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Sins and taxes – Enforcing tax laws on churches could be problematic

While the legislation that governs tax exemption for religious institutions is robust, enforcing compliance could be difficult, Louis Botha, an associate in Cliffe Dekker Hofmeyr’s (CDH’s) Tax & Exchange Control practice recently mentioned.

According to Botha, while there is nothing wrong with the legislation that governs how churches and other religious institutions are taxed, enforcement of the law is where the challenge arises. “Churches and religious institutions are not automatically exempt from paying taxes, as many people seem to think. If they seek tax exemption, these institutions need to apply to SARS to be approved as Public Benefit Organisations (PBOs),” Botha said.

In a media release he shared that the case of self-proclaimed prophet Shepherd Bushiri and his wife, who were arrested by the Hawks earlier this year on charges of fraud and money laundering, has cast the spotlight on tax laws relating to churches and religious institutions, and whether any loopholes that exist are being exploited.

“There is nothing wrong with the legislation. The issue is with enforcement. In practice it generally takes at least six months to get PBO status, from the date of submission of an application, so it is a comprehensive and rigorous process,” he concluded.

Click here to download the media release that covers more of his explanation as well as the SARS viewpoint.

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