To tax or not to tax: GRA in a fix over churches

The Ghana Revenue Authority (GRA) is in a fix to make a decision to either tax the Church or not, a move which has received mixed reactions from the general public, including the ‘Body of Christ’, in the recent past.

Though the GRA has not entirely refuted the idea of imposing tax on the Church in previous and present debates, the tax authority however considers the move as very sensitive – an idea which must be discussed widely with all stakeholders.

GRA’s Commissioner General, Dr. Ammishaddai Owusu-Amoah, responding to a question by the B&FT, after a recent Tax Governance Forum in Accra, as to whether the authority is still considering prospects of taxing churches across the nation, briefly responded: “We need to discuss with stakeholders”.

Though the answer by the Commissioner General does not imply GRA’s intention to collect revenues from the church, the response gives a hint about the tax authority’s resolve to carefully engage necessary stakeholders in order to make or unmake that critical decision of levying the Church.

Ghana’s situation

The conspicuous extravagant and glamorous lifestyle of certain pastors and church owners in Ghana have long been sparking conversations and debates on the need for these churches to pay taxes to government. Some of these pastors, whom the public refers to as celebrities, control millions of dollars, evident in their opulent lifestyle.

Response by the Christian Council of Ghana

The General Secretary of the Christian Council of Ghana, Dr. Cyril G. K. Fayose, however, told the B&FT that the activities of pastors in what he referred to as ‘One-man churches’, is not the standard to conclude whether churches should be taxed. “Many people in the congregation already honour their tax obligations to government and imposing another tax on a registered charity organisations like the Church, which thrives on donations and gifts, is not advisable”, he said.

He said church businesses including universities and hospitals pay taxes, and further attempt to levy direct tax on church revenue will amount to double taxation.

Data from the Christian Council shows that 40 percent of education and healthcare in Ghana is provided by churches, as their contribution to the country’s growth. Ghana is currently working to pass the Charities Law, a regulation which among other things, seeks to exempt churches from being levied.

Church tax in other jurisdictions

A church tax is collected in Austria, Denmark, Finland, Germany, Iceland, Italy, Sweden, some parts of Switzerland and several other countries.

The immediate past Ag. Commissioner of South African Revenue Service (SARS), Mark Kingon, before he left office, made it clear that the revenue service would ensure religious institutions – which are usually exempt from tax – are tax compliant.

Mr. Kingon stated that SARS will, in all likelihood, conduct lifestyle audits on certain employees of religious institutions in order to ascertain whether they are indeed being taxed correctly, and that they are not, in fact, avoiding taxes that they rightfully owe.

The SARS, he said, may start by confirming that religious institutions in South Africa are, in fact, registered as Public Benefit Organisations (PBOs), with tax exemption units, while critically ensuring that some church employees are not being paid unreasonably high salaries, a situation which could lead to the Church losing its status as a PBO in that country.

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