CSR tax-benefit area to be extended
Thursday, 6 May 2010
Doulot Akter Mala
The government is set to extend the tax-benefit area of Corporate Social Responsibility (CSR) in a bid to encourage corporate houses to invest more on public welfare and social development.
The National Board of Revenue (NBR) will include some new areas of CSR to avail of 10 per cent tax benefit on the invested amount.
Under the existing law, a company enjoys 10 per cent tax exemption on the invested amount relating to around 15 selected sectors defined as a major public welfare and social development area.
The government first incorporated the fiscal benefit in January 2009 to encourage companies to undertake CSR activities.
A high-powered body of the National Board of Revenue (NBR), headed by NBR member Aminul Karim, has been preparing a guideline to incorporate the new areas where companies will enjoy tax benefit on invested amount of CSR.
Investment in free medical services for poor and distressed people, climate change, solar energy, bio-mass processing, bio-diversity, shelter for poor people might be considered as new CSR areas.
The board will also ease some rules of eligibility for availing of 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 of the tax benefit. Only few banks and multinational companies availed of the tax-benefit so far," said a senior tax official.
It is necessary to simplify the rules in line with the country's present context, he said.
The board has found that the tax benefit for CSR not attracted the corporate houses due to its pre-conditions, he added.
"Banks, financial institutions and big corporate houses have been investing a significant amount on CSR activities. More companies will come forward if the NBR ease the pre-conditions on the basis of present economic context of the country," he said.
The NBR has set three pre-conditions for companies to be eligible for CSR tax-benefit, which a majority of companies found difficult to meet under the present economic conditions, the official said.
A number of companies, involved in the CSR activities, found it difficult to comply with the conditions as there is no specific definition of 'standard salary structure, child labour and workers participation and welfare fund'.
The government will ease some rules so that more corporate houses can avail of the tax benefit offered for CSR, he added.
Banks, companies and financial institutions have been paying highest rate of tax at 42.5 per cent. They have to pay the tax on the invested amount of CSR.
The revenue board has introduced the tax-exemption for CSR following requests of the big corporate houses.
Donation in foresting, pure water management, city beautification, waste management, old homes, HIV AIDS, mental and physical disability, education for poor children etc are entitled to enjoy the tax benefit as CSR activity.
The government is set to extend the tax-benefit area of Corporate Social Responsibility (CSR) in a bid to encourage corporate houses to invest more on public welfare and social development.
The National Board of Revenue (NBR) will include some new areas of CSR to avail of 10 per cent tax benefit on the invested amount.
Under the existing law, a company enjoys 10 per cent tax exemption on the invested amount relating to around 15 selected sectors defined as a major public welfare and social development area.
The government first incorporated the fiscal benefit in January 2009 to encourage companies to undertake CSR activities.
A high-powered body of the National Board of Revenue (NBR), headed by NBR member Aminul Karim, has been preparing a guideline to incorporate the new areas where companies will enjoy tax benefit on invested amount of CSR.
Investment in free medical services for poor and distressed people, climate change, solar energy, bio-mass processing, bio-diversity, shelter for poor people might be considered as new CSR areas.
The board will also ease some rules of eligibility for availing of 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 of the tax benefit. Only few banks and multinational companies availed of the tax-benefit so far," said a senior tax official.
It is necessary to simplify the rules in line with the country's present context, he said.
The board has found that the tax benefit for CSR not attracted the corporate houses due to its pre-conditions, he added.
"Banks, financial institutions and big corporate houses have been investing a significant amount on CSR activities. More companies will come forward if the NBR ease the pre-conditions on the basis of present economic context of the country," he said.
The NBR has set three pre-conditions for companies to be eligible for CSR tax-benefit, which a majority of companies found difficult to meet under the present economic conditions, the official said.
A number of companies, involved in the CSR activities, found it difficult to comply with the conditions as there is no specific definition of 'standard salary structure, child labour and workers participation and welfare fund'.
The government will ease some rules so that more corporate houses can avail of the tax benefit offered for CSR, he added.
Banks, companies and financial institutions have been paying highest rate of tax at 42.5 per cent. They have to pay the tax on the invested amount of CSR.
The revenue board has introduced the tax-exemption for CSR following requests of the big corporate houses.
Donation in foresting, pure water management, city beautification, waste management, old homes, HIV AIDS, mental and physical disability, education for poor children etc are entitled to enjoy the tax benefit as CSR activity.