ZIMBABWE Revenue Authority (ZIMRA says churches are compelled to pay taxes on profits generated from the sale of church merchandise.
ZIMRA is expecting churches to pay taxes from the sale of goods such as anointing oil, and t-shirts among others which are being produced as part of fundraising activities.
However, tithes and donations have not been charged by ZIMRA.
ZIMRA in a notice published Thursday said it will be engaging churches on tax compliance.
"The Zimbabwe Revenue Authority (ZIMRA), wishes to inform all churches of an upcoming Stakeholder Engagement dedicated to addressing tax compliance across all applicable tax categories.
"Income derived from trading activities is subject to income tax. Examples of taxable income include but are not limited to: Proceeds from the sale of church literature, books, or music, revenue from the sale of church-branded merchandise (e.g., apparel, anointing oils, artefacts, etc.), Income from the sale of meals, clothing, or similar items. Additionally, such sales may attract Value Added Tax (VAT) depending on the sales thresholds," read the notice.
Religious organisations have been engaged in fundraising activities and some have been reportedly failing to declare tax.
In 2019 the State dragged Prophetic, Healing, and Deliverance Ministries leader Walter Magaya to court for failing to declare tax of more than $28 million accrued from 2018 to 2019 contravening the Value Added Tax Act.
The church generated revenue from regalia, anointing oil and a guest house at Yadah Hotel in Harare.