The government’s decision to tax the business and rental income of non-profit organizations has been described as a “disheartening” move that could hinder these organizations and impact the social services they provide.
“As businesses, we make contributions to these organizations who are, to an extent, contributing to the social obligations of the government,” said Madhu Sudhan, principal tax and advisory services officer for accounting firm BDO Fiji, at a post-budget breakfast session in Suva this week.
“It is quite interesting to note that even sporting organizations fall into that category,” he added, arguing that the 13-year tax concessions to professional sporting bodies would mean developing and amateur sporting bodies will suffer.
During another post-budget forum, KPMG managing partner Lisa Apted expressed that non-profit organizations that work directly with communities and low-income parts of Fiji will be affected. She suggested creating a mechanism where the government can return some of the tax revenue to those involved in social programs.
Deputy PM and Finance Minister Professor Biman Prasad clarified that the intent was not to tax non-profit organizations per se but to “close some of the loopholes and leakages that some non-profit organizations, or those deemed to be non-profit organizations, have used to raise income.”
He acknowledged the difficulty in separating “what is for non-profit and what is for business.”
“We are open to discussing this further. If we feel it’s actually inhibiting non-profit organizations from expanding their support, that’s something the FRCS can look at on a case-by-case basis,” Professor Prasad stated.
PricewaterhouseCoopers managing partner Jerome Kado emphasized the need for clear legal wording to ensure that well-meaning businesspeople can continue to contribute to charitable trusts, thus fostering the growth of the charitable sector.