U.S. missionaries face taxing times

(Editor's note: All the missionaries and mission organizations, both in the United States and in Kenya, spoke only on the condition of anonymity, saying they feared reprisals from the Kenyan government.)

Orphanages, schools and health clinics are just a few of the services that missionaries established in Kenya since one U.S.-based mission began its work there more than 30 years ago.

But the 43 American missionaries who keep these programs running soon may be forced to flee the East African country.

The Kenyan government has threatened to charge Protestant missionary groups a 30 percent monthly tax on property, vehicles, missionary salaries and health benefits, said the area director for the East African mission organization. In addition, the government says missionaries should have been paying these taxes all along and has threatened to make them pay back taxes, he said. But missionaries say local tax lawyers have long told them that they were exempt from such taxes because their funding is based entirely on charitable donations.

The mission organization faces payment of tens of thousands of dollars in taxes — money the religious nonprofit does not have, he said.

"We added up all our benefits the way they wanted us to pay, and it was just outrageous," he said. "How ridiculous it is that they would drive away people who are there donating time, hundreds of thousands of dollars in buildings such as churches [and] schools. We're drilling wells, we have clinics [and] orphanages, and all this is in jeopardy because we cannot afford to stay there and pay those kinds of taxes."

Despite numerous calls over several weeks, the Kenyan Embassy in the United States declined to comment on the tax situation.

The Kenyan government is demanding that the missionary groups come forward and apply for tax amnesty. If they do so, the government has pledged to charge no penalties, but the back taxes will be due immediately.

For many missionaries, comprehending the Kenyan tax code has been the biggest challenge, a missionary in Kenya said.

"Our mission has been in Kenya since the mid-1970s and has tried for many years to get a clear statement from the Kenya Revenue Authority as to what taxes we owed, if any," he said.

To navigate the complex tax code, missionary groups typically hire Kenyan consultants. Often, these tax specialists offer contradictory advice — some say missionaries must pay taxes on their donation-based salaries; other consultants say the missionaries are exempt. Meanwhile, some church groups, including Roman Catholic organizations, are exempt from all taxes.

Another Protestant denomination was among one of the groups earlier told that they owed no taxes on missionary salaries, property or vehicles. However, they recently were told the opposite, said one of the group's missionaries.

He said the organization has been told it owes $26,400 in back taxes. Each missionary also would have to pay an estimated $1,100 a month in taxes, which is more than their monthly salaries. Adding to the tax burden, the government has begun reassessing the tax value of the mission's property.

In one instance, the government increased the estimated value of a missionary's unimproved home and surrounding land from $2,500 to $72,000, a missionary said by telephone.

He and dozens of other missionaries face a dilemma: Whether their group should apply for tax amnesty and get stuck with a tax bill the organization cannot pay, or leave the country.

"We don't want to leave too soon if there is any chance we could get some consideration from the [Kenya Revenue Authority], but neither do we want to stay too long and get stuck here with a tax burden we could never pay," he said.

"I am not certain yet what we will do," he added. "We are trying every avenue we can think of to appeal."

That included contacting the U.S. Embassy in Nairobi and urging it to ask Kenyan President Mwai Kibaki and his government to negotiate a more reasonable tax amount for missionaries.

But in an e-mail response to one of the missionary groups, U.S. Consul General David L. Stone said American officials had spoken with a Kenya Revenue Authority official, who said all people in Kenya are subject to taxes on income and property, including U.S. missionaries.

Some charitable institutions, Mr. Stone wrote, have received tax exemptions, but salaried missionaries are not eligible.

The e-mail said Kenya's assistant income-tax commissioner "stated that it was not the intention of the Kenyan tax laws to force people to depart the country." But that may be the outcome. One missionary said the Kenyan government has long considered churches and other nonprofits "soft targets" for tax increases.

"I think it's just simple: They need money, and they're just trying to get it any way they can," he said.

Some missionaries worry that the Kenya tax crisis could herald problems for missionaries across Africa.

"My thinking is [tax increases on missionaries] are going to go on to other countries in Africa," said a missionary from another Protestant denomination. He also is concerned that if the missionaries leave the country, Kenya's government will seize their property.

Missionaries are trying to get Kenya's government to spell out the tax liabilities of foreign missionaries and to make the country's politicians realize that if the missionaries leave, hundreds of Kenyans will lose jobs and valuable services.

"We want to pay taxes. It's not that we don't," he said. "We just want to pay a reasonable amount."