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Pakistan Civil Society Forum strongly rejects the new tax proposal in finance bill 2017/18

Lahore : Pakistan Civil Society Forum (PCSF) strongly rejects the new tax proposal in finance bill 2017/18 on non-profit organizations (NPOs). Para 83 of the budget speech talks about imposing further new taxes on NPOs and states the following:

 

  1. Non-Profit Organizations – At present if non-profit organisations do not spend more than 75% of their income on charitable and welfare activities, they lose the status of non-profit-organisation and their entire income is taxed at 30%. To remove this hardship it is proposed that if non-profit-organisations are unable to spend more than 75% of their income on charitable and welfare activities, the amount not spent shall be taxed at the rate of 10% and their status of non-profit organisation shall remain intact. It is also proposed to prescribe a limit of 15% on administrative and management expenses.

The proposal speaks volumes of Government’s lack of understanding about the work, struggle and contributions of NPOs in Pakistan.  PCSF believes that the Government’s definition of NPOs does not consider the diversity and nature of work of NPOs in Pakistan.  It is disturbing to read the proposed tax amendments as these infringe upon the autonomy of NPOs and will be discouraging the volunteers work for poor in Pakistan.

Proposing high rate of taxes on surplus is insensitive and unjustified. Savings on income is used for sustaining organizations and its activities in times of financial crunch. Surplus income also needs a realistic definition and shall not be viewed as extra-income.

Prescribing a limit of 15% on administrative and management expenses is a sheer violation of agreement between donors and NPOs. Government cannot come into it by fixing such a formula, which limits and violates the agreement between donors and the recipient NPOs.

PCSF strongly believes that the Government by imposing such harsh conditions will discourage the very cause of philanthropy and NPOs operating for social development of the country employing several qualified and experienced personnel in education, health and other key social sectors. Working with the most deprived which include rural poor, women, minorities and people with disabilities require a lot more expenditures on building the poor, their knowledge and capacities.

The Forum views with concern a deliberate and conscious campaign by the Government/s maligning NPOs, their work and contribution in the society. NPOs efforts have been brought into public debates, mostly for wrong reasons and with misplaced purposes, and a public impression is created deliberately about NPOs spending more resources on non-development purposes hence liable to be taxed or overly regulated.

This is totally a wrong perception and indicates short sighted views on the actual work of NPOs in Pakistan. We therefore demand the following:

  1. The government should take back the suggested proposals from finance bill 2017/18.
  2. Hold dialogues with representatives of NPOs ascertaining facts and seeking views from the sector before introducing such policies measures.
  • Government should respect the autonomy of NPOs and refrain from interfering in the work of NPOs.
  1. The Government must create an enabling environment for NPOs to work freely in the country in order to help large sections of the society.

In the larger spirit of continued dialogue and consultation PCSF is requesting an opportunity to brief the Finance Minister, parliamentarians and senators.

PCSF thanks the media and citizens for their valued understanding and support.

 

 

 

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