Taxation of churches and religious organisations

Shingirai Chirume know by his church activities as Prophet Makandiwa

There are situations where churches and religious organisations are required to pay tax. The taxes and the specific obligations are briefly explained below.

Income Tax on business profits

This tax is payable on business profits, that is, income derived from or deemed to be from a source within Zimbabwe. The receipts and accruals of church or religious organisations are exempt from Income Tax only to the extent of donations, tithes, offerings or other contributions by its members.

Employees’ Tax (PAYE)

Every person who becomes an employer is required to register for Pay As You Earn (PAYE)within 14 days of becoming an employer.

A church may qualify as an employer if it pays any type of remuneration such as salary, wage, allowance, among others, to its employees, in this case the organisation is required to deduct the correct PAYE every month according to the tax tables and remit it by the 10th

of the following month.

Capital Gains Tax

Capital Gains Tax is payable on capital gains realised from the sale of specified assets(immovable property, shares and other securities). The disposal of specified assets by a church organisation is exempt from Capital Gains Tax.

Value Added Tax (VAT)

This is an indirect tax levied on goods and services. Churches or religious organisations may qualify to register for Value Added Tax (VAT) if the total value of taxable supplies made in the period of twelve months exceeds $60, 000.  VAT payable should be remitted to ZIMRA by the 25th of the following month. Church organisations are not exempt from the payment of VAT when they purchase goods or services which are subject to VAT.

Withholding Taxes

There are a number of Withholding Taxes chargeable in terms of the Income Tax Act. Examples are Non –Residents Tax on Fees, Non-Residents Tax on Royalties, Non-Residents Tax on Remittances and Withholding amounts payable under contracts. A church or its paying agent is expected to withhold the tax and remit it to ZIMRA in cases where a payment is made. Withholding taxes are generally supposed to be remitted by the 10thof the following month after payment or a deemed payment is made.

Disclaimer This article was compiled by the Zimbabwe Revenue Authority for information purposes only.

ZIMRA shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.