'Corporate Social Responsibility' (CSR) is a relatively new concept for Bangladeshi businesses. Prior to its formal recognition as an important element of business operations, a section of the wealthy people here for time immemorial had been spending money on philanthropic activities to benefit society in general and the poor in particular. But such activities, bordering on individual charity, are not synonymous with CSR. Sustainability of CSR programmes with broader stake-holders' participation in devising a related strategy in tune with society's requirements is one of its important operational aspects. Meanwhile, the provision for tax rebate on CSR which by its definition covers far wider areas than those falling under philanthropy or individual charity, has added a new dimension to the topic.
The National Board of Revenue (NBR), the official agency responsible for collecting revenue for the government through various direct and indirect tax measures, has offered tax rebate on corporate profits, up to 10 per cent, to a company - listed or otherwise, if it invests 20 per cent of its gross income with the amount being capped at Tk 80 million a year. However, the NBR has specifically mentioned the areas where a company is allowed to spend its CSR funds and enjoy the tax benefit. But it has partly mixed up those with corporate governance-related issues which the businesses are otherwise bound to comply with, or follow, to carry out their business in a lawful way. Besides, the companies concerned are required to have prior approval from the NBR authorities as far as their CSR activities are concerned in order to avail themselves of the tax rebate facility for the purpose.
The issue of making the CSR more acceptable to a greater number of companies, particularly those operating in the financial sector, and thus more beneficial for society and the people by amending the existing tax rules and procedures came up for discussions at a roundtable in the capital city last Sunday. The event was jointly organised by the Bangladesh Institute of Bank Management (BIBM) and the Management and Resource Development Initiative (MRDI), with the support of the Bangladesh Bank (BB).
In Bangladesh, a good number of large companies have been spending funds on CSR programmes. Among them, banks have been contributing an increasingly larger amount of money every year. The basic objective behind the spending on CSR by all the companies is to help strengthen their footing in the community and facilitate their branding, with the support of stake-holders by promoting efforts to improve the overall socio-economic conditions of the underprivileged. In turn, this can create a strong base to build their public image which can ultimately pay them good dividends, in terms of future business expansion and long-term profitability. The more they spend funds on CSR, the greater the benefit for society in one way or other. But most companies, including banks, would naturally shy away from spending more on CSR if they encounter hurdles in the CSR process.
Persons like the governor and a deputy governor of the country's central bank at the roundtable dwelt upon the incentive framework at length, focussing particularly on tax-related factors that were not adequately encouraging the companies to expand their CSR activities. The issues include allowable limit for investment in CSR programmes, submission of CSR plans to the NBR for prior approval and unattractive rate of tax rebate. The BB men and other experts present at the roundtable wanted a thorough review of the incentives given on CSR to encourage the use of more of their post-profit corporate funds for the welfare of the poor and the disadvantaged, on a voluntary basis, and promote scientific research and development activities that would benefit the economy in particular. The concerned authorities do need to take note of this for revamping the fiscal policy to help achieve the intended goals and objectives of CSR on a sustained basis
