“There are two certainties in life: death and taxes. There is no escape from either of these variables. The inscription in the Internal Revenue Service (IRS) building in Washington reads: “Taxes are what we pay for a civilised society.”
These were the introductory remarks by Jennifer Dodoo, Justice of the High Court, in Taylor & Taylor Limited vs The Commissioner-General and the Attorney-General (2017, Unreported).
In Matthew 22:21, Jesus was asked by the Pharisees whether it was lawful to pay taxes to the emperor or not.
Jesus responded: “Render unto Caesar the things that are
Taxation of business profit of religious organisations
In 2009, the Supreme Court of Ghana ruled on the position of the law with regard to whether or not exempt organisations were subject to income tax in Ghana.
Thus, in Chapel Hill School Limited vs the Attorney-General and the Commissioner, Internal Revenue Service, [2009, Unreported], Dr Date-Bah JSC (as he then was), said: “Our comment on this argument by the second respondent (Commissioner, Internal Revenue Service) would be that the mere fact that what the appellant does constitutes a business does not inevitably lead to the conclusion that the activity cannot be exempt from tax.
“If the business concerned is one that falls within the purview of the educational business carried out by an educational institution of a public character, then the income from that business will qualify for exemption from tax.”
In explaining what constitutes public character, the learned judge said, “… business was of public character … did not confer any private benefit to individuals.” He further said, “… for as long as the appellant was a Company limited by guarantee, there was a legal assurance that its business was not conferring any private benefit on individuals.”
The court concluded that an educational institution of a public character was not subject to income tax during the said period it remained as a company Limited by guarantee until such time that
It must be pointed out that educational institutions and religious institutions under tax enactments in Ghana prior to the year 2016 were both considered as exempt organisations.
From the foregoing, it is my humble opinion that the business income of a religious organisation is exempt from income tax insofar as the income does not confer
Any surplus remaining after all the expenditure of a religious organisation in any year has to be retained and applied in the future to the company’s purposes. The exemption is, however, limited to a religious organisation registered as either:
i. a Company Limited by Guarantee under Companies Act, 1963 (Act 179); or
ii. a Trust under Trustees (Incorporation) Act, 1962, Act 106 (with no individual beneficiaries).
Taxation, religious leaders/employees
A religious organisation registered as such with the Registrar of Companies is separate from the founder(s), religious leaders or its employees.
As a result, the exemption from tax
From the foregoing, I recommend the following:
(a) Education of taxpayers. It appears that the religious fraternity is unaware of the position of the law.
It is, therefore, imperative that tax programmes be organised to educate them with regard to their tax responsibilities, including Withholding Tax, Pay-As-You-Earn, Value Added Tax (VAT), National Health Insurance Levy (NHIL) and Ghana Education Trust Fund (GETFund).
(b) Enforcement of the law: In the case of Atta
Although it is
The writer is a Chartered Tax Practitioner, a Chartered Accountant, a Postgraduate of University of East London, a Graduate of University of Ghana (Business School) and a Student of Law.