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 to the exempt of donations, tithes, offerings or other contributions by its members or income that is from trade and investments.

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

A Capital Gains Tax is payable on capital gains realised from the sale of specified assets (immovable property, shares and other securities). It should be stated that a church is exempt from Capital Gains Tax in respect of any sale of specified assets. However, the exemption stated in the foregoing does not cover a situation where the church carries on a trade through a company or other statutory corporation and the latter sells a specified asset.

Value Added Tax (VAT)

This is an indirect tax levied on goods and services. Churches or religious organisation may qualify to register for Value Added Tax (VAT) if they undertake various trading activities and their annual turnover exceeds $60, 000 per annum. 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 10th of 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.

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