In a bid to boost tax compliance and drive economic growth, the Uganda Revenue Authority (URA) has turned to religious leaders for support.
The URA today held a high-level dialogue with the Inter Religious Council of Uganda (IRCU), during which they urged clerics to instill a culture of paying taxes among their followers, and clarified the tax exemptions concerning religious institutions.
During the Dialogue, themed ‘Driving a taxpaying culture- The role of religious leaders’, the URA Commissioner General John Musinguzi Rujoki offered clarity on Religious Institutions and Tax in the current tax regime;
“The income of a religious institution which is not for profit, other than property income is generally exempted from income tax under section 2 (bb) of the Income Tax Act. To access this facility, the institution must apply for and be issued with a written ruling by the commissioner,” Rujoki said.
Imports By Churches
Rujoki also noted that when it comes to importation of goods into the country, only Bibles and Qurans are exempted from import duty and VAT, but Withholding Tax is payable.
He, however, noted that the above notwithstanding;
The property income of a religious institution is not exempt.
He explained that where a religious institution has employees, it is obliged to register for Pay As You Earn (PAYE) and account for and remit taxes on behalf of employees.
Why Tax Compliance Matters
Tax compliance is essential for the development of any country. Taxes fund public goods and services, such as infrastructure, education, and healthcare, which are vital for economic growth and poverty reduction. However, tax evasion and avoidance remain significant challenges in many countries, including Uganda.
Role of Religious Leaders
Rujoki explained that religious leaders play a crucial role in promoting tax compliance among their followers. With their influence and moral authority, they can encourage their congregations to fulfill their tax obligations. By partnering with the URA, religious leaders can help create a culture of tax compliance, which is essential for Uganda’s economic development.
Key Takeaways from the URA-IRCU Dialogue:
Tax Exemptions: Religious institutions are generally exempt from income tax, but property income is not exempt.
Import Duty and VAT: Only Bibles and Qurans are exempt from import duty and VAT, but Withholding Tax is payable.
PAYE Registration: Religious institutions with employees must register for Pay As You Earn (PAYE) and remit taxes on behalf of employees.
Benefits of Tax Compliance
Economic Growth: Tax compliance can contribute to Uganda’s economic growth and development.
Improved Public Services: Taxes fund essential public services, such as healthcare, education, and infrastructure.
Increased Government Revenue: Tax compliance can increase government revenue, enabling the government to invest in development projects.
The URA’s partnership with religious leaders is a strategic move to promote tax compliance and drive economic growth.
By working together, they can create a culture of tax compliance and contribute to Uganda’s development.
As the URA Commissioner General, Rujoki noted, “Driving a taxpaying culture” requires the support of influential leaders, including religious leaders!