The Zimbabwe Revenue Authority (ZIMRA) has announced plans to engage with churches nationwide in a bid to enhance tax compliance, as the cash-strapped government seeks to explore additional revenue streams.
In a public notice issued on Thursday, ZIMRA outlined the tax guidelines applicable to churches, highlighting the types of income that are exempt from tax, as well as those that are subject to taxation.
According to the guidelines, income generated from trading activities, such as the sale of church literature, merchandise, and other goods, is subject to income tax. Churches may also be required to pay Value Added Tax (VAT) on certain sales, depending on the sales thresholds.
This means that churches selling items like anointing oils will also be taxed. In fact, Prophet Walter Magaya’s church, PHD Ministries, was previously taken to court for allegedly evading tax on the sale of anointing oil.
However, donations, tithes, offerings, and contributions made to churches are exempt from income tax. Additionally, non-trading receipts, such as income from non-commercial activities, are also exempt.
“The Zimbabwe Revenue Authority (ZIMRA), wishes to inform all churches to an upcoming Stakeholder Engagement dedicated to addressing tax compliance across all applicable tax categories.
“This forum is part of ZIMRA’s ongoing efforts to promote transparency and provide support for compliance. The date and venue of the engagement will be communicated in due course,” ZIMRA stated.
ZIMRA’s stakeholder engagement with churches is aimed at ensuring that churches are aware of their tax obligations and are in compliance with the relevant tax laws. The authority has pledged to provide support and guidance to churches in this regard.
The move by ZIMRA to target churches is part of a broader effort by the government to increase revenue collection and plug fiscal leaks.
Recently, Finance Minister Mthuli Ncube announced a series of new taxes and royalties as part of the 2025 budget, aimed at boosting revenue and supporting economic growth.
Key changes include the restoration of duty on imported public service buses, increased excise duty on select alcoholic beverages, and the introduction of a 10% withholding tax on sports betting winnings.
Additionally, taxes will be imposed on the emerging sector, including fabric merchandisers and spare parts dealers, while royalties will now be treated as taxes. A 25% rental income tax will also be applied to residential properties converted to business premises.
Furthermore, a Fast Foods Tax will be introduced on items such as pizza, burgers, hot dogs, and french fries. These changes are set to take effect on January 1, 2025.
The Zimbabwean government recently failed to pay the local currency component of November salaries and bonuses for thousands of teachers sparking outrage from educators around the country.
The development highlighted the government’s severe financial constraints, which have been exacerbated by a sharp depreciation of the local currency.
The Treasury also directed ministries to prioritise spending for the remainder of 2024, focusing on wages and social services while cutting travel-related costs.
Debating the 2025 budget in Parliament on Wednesday, Norton legislator Richard Tsvangirai said the budget “fails to inspire confidence”.
“Economic growth should be the foundation of any national development strategy. Sadly, this budget fails to inspire confidence, instead it adopts measures that restrict opportunity and penalise the very people it should uplift.
“The introduction of regressive taxes such as the fast foods tax, the betting tax, and the plastic carrier bag tax, places an undue burden on middle and lower income earners, including the hardworking people of Norton who are already grappling with inflation and unemployment.
“For instance, the 0.5% fast foods tax unfairly targets low-income families who depend on affordable food options.
“This tax not only exacerbates their financial struggles but also threatens small and informal businesses in the fast-food sector, many of which operate in Norton and provide critical livelihoods.
“Instead of addressing issues such as poor nutrition or encouraging healthier lifestyles, this measure penalises the most vulnerable members of our community,” he said.
