Machakos DG Mwangangi criticises plan to tax religious organisations

Machakos Deputy Governor Francis Mwangangi has criticised the government’s plan to tax religious leaders.

Mwangangi said the plan should be abandoned as it risks double punishment.

He stated that religious organizations are partners of the state in the positive transformation of society and therefore should be spared such repressive taxes.

Mwangangi said religious organisations should be seen for their immense contribution to driving positive change in communities rather than penalised.

“Introducing taxation of religious organizations would be very unfortunate in the current times when they play an increasingly important role in driving changes in society,” Mwanangi said.

“Faith organizations such as churches should be exempt from paying taxes because of the role they play in the positive transformation of society, including saving souls.”

Mwangangi said that just as the state works to ensure a functioning society free from all diseases, churches, mosques and synagogues complement government intervention.

Churches, synagogues and mosques are by definition non-profit organizations, and their net income is not taxed.

However, employees of religious institutions pay income tax.

Proposed legislation to tax religious organizations has sparked an uproar, with some leaders calling the move “ill-considered and unfortunate.”

The Ministry of Finance has submitted to Parliament the Income Tax (Charitable and Donation Exemptions) Bill, 2024, which aims to reduce taxes for churches, non-governmental organisations and other institutions.

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

The decision sparked outrage among religious leaders and some politicians across the country, who said it was unfair and undermined past achievements.

The bill, proposed by former Treasury Secretary Njuguna Ndung’u, aims to set out the requirements that charities must meet to be eligible for income tax exemptions, as well as specify which donations will be eligible for tax deductions.

Following the presentation of its proposals last week, the Committee approved new tax recommendations.

“We have analysed the regulations and we are convinced that they are in accordance with the law,” Chepkonga said at the meeting.

Religious leaders in Siaya County have demanded public participation in the draft tax bill aimed at, among others, religious organisations.

Archbishop Patrick Nyagudi, a member of the Church of Christ in Africa (CCA) Siaya, said the government should put the proposed law to a public vote to gauge the feelings of Kenyans before it can be implemented.

Ligawa said churches like CCA do not have large investments to tax, noting that the small income they receive from tithes and offerings is often donated to charitable causes.

“Churches file their annual returns with the Attorney General’s office where they make payments, so they should not be additionally taxed,” he added.

Currently, religious organizations are exempt from paying any taxes to the state because they are considered partners of the government in supporting society.

In January, a doctor from Nakuru filed a petition challenging provisions of the Income Tax Act that exempt certain individuals and institutions, including churches, from paying taxes.

According to Magare Gikenyi, Section 3(2) of the Income Tax Act, Cap. 470, excludes other persons, which is contrary to the constitutional principles which provide that the tax burden should be shared equitably among all Kenyan citizens and all sectors of the economy.

Doctors who wanted churches to be subject to the tax cited Section 201(b) of the Constitution, which states that the tax burden should be mandatory because it should be shared equitably.

He described Section 13 of the Income Tax Act as discriminatory and unconstitutional because it allows certain groups of individuals and entities to be legally exempted from tax under the Act.

“Tithes, offerings and donations and all other tax-exempt individuals and entities should be subject to the same rules because Article 201 of the Constitution does not provide for discrimination,” he said.

He prayed the court to declare Section 3(2) of the Income Tax Act (ITA), Chapter 470, to be discriminatory, unconstitutional, void and null and void because it segregates and imposes the liability to pay income tax on certain persons and entities while excluding others.

The defendants in this case are the Attorney General, Ministry of Treasury, Kenya Revenue Authority, Senate and National Assembly.

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