to render to Caesar, which has not been happening.
The Zimra boss said most pastors had failed to separate their personal business interests and income from church offerings and tithes, a situation she said was short-changing the national tax collecting agency.
“… But I think you are right to note that we now have that blurred situation where the men of God and the church money and their businesses are one and we are actually looking into that. There has to be a separation, and declaration of whatever is due to Zimra…
“If you go to America, people like Creflo Dollar and Joyce Meyer have dealings with the Internal Revenue Services (IRS), so only offerings and tithes are exempt from tax,” Bonyongwe said at a Zimra parliamentary workshop in the capital.
Zimbabwe started taxing churches last year. At the moment, receipts and accruals of church or religious organisations are exempt from Income Tax as well as donations, tithes, offerings or other contributions by its members.
Bonyongwe pointed out that in the event that the churches had other business ventures, these needed to be registered, amid indications Zimra is also investigating separate businesses being run by churches and their pastors.
“As a policy we don’t tax the offerings and tithes but I go to a church where my pastor pays PAYE (Employees’ Tax)… so they are taxed.
“And if you have a business, and the church is involved in a business it has to be registered. If it is a trust, it must be registered as a trust. If it is a normal business it is taxed as a normal business,” said Bonyongwe.
Presently, churches pay income tax on business profits, which is payable on business profits, that is income derived from, or deemed to be from a source within Zimbabwe.
A church may qualify as an employer if it pays any type of remuneration such as salary, wage, allowance, among others, to its employees. A Capital Gains Tax is also expected from religious organisations from the sale of specified assets (immovable property, shares and other securities).
If a church undertakes various trading activities and their annual turnover exceeds $60 000 per annum, they also qualify to register for Vat, with church organisations not exempt from the payment of Vat when they purchase goods or services which are subject to Vat.
There are also a number of Withholding Taxes chargeable to churches in terms of the Income Tax Act like Non-Residents Tax on Fees, Non-Residents Tax on Royalties, Non-Residents Tax on Remittances and Withholding amounts payable under contracts.
Zimra — which surpassed its $1,6 billion revenue target for the first half of 2017 by 2,72 percent after net collections totalled $1,7 billion — has been carrying out several revenue enhancing methods which include lifestyle audits to help Treasury plug its budget deficit which has become an annual feature.