The Government’s decision to tax the business and rental income of non-profit organizations has been described as a “disheartening” move that could constrain these organizations and impact the social services they provide.
“As businesses, we make contributions to these organizations that contribute to the social obligations of the government,” said Madhu Sudhan, the principal tax and advisory services officer for accounting firm BDO Fiji, at a post-budget breakfast session in Suva this week.
Sudhan noted that even sporting organizations are affected by this decision and argued that while professional sporting bodies benefit from a 13-year tax concession, developing and amateur sporting bodies will suffer.
At another post-budget forum, KPMG managing partner Lisa Apted highlighted that non-profit organizations working directly with communities and low-income areas in Fiji will be affected. She suggested that the government should implement a mechanism to support those involved in social programs.
Deputy Prime Minister and Finance Minister Professor Biman Prasad clarified that the intention was not to tax non-profit organizations but to close loopholes and leakages exploited by some entities deemed to be non-profit to generate income. He stated that it is challenging to distinguish between non-profit and business activities.
“We are open to further discussion. If it is found that this measure inhibits non-profit organizations from expanding their support, the Fiji Revenue and Customs Service (FRCS) can look at it on a case-by-case basis,” said Prof Prasad.
PricewaterhouseCoopers managing partner Jerome Kado emphasized that the Government’s intentions should be explicitly stated in the law to ensure that well-intended businesspeople can continue to contribute to charitable trusts and help grow the charitable sector.