CLAIM: ZIMRA is expecting churches to pay taxes from the sale of goods such as anointing oil, and t-shirts among others which are being produced as part of fundraising activities.
SOURCE: NewZimbabwe.com
VERDICT: True
In an article headlined: ‘ZIMRA cracks whip on churches, taxes anointing oil, merchandise,’ NewZimbabwe.com an online publication in mid December 2024 claimed that the Zimbabwe Revenue Authority (ZIMRA) expects churches to pay taxes from sales generated through the sale of anointing oil and merchandise.
‘ZIMRA is expecting churches to pay taxes from the sale of goods such as anointing oil, and t-shirts among others which are being produced as part of fundraising activities,’ read the second paragraph of the NewZimbabwe.com article.
The article further says tithes and donations remain exempted from tax.
According to ZIMRA’s Public Notice 98 of 2024 (Notice to all churches), issued on 11 December 2024, the authority clarifies taxable and exempt income applicable to religious and faith institutions.
‘Income derived from trading activities is subject to income tax,’ reads the ZIMRA notice. ‘Examples of taxable income include but not limited to: Proceeds from the sale of church literature, books, or music, revenue from the sale of church-branded merchandise (e.g., apparel, anointing oils, artifacts, etc.), Income from the sale of meals, clothing, or similar items. Additionally, such sales may attract Value Added Tax (VAT) depending on the sales thresholds.’
Churches’ income exempt from tax
· Donations,
· Tithes,
· Offerings,
· Contributions:
· Income received or accrued from donations, tithes,
· Offerings, or other contributions made by members or benefactors of the church or its institutions.
· Non-Trading Receipts – Any income that does not arise from trade or investment activities conducted by or on behalf of the church or its institutions.
Background to the taxing of churches in Zimbabwe
While it remains unclear whether all churches have been tax-compliant, the taxing churches’ income from trade and investments was set to begin in January 2016, following the signing into law of the Finance Act by then-President Robert Mugabe in November 2015. The new law amended the Income Tax Act to include churches in the definition of “company” or “trust”. Moreover, churches are also required to pay Value Added Tax (VAT) on certain goods and services they purchase or consume.
Section 2 of the Finance Act, 2015, which is an amendment of section 14 of Cap. 23:04 reads as follows:
‘Section 14(“Income tax for periods of assessment after 1.1.10”) (l) of the Finance
Act [Chapter 23:04] is amended by the insertion of the following definition-
… company” or “trust”, is deemed to include a reference to any ecclesiastical, charitable or educational institution to the extent that any part of the income of such institution is derived from trade or investment, not being income from trade or investment that is exempt from tax in terms of paragraph 2(e) of the Third Schedule to the Taxes Act”.’
Conclusion
The claim: ‘ZIMRA is expecting churches to pay taxes from the sale of goods such as anointing oil, and t-shirts among others which are being produced as part of fundraising activities,’ has been rated as true. ZIMRA issued a public notice on December 11 which shows that income generated from church sales including anointing oil and other merchandise remains subject to income tax. The country’s Finance Act also mandates churches to pay the taxes in question.
