In Ghana, churches have long been pillars of society, offering spiritual guidance, community support, and charity.
However, as many of these institutions grow in size and influence, their involvement in broader socio-economic activities raises important questions about their obligations under Ghana’s tax laws.
The Ghana Revenue Authority (GRA) recognizes churches as tax-exempt entities, but only under specific conditions. According to the Income Tax Act, 2015 (Act 896), churches are exempt from income tax, but this exemption applies only to income used exclusively for religious or charitable purposes.
In Ghana, the role of top politicians who are members of churches has added a layer of complexity to the debate on taxing religious institutions.
Many prominent politicians are affiliated with churches, and this has led to concerns about potential conflicts of interest and the lack of transparency in church finances.
The Ghana Revenue Authority (GRA) has stated that religious organizations are exempt from paying taxes only when their income is used exclusively for religious or charitable purposes, as outlined in Section 10 (1)(d) of the Income Tax Act, 2015 (Act 896).
However, many churches in Ghana engage in commercial activities, such as running schools, hospitals, and businesses, which generate significant revenue.
The Minister for Chieftaincy and Religious Affairs, Hon. Ahmed Ibrahim, recently revealed that about 98% of registered churches in Ghana are single-owner operations, raising concerns about governance, accountability, and financial transparency.
This has sparked debates about whether churches should be taxed on their business-related income and assets.
Some argue that taxing churches could generate significant revenue for the government, which could be used to fund public services and infrastructure.
Others argue that taxing churches could infringe on religious freedom and stifle charitable activities already engaged by some of these churches.
The involvement of top politicians in churches has also raised questions about the potential for favoritism and corruption.
For instance, some politicians have been accused of using their church affiliations to further their political interests or shield their businesses from tax scrutiny.
Understanding tax exemptions and obligations
To qualify for tax-exempt status, a church must meet several conditions, including:
- Public Religious Character: The church must operate in the interest of the broader public, not as a private or exclusive entity.
- Written Constitution: The constitution must explicitly prohibit political involvement or partisanship.
- Registration and Licensing: The church must be registered with the Office of the Registrar of Companies and obtain a license from the Non-Profit Organization Secretariat.
Even with tax-exempt status, churches are not exempt from other tax obligations, including:
- PAYE (Pay As You Earn): Churches must deduct and remit income taxes on salaries paid to pastors, administrators, teachers, and other employees.
- Withholding Tax (WHT): Churches must deduct tax at source and remit it to the GRA for services such as consulting, legal work, rent, or construction.
- VAT (Value Added Tax): Church-run businesses generating over GHS 750,000 annually must register for VAT and apply the relevant tax on goods or services provided. Now per the VAT Act 2025, (ACT 1151), irrespective of the threshold, once you are into services, you must register for VAT.
Taxation of church businesses and investments
Churches engaging in commercial activities, such as operating schools, hospitals, transport, or real estate ventures, are subject to income tax, VAT, and other applicable levies. Examples of taxable activities include:
- Educational Institutions: Operating fee-paying schools or universities.
- Healthcare Facilities: Running hospitals or clinics that charge standard rates.
- Real Estate: Leasing church-owned properties or venues for events.
Personal earnings of pastors and church owners
Pastors and church owners are required to pay taxes on their personal income, including:
v Employment Income: Salaries, wages, and benefits are subject to income tax.
v Business Income: Income from side businesses or investments is taxable.
v Gifts and Donations: While gifts and donations to the church are tax-exempt, personal gifts to pastors or church owners may be subject to tax.
The call for civic responsibility
As Ghana’s churches continue to grow and diversify their activities, it is essential for pastors, Bishops, and Archbishops to recognize their civic responsibilities and comply with tax laws. By doing so, they can:
- Promote Transparency and Accountability: Ensure financial integrity and build trust with their congregations and the broader community.
- Contribute to National Development: Support Ghana’s development through tax payments and social programs.
- Uphold Ethical Standards: Demonstrate commitment to ethical conduct and responsible stewardship.
In the words of the Holy Bible, “Give to Caesar what belongs to Caesar, and give to God what belongs to God” (Mark 12:17). As Ghana’s churches navigate the intersection of faith and finance, they must prioritize compliance with tax laws and contribute to the nation’s development as some of them do.
The writer Christopher K. Beyereh is the Founder of the African Centre for Tax Education &Policy-ACTEP & The African Society of Artificial Intelligence-ASAi.
He holds a Postgraduate in AI & Data Analytics from the University of Texas, Certificate in Professional Course in Taxation (PCT), A Chartered Marketer and an MBA. cbeyereh@gmail.com or christopher.k@actepafrica.org. Tell: +233246440723
