Machakos DG Mwangangi faults plan to tax religious organisations

Machakos Deputy Governor Francis Mwangangi has faulted the government's plan to tax religious leaders.

Mwangangi said the plan should be abandoned, saying it is double jeopardy.

He said religious organisations are partners of the state in the positive transformation of society and should therefore be spared of such punitive taxes.

Mwangangi said religious organisations should be viewed through the lenses of their massive input in spurring positive change in communities rather than being punished.

“Introducing taxation for religious organisations would be most unfortunate in this era when they are playing a bigger role in shepherding change in society," Mwanangi said.

“Organisations of faith like the churches should be exempted from paying taxes because of the role they play in positively transforming society including saving souls."

Mwangangi said that just like the way the state works to ensure a functional society free of any ills, churches, mosques and synagogues complement the government interventions.

Churches, synagogues, and mosques are, by definition, nonprofit entities, and nonprofits are not taxed on their net income.

However, staff working for religious entities pay income tax.

The legislative proposal to tax religious organisations has triggered a storm with some leaders now terming the move "ill-conceived and unfortunate".

The National Treasury has proposed to Parliament the Income Tax Regulations Bill (Charitable Organisations and Donations Exemptions) 2024 targeting churches, NGOs and other institutions that are exempted from taxes.

The National Assembly Committee on Delegated Legislation, chaired by Ainabkoi MP Samuel Chepkonga, last week endorsed the proposed legislation in a meeting with top officials of the Kenya Revenue Authority (KRA).

The move sparked uproar from religious leaders and a section of political leaders across the country saying the decision is unfair and a reversal of the gains made so far.

The Bill, proposed by former Treasury Cabinet Secretary Njuguna Ndung'u, seeks to outline requirements to be met by charitable institutions that qualify them for tax exemptions on their income and stipulate what donations will be considered for tax deductions.

Following last week’s submissions, the Committee gave the nod for the new tax recommendations.

"We have reviewed the regulations and are satisfied that they conform to the law," Chepkonga stated at the meeting.

Religious leaders in Siaya County have demanded public participation in the tax proposals targeting among others, religious organisations.

Church of Christ in Africa (CCA) Siaya Archbishop Patrick Nyagudi said the government should subject the proposed law to public participation to get the feelings of the Kenyans before they can proceed to implement it.

Ligawa said churches such as the CCA do not have huge investments that can be taxed, noting that the little income that they have been raising through tithe and offerings is often ploughed back through charity work.

“Churches submit their annual returns to the office of the Attorney General where they make payments and should therefore not be taxed any further,” he added.           

Currently, religious organisations are exempted from paying any taxes to the State as they are assumed to be partners with the government in supporting society.

In January, a Nakuru doctor filed a petition challenging sections of the Income Tax Act that exempt some people and institutions including churches from paying tax.

According to Magare Gikenyi, Sections 3(2) of the Income Tax Act Cap 470 leaves out other persons contrary to Constitutional principles which state that the tax burden should be shared fairly by all Kenyans and by all sectors of the economy.

The medic wanted churches included in paying tax said Article 201(b) of the Constitution saying it should be made mandatory that the taxation burden should be shared fairly.

He termed Section 13 of the Income Tax Act as discriminatory and contradictory to the Constitution because it allowed certain groups of individuals and entities to legally be exempted by the statute.

”Tithes, offerings and donations and any other person and entity exempted from taxation should be subjected to the same because article 201 of the constitution does not anticipate discrimination,” he said.

He asked the court to declare Section 3(2) of the Income Tax Act (ITA) Cap 470 of the laws of Kenya discriminatory, unconstitutional, null and void because it segregates and provides certain people and entities to pay income tax while leaving out others.

Respondents in the matter are the Attorney General, the Treasury CS, Kenya Revenue Authority, the Senate and the National Assembly.

The National Council of Churches of Kenya, Kenya Conference of Catholic Bishops, the Evangelical Alliance of Kenya and the Supreme Council of Kenya Muslims are listed as interested parties.