FINANCE minister Patrick Chinamasa has said offerings given during a church service are exempt from taxes, allaying fears that the taxman was now targeting churches.
Chinamasa, however, said any business run by church groups should pay tax.
He was responding during the Senate oral answers to questions with notice on payment of taxes by church-run businesses last week.
“The current Income Tax Act, Section 14(2)(e) exempts the receipts and accruals of all ecclesiastical, charitable and educational institutions of a public character,” the minister said.
“The receipts and accruals of ecclesiastical institutions being referred to relate to church activities only which are not of a business nature.
“By this I mean only offerings given by congregants during a church service are exempt from taxes.”
With the country’s tax base increasingly shrinking as more people move to the informal sector, there was speculation that the government was now targeting churches to augment revenue collection.
Some churches are reported to host more than 50 000 worshippers in a single Sunday service, racking in huge amounts in offerings and
Chinamasa said with regards business ventures of churches, these were to be accounted for separately.
He said any business venture for a church should be properly registered as an incorporated company.
“The Income Tax Act specifically pronounces that any company engaged in a trade which includes any profession, business, activity or calling, occupation or venture in producing income is liable to pay all due income taxes,” he said.
“This applies to consumption taxes such as Value Added Taxes, excise and customs duty.”
Last year, the government hinted on imposing tax on churches as it emerged the religious entities had virtually turned into commercial entities through their continued exchange of huge sums of money during their services.
But the faith-based organisations, which run charity activities, insisted that they should not be taxed as they were doing work which the government had failed to do.