Taxman now eyes the Church

June 20, 2012
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KRA Commissioner General John Njiraini says with the current act, it may be hard to tax churches despite them running businesses and investments/FILE
NAIROBI, Kenya, Jun 20 – The Kenya Revenue Authority plans to start reviewing the issue of tax exemptions in the Income Tax Act so as to decide whether or not it will bring churches into tax brackets.

KRA Commissioner General John Njiraini on Wednesday said with the current Act, it may be hard to tax churches despite them running businesses and investments.

‘We are actually looking at the whole issue of tax exemptions. That is which exemptions should be sustained. Of course in the case of churches, some have abused the privileges, and I think as the Finance Minister said yesterday, we need to start drawing the fine lines, between what should be exempted and what shouldn’t,” Njiraini said.

Njiraini added that apart from churches KRA will also focus on senior personalities and professional institutions like the Institute of Certified Public Accountants which he said still enjoyed some tax exemptions since 1978.

“I think the Constitution is asking why anybody should in the first place be having these things. We need now to ask the fundamental questions of who should and why they should,” Njiraini said.

On landlords paying tax from the rent income Njiraini said the issue has been blown out of proportion by the media, adding that there is no new legislation that has been introduced and they will have to follow the current income tax law.

“I therefore strongly urge those who have not been making rental income declaration to do so voluntarily at the earliest opportunity, failure to do so will result in unpleasant consequences when we finally catch up,” he warned.

He added that KRA focus is not just on landlords but also on the real estate developers who he said have continued to enjoy hefty profits without taxation.

“One area that has escaped attention in the raging debate is that of the taxation of gains resulting from the real property development and sale. They have in the past sought to shield huge profits they make by using an excuse of the suspension of Capital Gains Tax 17 years ago,” he said.

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