Court Rules on KRA Plan To Tax Church Offerings, Tithes And Donations

June 9, 2022

How To File for Rental Income Tax in KenyaThe High Court has dealt a blow to the Kenya Revenue Authority(KRA) and offered a reprieve to churches over a plan by the taxman to impose taxes on tithes, offerings and donations.

Justice David Majanja upheld a ruling made by the Tax Appeals Tribunal that barred KRA from taxing houses of worship.

The Tribunal had ruled in a case where KRA was demanding Sh.5.5 million in taxes from Thika Road Baptist Church.

The taxman had argued that the church failed to produce documents that showed that it was exempted from paying taxes.

While churches are exempted from paying taxes, KRA argued that Thika Road Baptist must produce a tax exemption certificate, which is subjected to certain conditions.

In his ruling, Justice Majanja dismissed KRA’s argument saying that the donations, tithes and offerings made to the church cannot be considered an income and hence cannot be subjected to the income tax bracket.

The Judge further noted that KRA failed to demonstrate how tithes, offerings and donations made to the churches are gains and profits, employment or rights granted for use of property or any other form of recognized income by the Income Tax Act (ITA).

“I hold that since tithes, freewill donations and offerings are not income chargeable with income tax, the church didn’t have to seek the tax exemption

“I agree that the type of income (to the church) does not fall within section 3(2) of the ITA,” Justice Majanja ruled.

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