Tax exemption for CSR
Thursday, 26 June 2008
CORPORATE social responsibility (CSR) is a term which is now growingly familiar to private sector entrepreneurs operating in different fields of the country. CSR has opened up a new dimension to making businesses or enterprises responsible and contributory to their employees, the society, the national economy and the environment. Under the CSR concept many firms in Bangladesh have developed the awareness that their employees ought to be treated fairly, justly and equitably not only for the latter's well being but also for the firms to gain from employees' satisfaction and hence their working harder or more sincerely. Outside the firms, the entrepreneurs started and maintained initiatives ranging from environment-friendly activities such as planting trees and beautification to establishment of academic and health care institutions for the poor. There is no need to explain why these types of CSR activities related to establishment of various care facilities for the poor or in the alleviation of their poverty, should be hugely welcome. For more the net of such activities, the same would be in support of similar governmental endeavours with both streams making a greater impact on poverty reduction and delivery of critically needed services to the vast number of the non-affluent ones in the population. Thus, CSR needs to be recognised and promoted as positively complementary to government's own actions for social and economic distributive justice.
CSR is gaining in momentum but it could really accelerate with the right kind of governmental stimulus given to it. The finance adviser was reminded in a scholarship giving function by a private sector bank on Tuesday how CSR activities can be powerfully aided leading to their substantial increase, if only government takes the step of exempting such activities from taxation. Presently, businesses are required to pay 45 per cent tax on the money allocated for CSR. This reduces the amount available to them to undertake and complete projects and reduces the incentives to take up such projects in many cases. From reducing the rate of tax on CSR money or waiving the tax altogether, government can give a big boost to CSR activities on the whole.
The finance adviser was noted to have received the suggestion for reducing or waiving the tax on CSR with an open mind. He said that government is actively considering the proposal. But the issue, according him, also needs safeguards to ensure that the untaxed CSR money would be completely and incorruptibly used by businesses once the facility is extended. There would surely be a way for the government and businesses to devise a framework for ensuring satisfactory utilisation of CSR funds. But this goal should now be chased with some urgency and followed by a prompt decision to exempt or reduce tax on CSR money.
The wider adoption and practicing of CSR promises to change the gamut of corporate culture in the country and create multi-faceted benefits. But the huge possibilities from CSR will remain suspended as long as dilly-dallying keeps on frustrating the move toward unbundling greater amounts of money for such purposes. So, the imperative is to overcome the hurdles at the fastest.
CSR is gaining in momentum but it could really accelerate with the right kind of governmental stimulus given to it. The finance adviser was reminded in a scholarship giving function by a private sector bank on Tuesday how CSR activities can be powerfully aided leading to their substantial increase, if only government takes the step of exempting such activities from taxation. Presently, businesses are required to pay 45 per cent tax on the money allocated for CSR. This reduces the amount available to them to undertake and complete projects and reduces the incentives to take up such projects in many cases. From reducing the rate of tax on CSR money or waiving the tax altogether, government can give a big boost to CSR activities on the whole.
The finance adviser was noted to have received the suggestion for reducing or waiving the tax on CSR with an open mind. He said that government is actively considering the proposal. But the issue, according him, also needs safeguards to ensure that the untaxed CSR money would be completely and incorruptibly used by businesses once the facility is extended. There would surely be a way for the government and businesses to devise a framework for ensuring satisfactory utilisation of CSR funds. But this goal should now be chased with some urgency and followed by a prompt decision to exempt or reduce tax on CSR money.
The wider adoption and practicing of CSR promises to change the gamut of corporate culture in the country and create multi-faceted benefits. But the huge possibilities from CSR will remain suspended as long as dilly-dallying keeps on frustrating the move toward unbundling greater amounts of money for such purposes. So, the imperative is to overcome the hurdles at the fastest.