Disclaimer: I am not an advocate for taxing of churches rather i would prefer a self regulatory system for churches to monitor and ensure that church funds are not abused or diverted for personal use by rogues and charlatans who parade themselves as men of God today. However i decided to share this article all the same because it makes interesting reading and proves from the legal perspective that what is going on in a lot of churches is culpable under the law. It's really a shame that the church being the salt of the earth ought to be held to higher standards however in terms of corruption today, a lot of our church leaders are running neck to neck with our most corrupt thieving politicians. 
It’s About Time Nigeria’s Churches Started Paying Taxes
Olatoye Akinbode - November 5, 2013 - Economy, Lifestyle
The wealth of Nigeria’s millionaire pastors is evidence of widespread trustee misconduct, abuse of trust and fraud. With so many growing stupendously rich in the service of God why is this wealth exempted from income tax? Olatoye Akinbode argues that the time has come to tax Nigeria’s churches.
In June 2011 Forbes.com published a report on the 5 richest pastors in Nigeria. The report, which is still available online and has now been read on the Forbes website more than 500,000 times, chronicles the stupendous wealth amassed by some of Nigeria’s most successful and influential church leaders.
According to Forbes.com, David Oyedepo, Bishop of the Living Faith World Outreach Ministry, aka Winners Chapel, is Nigeria’s wealthiest cleric with a personal net worth of $150 million. Clearly, God has been very good to David Oyedepo, a full-time minister of the gospel who is also reported by Forbes.com to be the owner of a fleet of 4 private jets, including a $30 million Gulfstream V. The other 4 pastors mentioned in the report, Chris Oyakhilome, Temitope (T.B.) Joshua, Chris Okotie and Mathew Ashimolowo are estimated to have a combined personal net worth between $49 million and $85 million dollars. These men are not alone. Across Nigeria men and women are building stupendous fortunes in the service of God and the pastoring of his flock.
How does a full-time preacher like David Oyedepo or Chris Oyakhilome, manage to amass such wealth? The answer is simple: from the tithes, offerings and donations offered by members of their congregations, most of whom defend the right of the pastor to grow wealthy in the service of his flock. There are however two fundamental problems with all of this pastoral wealth. The first is that it is generated from the proceeds of trustee misconduct, abuse of trust and fraud. The case of Mathew Ashimolowo’s KICC is a good case study on how pastors generate immense amounts of wealth by abusing the trust of the very churches they are meant to lead.
In 1992, Foursquare Gospel Church sent a young assistant pastor named Mathew Ashimolowo to open a satellite branch of the church in London. Ashimolowo however had ideas of his own and decided to set up his own church instead, Kingsway International Christian Centre (KICC). KICC was registered as a charity in the UK (The King’s Ministries Trust) on 5 September 1992. The objects of the trust are to advance the Christian faith; the relief of sickness and the preservation and protection of physical and mental health; and the relief of poverty. Today, Mathew Ashimolowo is personally worth between $6 million and $ 10 million dollars and earns a self-awarded salary of £100,000 per annum. In October 2005, the Charity Commission of England and Wales released the report of a 3-year investigation of the ‘charitable activities’ of Ashimolowo and KICC. The report found serious misconduct and mismanagement in the administration of the charity. Ashimolowo was responsible for approving unlawful payments and benefits to himself and his wife totalling more than £384,000, free accommodation on church premises for himself and family, an £80,000 car for his personal use, a £13,000 timeshare apartment in Florida, and payments of over £500,000 to private companies he owned (which were also operating rent free on church premises). The report also found that Ashimolowo made personal purchases on the church credit card and acted, unlawfully, as both a trustee and paid employee of the church. The full report is available online and contains numerous other irregularities too numerous to set out here.
