Churches have been handed a big relief after the High Court stopped the Kenya Revenue Authority (KRA) from demanding tax on tithes, donations and offerings without exemptions.
Justice David Majanja upheld a ruling of the tax Appeals tribunal, which barred the taxman from demanding tax from Thika Road Baptist Church.
The taxman wanted the church to pay Sh5.5 million, arguing that it failed to produce a tax exemption certificate.
While churches are exempted from paying taxes on tithes, the 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.
This comes as a major relief to churches that collect hundreds of millions of shillings in tithes every year and a win by the taxman would have been used as a precedent to go after the big and established churches.
According to the judge, the 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 recognised income by the Income Tax Act. BY DAILY NATION