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Explainer: How much tax churches should pay to KRA & what the law says

Unlike what many Kenyans assume, churches are required to pay taxes. Read the story for a break down on the tax obligations churches are supposed to meet to stay compliant with the law.

A stock image of a church

Attorney General Justin Muturi has disclosed that New Life Prayer Centre and Church faces closure over failing to pay taxes.

Muturi made the disclosure on May 10, to a Senate committee probing the death of Kenyans in Shakahola, where police found bodies of people believed to be from New Life Church and Good News International associated with the pastor Paul Mackenzie.

This revelation has triggered a debate among Kenyans, many of whom thought that churches in Kenya don’t pay taxes.

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Unlike many believe, churches in Kenya are required to pay taxes. According to the law, churches are required to file annual returns to the Kenya Revenue Authority.

In a past interview, Denis Mwangi spoke with Bishop Joseph Amiani, the chairperson of a group of churches located in Nairobi’s Kosovo area in Uthiru Nairobi, who broke down the tax obligations churches are supposed to meet to stay compliant with the law.

He said that annual returns are graduated depending on the size of a church's congregation.

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Our expenses include paying taxes to the government and filing annual returns. All churches in Kenya file returns and we do it every end year. The good thing about those returns is not a lot of money that one can claim has been imposed on us,” he said.

“For a congregation of between 50 to 100, we pay around Sh100. There is no church that pays more than Sh400 unless those that run businesses like schools or hospitals,” he added.

Churches are also required to remit pay as you earn (PAYE) taxes for salaried employees.

Watch the interview below

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The Income Tax Act in Kenya provides tax exemptions for churches, including the exemption from paying income tax on certain types of income such as tithes, offerings, and donations.

The Act considers these types of income as non-taxable under Section 3 of the Act.

This position was further supported by a High Court ruling in 2022 in the case of Commissioner of Domestic Taxes vs Thika Road Baptist Church Ministries.

In the case, KRA’s Commissioner for Domestic Taxes was seeking to recover Sh5 million in taxes from the church for the period between 2015, 2016 and 2017.

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However, Justice David Majanja upheld the ruling that churches are not required to apply for and obtain specific exemptions from the Commissioner in order for the income to be tax-exempt.

Such income would include grants, donations, tithes, offerings and any other income of a similar nature.

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