The High Court has stopped Kenya Revenue Authority (KRA) from demanding tax payments on tithes, donations and offerings without exemptions. This move has handed the church a huge relief.
The ruling of the tax appeals tribunal, which barred KRA from demanding tax from Thika Road Baptist Church was upheld by Justice David Majanja.
The taxman had asked the church to pay Ksh5.5 million, claiming that it did not produce a tax exemption certificate. Moreover, while churches are excused from paying taxes on tithes, KRA insisted they must get the exemption, which is subject to certain conditions.
“I, therefore, find and hold that since tithes, offering and freewill donations are not income chargeable with income tax, it was not necessary for the church to seek an exemption,” Justice Majanja said.
Justice Majanja’s judgement comes as a major relief to churches that collect millions of shillings in tithes every year. Also if the taxman had won the case, they would have used it as a precedent to go after the big and established churches.
The judge stated that, KRA failed to demonstrate that tithes, donations and offerings are gains and profits, employment or rights granted for use of property or any other form of recognized income by the Income Tax Act.