The government’s decision to tax non-profit organizations’ business and rental income has been described as a “disheartening” move that could negatively impact the social services provided by these organizations.
“As businesses, we contribute to these organizations, which in turn fulfill some of the government’s social obligations,” stated Madhu Sudhan, principal tax and advisory services officer for accounting firm BDO Fiji, during a post-budget breakfast session in Suva this week.
Sudhan noted that even sporting organizations are affected by this change, arguing that the 13-year tax concessions granted to professional sporting bodies could harm developing and amateur sporting groups.
In another post-budget forum, Lisa Apted, managing partner of KPMG, highlighted the impact on non-profit organizations that work directly with communities and low-income areas in Fiji. She suggested the government implement a mechanism to support those engaged in social programs.
Deputy PM and Finance Minister Professor Biman Prasad clarified that the intention was not to tax non-profit organizations but to “close some of the loopholes and leakages” exploited by entities claiming non-profit status to generate income.
He acknowledged the difficulty in distinguishing “what is for non-profit and what is for business” and expressed openness to further discussions. “If we find it’s inhibiting non-profit organizations from expanding their support, the Fiji Revenue and Customs Service can review it on a case-by-case basis,” Prof Prasad said.
Jerome Kado, managing partner at PricewaterhouseCoopers, emphasized the need for the government’s intentions to be clearly articulated in the law to ensure that well-meaning businesspeople can continue to support charitable trusts and help grow the non-profit sector.