Doulot Akter Mala
The National Board of Revenue (NBR) is yet to receive any application seeking tax benefit for Corporate Social Responsibility (CSR) activities so far this fiscal year (FY) even though the government expanded the areas of CSR for tax relief in the budget for FY 2010-11, officials said.
The government had offered special tax benefit for companies on deployment of funds for public welfare-oriented activities under its CSR scheme but it failed to attract big corporate houses as none of them applied for availing the facility in the last two years.
Under the facility, corporate bodies could get 10 per cent tax benefit on the amount of fund spent on CSR activities. Companies have to take prior permission from the NBR before utilising funds for CSR activities.
Talking to the FE, former finance adviser Mirza Azizul Islam said the rules on CSR should be simplified more so that corporate houses can avail the facilities.
Dr. Islam first introduced the CSR tax benefit in 2008 when he was finance adviser to the caretaker government.
"May be companies found the measure not favourable for them. The government can amend the rule by allowing tax benefit after utilisation of funds for CSR activities, instead of the existing requirement for prior approval," he said.
The government can offer the tax benefit when companies would claim the facility for CSR activities with necessary documents, he said.
Mostly banks are involved in CSR activities in the country as Bangladesh Bank (BB) has instructed them to use more funds in support of CSR activities to raise performance indicators. Banks and financial institutions are paying the highest amount of tax among the corporate tax payers. Currently, all banks and financial institutions are paying tax at 42.5 per cent which is the highest in the world.
K Mahmood Sattar, chairman of the Association of Bankers, Bangladesh (ABB) and managing director (MD) and chief executive officer of the City Bank Ltd, said: "The rule for availing tax benefit on CSR is not effective. No banks will seek the negligible amount of tax benefit after facing several bureaucratic procedures."
The benefit is only Tk 4.25 on deployment of each Tk 100 for CSR activities as the banks are paying tax at 42.5 per cent, he said demanding full waiver of the tax if the government wants to help the banks that are investing in public welfare.
Mahmood Sattar also sought withdrawal of the system of taking prior approval from the NBR to avoid bureaucratic procedures.
The MD and CEO of National Credit and Commerce (NCC) Bank, Mohammad Nurul Amin said banks or companies have to use funds for CSR operations sometimes hurriedly in case of natural calamities or during other crisis periods.
It is then impossible to take the prior approval from the NBR to get the tax benefit, he said.
"We don't want to waste time for the insignificant amount of benefit," he said.
The bankers found the existing conditions on availing tax benefit on CSR as complicated and discouraging for the private sector.
Following the complaint of big corporate houses on this issue, the Large Taxpayers Unit (LTU) recently requested the NBR to amend the existing CSR rule in line with the BB rules for CSR.
In the current fiscal's budget, the government amended the CSR rule to simplify it when it found that the companies were not coming to the NBR to avail themselves of the facilities because of harsh conditions.
A top official of the NBR said: "BB has instructed banks to invest more on CSR while NBR imposed hard conditions on availing tax benefit that the government offered to encourage CSR."
The NBR this fiscal year incorporated some new areas of CSR so that banks or companies could avail 10 per cent tax benefit on the invested amount.
Under the existing law, a company enjoys 10 per cent tax exemption on the amount of money for CSR activities in about 18 selected sectors defined as a major public welfare and social development area.
The NBR will also ease some rules of eligibility for availing tax benefit for CSR as it has found poor response, in general, to the offer from corporate houses and exporting companies.
"We have found that the existing rules are very harsh for companies to avail themselves of the tax benefit. No banks or companies availed themselves of the tax-benefit so far," said a senior tax official.
It is necessary to simplify the rules in consideration of the country's present context, he said.
"Banks, financial institutions and big corporate houses have been deploying significant amounts of funds in CSR activities. More companies will come forward if the NBR eases the pre-conditions," he said.
The NBR has introduced tax-exemption for CSR following requests of the big corporate houses on donation to forestry, pure water management, city beautification, waste management, old homes, HIV AIDS, mental and physical disability, education for poor children, investment in free medical services for poor and distressed people, climate change adaptation, solar energy, bio-mass processing, bio-diversity, shelter for poor people etc.
Tax benefit offer for CSR gets poor response
Doulot Akter Mala | Published: April 16, 2011 00:00:00 | Updated: February 01, 2018 00:00:00
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