· Religious leaders in spotlight
Finance minister Tito Mboweni wants the taxman to clamp down on controversial churchmen suspected of tax evasion and other related crimes.
At a pre-budget press briefing on Wednesday, Mboweni said government could no longer afford to sit back and watch controversial men of the cloth flaunt wealth while they found creative ways of evading the payment of tax.
“Have you seen them? they feed people snakes and grass and they walk on people, they do all kinds of crazy things in the name of God, hayi khona.
“And then you see them displaying wealth; the big cars, the doors [that] open both sides and all kinds of things and they are not paying tax, these fellows. Some of them have private jets and so on, all in the name of God,” Mboweni told journalists.
He has mandated tax experts within the National Treasury and the SA Revenue Service to tighten the laws governing tax affairs of religious public benefit organisations or churches.
“They said they are already paying tax. I said ‘where?’
“I want to see this Bushiri fellow, where is the tax certificate?” said Mboweni in reference to flamboyant Pretoriabased pastor Shepherd Bushiri.
Mboweni said churches were mushrooming everywhere, with congregants making contributions that the church leaders paid no taxes on.
“I know I am going to get into trouble for this. The president will probably call me into his office and say ‘what did you say about that thing', and then I will tweet about it later,” he joked.
SARS commissioner Edward Kieswetter said in terms of the current tax regime, churches were classified as public benefit organisations and were exempt from income tax.
But Kieswetter said most church organisations were not registering their employees for pay-as-you-earn, among the other tax obligations they were not meeting, including VAT.
“Where the abuse takes place is that when they employ anyone, those employees are subject to PAYE as you earn. They are not exempt from that,” he said. “If they are not exempted by SARS, the organisations have to also pay VAT on goods and services that they get.
“The salary of the president of the public benefit organisation, or pastor if it’s a religious organisation, has to run all of his income through the normal ‘in the services you rendered provision’ and cannot for example have a car as a benefit that doesn’t reflect as income or big house or a plane that doesn’t reflect as an income.
“To the extent that it is donated, it must have a donation’s tax from the person who gives it, so you can’t get out of the tax loop,” he said.
Kieswetter said many of these organisations conflate the public benefits activity for which they are issued a certificate with other taxable activities.
“We have this year begun to raise quite a number of assessments through our audit work on such organisations and we will step up that work as it begins to improve compliance activities across,” said Kieswetter.
A 2017 report by the cultural, religious and linguistic rights commission (CRLRC) found that many churches across the country were neither registered with the department of social development nor SARS as public benefit organisations.
It also found that some of the churches did not submit annual reports to social development and did not disclose the amounts they made per year.
The report also found that in many places of worship, money collected from members was not usually banked.
In cases where this was done, the funds went into personal accounts of spiritual leaders and in some cases such accounts were held in foreign countries.
Certain implicated religious leaders, the report found, did not apply to the SA Reserve Bank before repatriating money out of the country.