The National Board of Revenue (NBR) is actively considering a revision on income tax law for Corporate Social Responsibility (CSR) by increasing ceiling for CSR expenditures and widening prescribed areas of intervention.
The ceiling of CSR expenditure may be raised to Tk 100 million from the existing Tk 80 million. Prescribed sectors for tax rebate on CSR intervention may also be broadened by adding some new areas, sources said.
The changes may take place in the budget for fiscal year (FY) 2014-15, to be placed in parliament on June 05 next.
Officials said the CSR rules might be revised to make it friendly to the corporate taxpayers to facilitate them avail the benefit.
Currently, corporate taxpayers are being discouraged to enjoy the existing tax benefit on CSR intervention due to complexities in the existing tax law with troublesome conditions to comply with.
Many of the large companies, mainly banks, came forward with wide range of CSR activities as part of their social obligation and in compliance with directives of the regulators.
Under the existing law, corporate taxpayers are paying tax ranging from 27.5 per cent to 45 per cent on their annual income. The companies can reduce the higher tax burden on them by claiming tax rebate on CSR expenditure.
There is a blame game among the tax officials and corporate taxpayers on availing the tax benefit.
Corporate taxpayers alleged faulty and inconvenient tax rules while taxmen blamed lack of transparency in the corporate taxpayers' accounts for not availing the facility.
Under the CSR rules, the government allows the companies to enjoy 10 per cent tax rebate on their CSR expenditures upon complying with some conditions.
The conditions include: limit of CSR expenditures up to Tk 80 million or 20 per cent of annual income, obtaining prior approval from the NBR before CSR expenditures and some prescribed sectors for CSR intervention, etc.
Talking to the FE, a senior tax official acknowledged the troublesome tax rules that are discouraging the large corporate taxpayers to get the benefit.
"We are actively considering a revision of the CSR rules so that companies can avail the offered tax benefit," he said.
Many of the taxpayers and experts have also suggested revision of the tax rules for corporate taxpayers, the official added.
Some of the tax officials at the field level are reluctant to allow CSR tax rebate fearing loss of revenue which may pose threat to meeting target.
Officials in the Large Taxpayers Unit (LTU) said only a handful of corporate taxpayers, including banks and cell phone companies, have applied for tax rebate in FY 2012-13, but most of them failed to comply with the conditions set by the NBR.
Former chairman of the Association of Bankers, Bangladesh Nurul Amin said the condition on obtaining prior approval for CSR intervention is discouraging companies to avail the facility.
He said the areas for CSR intervention by companies should be broadened.
"The tax measure should attract companies. There are so many hassles in the existing rules on obtaining the tax benefit," he said.
Recently, the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) and non-profit advocacy organisation, MRDI has proposed some changes in CSR rules in the upcoming budget.
In a proposal, the MCCI has demanded withdrawal of the limit of CSR intervention.
On April 26 last, the Management and Resource Development Initiative (MRDI) organised a roundtable on policy support to CSR in the context of tax exemption for the banking sector.
In the meeting, experts proposed either to scrap the ceiling for CSR expenditures for financial institutions and corporate entities or to increase those to Tk 200 to 250 million.
They also proposed to raise the tax exemption rate on CSR expenditures to 10-20 per cent for banks and other FIs, withdraw rules on prior approval and set up a CSR cell at NBR.
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