Corporate entities cool about CSR tax rebate

Corporate taxpayers are yet to find the existing tax rebate on their social responsibility activities attractive despite several changes and amendments made to the relevant law over the last five years.
None of the corporate taxpayers availed or applied for the 10 per cent tax-rebate on Corporate Social Responsibility (CSR) expenditure in the outgoing fiscal year (FY), 2014-15.
The NBR introduced the tax-benefit in 2010 in a bid to encourage CSR expenditure, especially for banks that contribute about 60 per cent of the corporate tax.

Since introduction of the benefit, the government has brought several changes through the Finance Act. It has expanded the number of areas under CSR activities from 15 to 22, raised the minimum ceiling to Tk 120 million and also incorporated provisions to make CSR expenditure transparent.  
Experts and bankers said the CSR concept needed adequate policy advocacy to make the procedure of expenditure clear and raise awareness of policymakers and stakeholders.
Executive Director of Management and Resources Development Initiative (MRDI) Hasibur Rahman said the CSR concept needed adequate policy advocacy to make people aware and resolve misconception about the issue.
"The government's Millennium Development Goal (MDG) and Sustainable Development Goal (SDG) targets can be achieved by increasing CSR expenditure of corporate houses," he said.
Specific guidelines from the regulating bodies, including the Bangladesh Bank (BB), can help the corporate bodies target the marginal group of people who really deserve the support, he added. Mr Rahman stressed the need for ensuring transparency of the accounts of corporate bodies and accountability and also a taxpayer-friendly attitude of the NBR (National Board of Revenue) for aiding effective CSR activities.
Talking to the FE, some corporate taxpayers alleged unwillingness of taxmen to allow the tax-benefit.   
Banking sector insiders said the amount of tax-rebate was insignificant compared to the hassles and procedures of availing the tax-benefit.
Former income tax member Dr Syed Aminul Karim said there was no scope for taxmen to disallow the application for CSR tax-benefit, if corporate taxpayers spend on CSR in line with the existing law.
"I found banks are not willing to claim tax-benefit for CSR, rather they spend the amount for promoting their brand name," he said.
Transparency of the accounting system is also imperative to claim the tax-benefit, he added.
"In many cases, it has been found that banks' CSR expenditures do not fall under the defined areas for CSR tax-rebate," he added.
Managing Director (MD) and Chief Executive Officer (CEO) of Mutual Trust Bank Limited Anis A Khan said the banks were assisting the government in carrying out its public welfare-oriented activities in the form of tax paid at the rate of 40 per cent.
"It is burdensome for a bank to pay the tax at a high rate on the expenditure that has been made for supporting the government," he said.
For this reason, it was difficult for the commercial banks to confine their CSR expenditure to the defined areas, he added.
There is a CSR guideline of BB for showing path to the commercial banks as their regulator.
Specific guidelines of the central bank have led to systematic expenditure of CSR by the commercial banks and non-banking financial institutions.
Deputy Governor of BB Sitangsu Kumar Sur Chowdhury said the central bank framed the guideline to ensure discipline in CSR expenditure and show the financial sector the right path.
The voluntary efforts of banks and NBFIs (Non Bank Financial Institutions) help both improve livelihood of underdeveloped area and also expand their client-base, he added.
Commercial banks can improve their performance indicators in 'Camel rating' through increased and effective CSR activities, he said.
"CSR is a complete voluntary effort of financial sector, not mandatory. However, all of the voluntary efforts for public welfare are not CSR," he said.
A corporate body would be entitled to the tax benefit upon compliance with the existing rules, Mr Sur said.
According to the Bangladesh Bank (BB) data, CSR expenditures of the country's commercial banks marked a twofold increase during the last five years playing a significant role in improving livelihood of the under-privileged people in remote areas.
[email protected]