Taxman moves in on churches

via Taxman moves in on churches | The Herald October 23, 2015

The Zimbabwe Revenue Authority has written letters to several churches demanding information which it intends to use to calculate how much tax they owe, as moves gather momentum to ensure churches pay taxes for the first time.

Investigations by The Herald revealed that a number of churches were in possession of the letter demanding a list of financial documents to assess and come up with the figures owing in tax arrears.

This came at a time when Zimra has raided churches like the Apostolic Faith Mission in Zimbabwe’s accounts for not complying with paying taxes.

On September 24, 2015, Zimra wrote a letter to Prophet Emmanuel Makandiwa’s United Family International Church, demanding some financial documents and other papers relevant for the taxing exercise.

In terms of the letter signed by Zimra manager (domestic Taxes) for its Regional One, Mr E Tafireyi, UFIC was asked to produce the following:

1 A listing of all associated companies.

2 Financial statements for the period between 2012 to 2014.

3 Summarised monthly cash book for the year 2012 to date.

4 Stock records for the same period (to include both opening and closing)

5 Monthly sales schedules for the same period

6 Purchase invoices and or bills of entries for imports for the same period

7 VAT input tax claim schedules for the same period

8 Suppliers tax clearances (ITF263) for the same period

9 ITF16 and payroll summaries for the years 2012 to 2014

10 Asset registers including those for associated companies

11 List of directors including for all associated companies and their physical address and breakdown of non-executive directors fees and details of withholding tax remittances if there are any non-executive directors.

12 Name and addresses of the shareholders including for all associated and related companies.

Sources said the same letter was written to several other churches.

According to the letter, Zimra wanted its two investigating officers J Mutezo and T Mandiona to access the requested documents for the authority’s verification exercise.

“Messrs J Mutezo and T Mandiona are Zimra officers authorised to carry out a verification on the tax affairs of UFIC for period January 1 2012 to date,” read the letter.

“Following the meeting at Zimra Kurima offices with Mr Elias Hwenga on the 9th instant, where we agreed that UFIC avail the below listed information, it is with this and in cognisance that we further write in follow up to our earlier request for the below listed information to be availed by Monday 28 September 2015, for the completion of the verification exercise.”

The Herald understands that several pentecostal churches were under probe for tax evasion, although Zimra commissioner general Mr Gershem Pasi is on record saying the commission was still working on a legislative framework on taxing churches.

Zimra spokesperson Mr Canisius Mudzimu refused to comment on the matter and ignored questions sent to him two days ago despite several follow-ups made.

The Herald understands that some AFM in Zimbabwe churches in areas like Kwekwe and Karoi have been taxed in excess of $100 000 and had their accounts garnished.

Sources said Zimra officials would disguise as church members and check on the monies contributed during services.

Zimra is reportedly tracking the churches from the imported vehicles that have some exemption, down to the pastors’ rented houses in a bid to come up with an appropriate tax.

Some churches announce the total offerings at the end of the each session and tithes raised, the evidence that may be used by the taxman in arriving at figures owing in tax.

Last month, Zimra reportedly raided Prophet Walter Magaya’s Prophetic Healing and Deliverance Ministries, probing the church over numerous donations that had been done to the needy.

Appearing before the Parliamentary Portfolio Committee on Small and Medium Enterprises and Cooperatives Development recently Mr Pasi said:

“We are now focusing on them (churches) and we have engaged them, we are setting parameters,” he said.

“We don’t care how they make their money and come November, we will be through with our legislative proposals to the minister (of Finance and Economic Development Patrick Chinamasa), which will tighten that area because we have seen loopholes there. They are not immune to taxation.”