Why Pentecostals should pay taxes

By Andrew Kyambadde Mukasa

Any religious organisation that lives up to its commitments to its congregation and community would have nothing to fear from filing a tax return and should clearly state its income and expenditure patterns.

Pentecostals emerged from the church and the movement is connected with a group of Christians that emphasise the gifts of the Holy Spirit. The free dictionary describes pentecostals as “any fundamentalist protestant church that uses revivalist method to achieve experiences comparable to the Pentecostal experience of the first Christian disciples”.


The Pentecostals in Uganda are registered by the Non-Governmental Organisations (NGOs) Registration Act of 1989, amended 2006.The law deems them “Tax Exempt”It will be obvious to rational people that exempting religious organisations from paying corporation taxes is a clear case of government "respecting an establishment of religion.

There is aneed to establish whether Pentecostals in Uganda are qualified to maintain their status quo as tax exempt organisations considering their vast financial resources and their business like activities. In Uganda’s Income Tax Act Cap.340 establishes a category of exempt organisations.


Tax exempt organisations include charitable, educational and religious institutions of a public character therefore, Pentecostals being a religious institution is exempted from income tax in Uganda, and Pentecostals are exempted from income tax because they are regarded as organisation of a public character (Bahemuka, 2006).

Of recent, there is a question to as to why Pentecostals should maintain tax exempt status since they are business oriented organisations.


They advertise, send mobile money (Tithe) to God, price special service programmes, profit oriented which all qualifies such activities as business. Sec.2 (g) of the income Tax Act, Business includes, any trade,profession,vocation or adventure in the nature of trade but doesn’t include employment, Pentecostal activities would come into the tax net because they are adventures in the nature of trade. Trade is defined by a number of budges and among others include the motive, the frequency just to mention.

The question is the money that these churches receive from their activities in the nature of trade. How is the money made and spent? Church groups receiving tax exemptions must annually file a detailed 360 statement itemising where the money has gone and how it was obtained and should disclose any related businesses as provided for by the International Accounting standards of financial reporting.


Pentecostal churches have taken great advantage of their tax-free status and amassed great wealth and vast media empires and buildings all of it off the tax rolls largely contributing to income inequalities and tax deficits.

 A case study of a  Pentecostal  church in town, is the one where in one month  made $1, 0004, 000 on what they called MMO (“My Miracle Offering”) and they claimed that their motive was to spend it in Israel, Southern Sudan among other countries.


That is a good motive but how much of it will be spent otherwise and go untaxed, It is economically irrational to see that money is collected in Uganda and being spent or siphoned out of the country because it is easily and routinely abused (the tax exemption). The proliferation of phony churches is considered as a tax dodge and evidence observed where pastors drive “high end” cars, have powerful houses,dress in imported suits and make frequent first class travels.

The policy makers need to review the tax exemption status of Pentecostal churches and amend the Income Tax laws in order to bring the business oriented activities of these churches into the tax net, this will not only increase the tax base but also improve revenue collection.

The writer is a tax associate.