The Ashimolowo report could very easily have been in respect of many churches in Nigeria, particularly those of the Pentecostal persuasion which operate, as KICC did, as personal fiefdoms of the pastor or general overseer. This is, of course, against Nigerian law, although you would be hard pressed to hear anyone mention it. [b]In Nigeria, churches and other religious organisations are registered as corporate entities under Section 590 of the Companies and Allied Matters Act (CAMA) through their incorporated trustees. As the name implies, ‘incorporated trustees’ are trustees of the church and its property, with fiduciary duties and responsibilities fixed by the Act and the constitution of the Church. Section 603 of CAMA expressly prohibits trustees from applying the income or property of the church, directly or indirectly, as dividends, bonuses, profits or otherwise to any member of the church. Instead the income and profits may only be applied towards the promotion of the registered objects of the church, i.e. the religious purpose for which it was established (i.e. the advancement of the Christian faith). The Act also expressly forbids churches and organisations registered under Part C from appointing members of the governing or management council or any governing body or office of the church to salaried office or employment or to any office or body remunerated by the payment of fees. The Act also prohibits members from receiving any benefit or remuneration in cash or kind save for the reimbursement of out-of-pocket expenses and reasonable fees for services rendered, under liability of making restitution for the misapplied income or property. Unfortunately, in many Nigerian churches the advancement of the Christian faith goes hand in hand with the advancement of the pastor’s pocket.[/b]
The truth is that no one wants to talk about the questionable wealth of Nigeria’s pastors. Congregations appear to be complicit in all of this financial malfeasance and church members mostly look on approvingly as their pastors grow rich on income they are, by law, bound to hold and administer in trust for the purpose of advancing the course of Christianity. “Touch not my anointed and do my prophets no harm”, to which we might as well add “even if their hands are to be found permanently dipped in the proverbial cookie jar”. Jesus may be “the way, the truth and the light” but the questionable and murky financial practices of Nigeria’s churches are very often immune to this light. Financial transparency is not a phrase that is synonymous with Nigerian churches.
We should however be talking about the widespread abuse of trust and misappropriation of church income that is the order of the day in Nigerian churches. While I do not begrudge the right of congregations across Nigeria to fund the expansive lifestyles of their pastors and elders, I find it intolerable that the church income which is the source of these million dollar private jets, luxury cars and designer suits is generally exempt from the payment of tax and this is the second of the two fundamental problems I referred to earlier. Section 23(C) of the Companies Income Tax Act exempts the profits of any company engaged in ecclesiastical activities of a public character from income tax, on the condition that such profit or income is not derived from a trade or business. Section 26 of the Capital Gains Tax Act also exempts churches from the payment of capital gains tax on the proceeds of the sale assets not acquired in the course of a trade or business.
The legal justification for exempting churches from tax is questionable at best and there is a decent argument that these exemptions are unconstitutional. Section 42 (1) of the Constitution prohibits the grant of any privilege or advantage to an individual or group on the basis of religion. The grant of tax exemptions to religious organizations is clearly a privilege that is not extended to non-religious associations. Furthermore, the tax exemption means that non-religious groups and ordinary Nigerians (Christian and non-Christian) effectively provide a subsidy for the tax-free wealth generation that goes on in churches. These churches are often not accountable to their own members and congregations, much less the general public that provides a fairly substantial subsidy of their activities. Every kobo that a church is exempt from paying as income or capital gains tax is, in effect, paid by ordinary Nigerians and non-religious groups and associations on its behalf. This is great for the pastors but not so great for the rest of us.
There really is no rational justification for granting churches tax exempt status. If the basis of tax exemption is that the churches provide useful and desirable charitable functions and services in society then at the very least, they should be made to demonstrate what these charitable activities are and the cost at which they are provided. In many instances they are actually offered for profit (as in the case of many of religious colleges or universities). In any case, there are numerous non-religious, non-ecclesiastic charities that provide these same or similar services. Tax-exempt status is a privilege – not a right – and churches should be held to the same standards as other non-profit organizations – if not higher standards. Our pastors and church leaders are ultimately accountable to God and will give account of their stewardship before Him. However, while they are still here on earth they are, like us all, accountable to the laws that govern us and must give full account of their activities in accordance with the law. As a wise man named Jesus once said, “Give unto Caesar what is Caesar’s, and to God what is God’s”. If churches and their pastors are wealthy enough to buy private jets they can probably afford to pay tax like everyone else.
This article also appeared in Olatoye’s column, ‘Cheekylawyer’ in the print edition of Thisday Newspaper on 5th November 2013.
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