Tax incentives for businesses practising CSR
Saturday, 11 October 2008
The government is reportedly considering providing tax incentives to the corporate business houses so as to motivate them to invest more in public welfare activities. The issue of public welfare in the arena of corporate business is a self-motivated movement expressed through the term, Corporate Social Responsibility (CSR) and it has been gaining popularity on a global scale. However, this culture in Bangladesh is yet to come of age. The reason for this does not lie simply in the fact that the corporate sector in Bangladesh does not yet have a strong base and also its fledgling corporate culture is shy of spending money in the social welfare sector. On this score, the government, too, has some responsibility. Its tax regime, especially in regard to the investments made by the larger business houses in the domain of public good, has not been pro-active enough to encourage expansion of the CSR culture in the country. In this context, it is heartening to note that the government, of late, has been alive to the issue. The National Board of Revenue (NBR) has already sent a proposal to the finance ministry to the effect that the business houses discharging CSR be given some tax exemptions, for the investments they will make for public welfare.
Save some rare exceptions, the business practice in Bangladesh, generally speaking, is still in a state of primitive accumulation, which is stranger to public welfare. In contrast, the businesses in the West had to go through centuries of trial and error. Notwithstanding the latest upheaval in the financial markets of the developed rich countries largely because of lax regulation, there is no denying that the corporate sector there has otherwise learnt the simple fact that investments in the welfare of their own employees and other stakeholders -- for that matter, the community at large -- pay dividends for the growth of the business itself in the end. One is talking here of the wider domain of public good, where one is to look further beyond the narrow periphery of one's own business concern. So, it is quite understandable that so far as the home-grown businesses in Bangladesh are concerned, the concept of corporate business culture, let alone the CSR that goes with its very advanced form, is yet to become popular or take an institutional character. However, a good number of multinational business operators in the country as well as some local business houses or companies have been showing a growing interest in activities that do otherwise come under the CSR domain. They have, thus, been playing some meanwhile positive roles in discharging CSR in a self-motivated fashion and helping the related activities expand among the other businesses across the country.
All concerned would certainly agree that the role of the government in furthering the cause of CSR among the local as well as the international operators in business is very pertinent. In this context, the proposed tax exemption should not be looked upon simply as an inducement for the business houses concerned. Lowering of corporate profit tax or granting of waiver on such taxes in the case of those companies or businesses having CSR operations will be considered right steps for encouraging them in related activities. Here, the proposals that have been mooted by the NBR for a 5.0 per cent tax waiver on CSR-related investments by the companies or the 2.0 per cent waiver on the total corporate tax charged on them by the government are pro-active moves to even things up and to help broaden the scope for their CSR activities.
Having said that, it is necessary also to remind ourselves that altruism is not really the cup of tea in the domain of business proper. If truth be told, the motivation for pro-public welfare investments made by the business houses is driven more by the tax or other government-provided benefits they imply than for any altruistic end per se. It is to address this particular aspect of the issue that the government will have to ensure that the companies taking the CSR-related tax exemption do also comply with certain minimum conditions having to do with the public and social good.
Save some rare exceptions, the business practice in Bangladesh, generally speaking, is still in a state of primitive accumulation, which is stranger to public welfare. In contrast, the businesses in the West had to go through centuries of trial and error. Notwithstanding the latest upheaval in the financial markets of the developed rich countries largely because of lax regulation, there is no denying that the corporate sector there has otherwise learnt the simple fact that investments in the welfare of their own employees and other stakeholders -- for that matter, the community at large -- pay dividends for the growth of the business itself in the end. One is talking here of the wider domain of public good, where one is to look further beyond the narrow periphery of one's own business concern. So, it is quite understandable that so far as the home-grown businesses in Bangladesh are concerned, the concept of corporate business culture, let alone the CSR that goes with its very advanced form, is yet to become popular or take an institutional character. However, a good number of multinational business operators in the country as well as some local business houses or companies have been showing a growing interest in activities that do otherwise come under the CSR domain. They have, thus, been playing some meanwhile positive roles in discharging CSR in a self-motivated fashion and helping the related activities expand among the other businesses across the country.
All concerned would certainly agree that the role of the government in furthering the cause of CSR among the local as well as the international operators in business is very pertinent. In this context, the proposed tax exemption should not be looked upon simply as an inducement for the business houses concerned. Lowering of corporate profit tax or granting of waiver on such taxes in the case of those companies or businesses having CSR operations will be considered right steps for encouraging them in related activities. Here, the proposals that have been mooted by the NBR for a 5.0 per cent tax waiver on CSR-related investments by the companies or the 2.0 per cent waiver on the total corporate tax charged on them by the government are pro-active moves to even things up and to help broaden the scope for their CSR activities.
Having said that, it is necessary also to remind ourselves that altruism is not really the cup of tea in the domain of business proper. If truth be told, the motivation for pro-public welfare investments made by the business houses is driven more by the tax or other government-provided benefits they imply than for any altruistic end per se. It is to address this particular aspect of the issue that the government will have to ensure that the companies taking the CSR-related tax exemption do also comply with certain minimum conditions having to do with the public and social good.