The Income Tax Act is being waved menacingly in the face of the Church as URA attempts to make good on its promise to widen the country’s tax base.
As offertory receptacles are passed around church pews today, congregants will be oblivious to a silent storm that is brewing between church leaders and the taxman. The Income Tax Act is being waved menacingly in the face of the Church as the Uganda Revenue Authority (URA) attempts to make good on its promise to widen the country’s tax base.
One of the institutions that the Museveni administration has co-opted during its nearly four-decade stay in power, the Church is not accustomed to dealing with the uncomfortable spotlight the taxman has placed on it. Moreover, during an electoral cycle when what emerges from the pulpit can have implications on the outcome of a vote.
Observers say this, in part, explains the co-optation. But with resources from development partners shrinking each passing day, so-called megachurches find themselves blipping on the taxman’s radar. They warn that this will not be without consequences.
“Any donation, even a pulpit which is engraved on as a donation, attracts taxes. Even pens with the names of the Church are taxed. URA is looking for money everywhere, and if churches are not supported to do their work, they may soon lose their impact on the community,” Bishop Andrew Lugoloobi, Secretary General of the National Born Again Churches, told Sunday Monitor in an interview.
Bishop Lugoloobi also moved to correct the impression that when Church leaders get cars from the State, it translates to state co-optation.
Joshua Kitakule, the Secretary General of the Inter Religious Council of Uganda (IRCU), concurs, adding that the growing impression of the Church being a tax-evading institution is wide off the mark. Ditto the co-optation claims.
“We want a framework which enables churches and mosques to thrive, not stifling them. If one day churches and mosques woke up and told their followers that they are opposed to some government policies, there would be chaos in this country,” he said.
Giving to Caesar…
Yet to claim that there are no rough edges on the part of the Church would be disingenuous. Well, at least according to Ivan Naijuka, spokesperson of Kampala Archdiocese. He, nevertheless, says the Anglican Church is “guided by the philosophy of giving to Caesar, what belongs to Caesar.”
Church of Uganda, Mr Naijuka further offered, discarded the policy of getting tax waivers for its projects when it realised that some church leaders were abusing the same by using set provisions to clear personal goods alongside those of the Church. This was whenever they imported goods for Church projects.
Mr Naijuka says the Church arrived at the decision in order not to affect its income-generating projects that include schools, churches, vocational schools, universities and other income-generating properties such as the Church House.
“Some individuals had started evading taxes using the Church as an NGO [non-governmental organisation]. We have schools, churches, universities, vocational schools, guest houses, we lease buildings, we have farms which generate income for the Church, and we pay all our taxes,” he said.
Citing the All Saints Cathedral Church house project, which cost Shs7b to construct, using money collected from donors and parishioners, Mr Naijuka said Shs1.8b went to a range of taxes such as VAT, withholding tax, and other import duties.
He added that with 5,200 primary schools, 50 vocational schools, and 630 secondary schools dotting the country, the Church of Uganda has on its payroll a multitude of employees who attract different taxes that their institutions have to pay directly or indirectly.
Such is the transparency that even when the Anglican Church receives a donation from another Anglican Church outside Uganda, it always makes a declaration and duly attracts the attendant taxes.
Mr Daniel Ogwal, the pastor of Watoto Church’s Kansanga campus, shared a similar transparency-themed anecdote with his congregants last Sunday.
When Gary Skinner, the church’s founder, was stepping down from the leadership role he first took on in 1983, he received a donation. His next act, said Mr Ogwal, was to call the taxman to find out what taxes the donation attracted. Of which he was furnished with.
Transformative role
Mr Robby Muhumuza, a Board member of Monitor Publications Limited, and also a leader and an elder at Watoto Church, says the church has rescued thousands of needy children from the streets and garbage skips.
These children, he adds, have been rehabilitated through programmes that are run from Watoto church funds such as tithe, donations and offerings. Several children who have been educated to the point of getting university degrees have gone on to become law-abiding and tax-paying professionals — engineers, doctors, architects and pilots.
Through another programme called Watoto Neighbourhood, the church has transformed women and single mothers by giving them a hand-up, not a handout in the shape of vocational skills.
“All gifts, tithes and donations are recorded. Every expenditure is recorded, and we budget for all our activities. We have external auditors who come and audit us, and we hold annual business meetings where we give accountability of all the money we have received in the year,” Mr Muhumuza said of Watoto church’s operations, adding that the church deducts Pay As you Earn (Paye), National Social Security Fund (NSSF), and other taxes required by URA from all its employees and suppliers.
Far-reaching impact
Bishop Lugoloobi says the work that mega churches like Watoto do is essentially what should be done by the government. Rather than hound them, they should, he strongly suggests, be supported with tax waivers.
Yet, as the leaders of the Orthodox Church in Uganda recently learnt when they tried to get one for an ambulance, the taxman is not in the habit of giving waivers to the Church.
The Secretary General of the National Born Again Churches also has a few choice words for the central bank that has gone public with its demand that churches get a tax identification number (TIN).
“I can authoritatively state that [the] government doesn’t understand [the] operations of churches. The demand by [the] Bank of Uganda for every Church to get a TIN number means you have to be incorporated. This has an implication. This means [the] Namirembe Archdiocese will not have authority over Bugolobi church,” he illustrated.
Bishop Lugoloobi further explained that Namirembe Archdiocese, which is the headquarters of the Anglican Church, supervising more than 40,000 Anglican churches in the country, will lose control over the churches since they are independent entities recognised by the law.
He thinks such a move is a deliberate effort to destroy churches in Uganda because with it implemented, even the Catholic church will now be able to defect from Rome. This is because it will have its own by-laws as a registered entity and it will have its own constitution.
“In the near future, when we get leaders who are not guided, they can easily secede. They will simply say we are independent. We need dialogue with the Uganda Revenue Authority, Uganda Registration Services Bureau and the Ministry of Finance,” he told Monitor.
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