The Tax Administrator’s Dilemma: To Tax or not to Tax Church Incomes in Ghana

Abstract

This paper explores the opportunity for Tax Administration in Ghana to widen the tax net via taxation of other sources of income, including incomes accruing to Churches. Evolution of Taxation of Religious bodies and Charitable Faith based Organisations in Ghana, Constitutional perspectives of taxation of Religious bodies, Functions of Churches, Tax Exempt Provisions, and Tax decided cases were discussed. It was observed that limited companies registered by guarantee commit an offence, when they engage in profit making ventures, and shall be liable to a fine not exceeding five pounds for every day during which it shall carry on such business. It also came to light that some churches were engaged in income generating activities such as transportation, church farm, bookshops or guest houses, private Universities, money transfers, consultation fees, sale of olive oil, water from the well, lemon, porridge, oranges, handkerchiefs, stickers, Anti-Witchcraft Pomade (“Abiyifoo Nku”),commission on lotto winnings, and microfinance companies which does not fall under the tax exempt clauses as stipulated in the Income Tax Act 2015, Act 896.The study therefore recommended for the Taxation of the Business and Investment Income of Religious and Faith based organisations, strict application and enforcement of the Tax law by the Commissioner of Ghana Revenue Authority, and filing of returns by religious bodies.