21 September 2017

Malawi Revenue Authority Urges Church Bodies to Pay Tax

Ecclesiastical bodies in the country have been urged to observe their responsibilities of registering their businesses and paying their taxes whenever they are operating businesses meant for income generating purposes.

The call was made Wednesday in Lilongwe when the Malawi Revenue Authority (MRA) engaged the religious bodies at Lilongwe hotel to remind them of what the law requires them on the same.

Under the Taxation Act, Value Added Act (VAT) and the Customs and Excise Act, which are the legal instruments for taxation; Ecclesiastical bodies are required to remittance with the MRA whenever they are engaging in businesses.

For example, this is applicable whenever Ecclesiastical bodies are running businesses like private schools, hiring of halls, chairs, rentals from buildings and lodges amongst other businesses.

"As Ecclesiastical bodies, we do not want to see them on the wrong side of the law. That is why we wanted to remind them that whenever they are engaging in business ventures, they are required to pay taxes as per requirements of the law.

"However, Ecclesiastical bodies are never required to pay tax on tithe, church offering and pledges amongst other activities. But on the other hand, their employees are subjected to Pay As You Earn (PAYE) whenever applicable," Public Relations Specialist for MRA, Hilda Mkandawire told journalists.

She said many of the Ecclesiastical bodies in the country have been forthcoming in honoring their taxes but said the need is still there to remind them of their responsibilities and keep tem updated on new development.

One of the participants, Pastor Nick Chakwera of Malawi Assemblies of God said the meetings are very important as they bring together people from the religious sector and the government to discuss issues of revenue for the country.

Out of these meetings, he said Ecclesiastical bodies get to hear of what the government expects from them and the religious bodies also gets a chance to voice out their concerns to government.

Pastor Chakwera said there have been long outstanding issues like whether pastors should be regarded as employees or not and whether they should pay taxes or not and clarification on church equipment which are tax exempted.

As religious bodies, he said they can stand together to lobby government to implement some changes in areas deemed necessary:

"The best example is on building materials. At first churches used to acquire building materials tax free but it was stopped because some people abused that system and ended up building their own houses.

"But is not fair to punish the rest because of (a few) people who are abusing the system. But rather; government could improve on its verification system on what the stated items are being used for. But in churches, we need the buildings because that is where church happens, " Chakwera pointed out.

Under the Customs Procedure Code (CPC) 422, Ecclesiastical bodies can obtain Altars, communion wafers, statuary, wine and pulpits for religious purposes; tax free.

Under CPC 404, nursing homes and clinical equipments are exempted. These include dispensary equipments, specialized furniture and appliances. These have to be approved however the Ministry of Health.

CPC 406 exempts tax on school equipment like athletic and sports equipment, stationery, furniture for classroom, workshop and laboratory use if approved by the Ministry of Education.


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