FBR rejects tax exemption to INGOs

ISLAMABAD: The FBR has rejected outright any tax exemption for the International Non-Governmental Organisations (INGOs), asking the government to get all INGOs registered with tax authorities for getting 100 percent tax credit, filing of tax returns and submitting withholding statement on annual basis.
Under the National Action Plan (NAP) to eliminate the menace of terrorism, the government is contemplating various options to place Foreign Contribution Act 2015 before the Parliament to monitor financing for INGOs, trusts and other organisations getting funds from outside Pakistan.
“We want documentation of all INGOs with tax authorities which are registered with Economic Affairs Division (EAD) so the FBR has dispatched its viewpoint on draft of Foreign Contribution Act which will be tabled before the Cabinet Division soon,” official sources in the FBR confirmed to The News here on Wednesday.
FBR, the sources said, had introduced concept of 100 percent tax credit from July 1, 2014 but has found that a number of INGOs were not complying with the newly devised rules issued by the tax authorities.
On proposed Foreign Contribution Act, the sources said that the FBR has asked the government to ensure registration of all INGOs, binding them to file tax returns and submit withholding statement on annual basis.
According to Income Tax Ordinance section 2 (36), the FBR has implemented 100 percent tax credit by placing rules with effect from July 1, 2014. “For procedure for the approval of a non-profit organisation, an institution, fund, trust, society or any other non-profit organisation (hereinafter referred to in this Chapter as organisation) established in Pakistan for religious, educational, charitable, welfare or development purposes or for the promotion of an amateur sport requiring approval of the Commissioner under clause (36) of section 2 of the Ordinance, shall make an application to the Commissioner in the prescribed form of the FBR.
For refusing approval, the FBR rules states that the approval shall not be granted if the constitution, memorandum and articles of association, trust deed, rules and regulations or bye-laws, as the case may be, specifying the aims and objectives of the organisation do(es) not provide - (a) for the audit of the annual accounts of the organisation by a qualified accountant as specified in clause (f) of sub-rule (2) of rule 211; (b) where the organisation is registered under the Societies Registration Act, 1860 (XXI of 1860), the Voluntary Social Welfare (Registration Control) Ordinance, 1961 (XLVI of 1961), or any other law in substitution thereof relating to the registration of welfare organisation, for the quorum of a meeting of the members of the body in which the control of the affairs of the organisation vests, being not less than four or one-third of the total number of the members of such body, whichever is greater; (c) where the organisation is a Trust as defined in the Trust Act, 1882 (II of 1882), for the quorum of a meeting of the members of the body in which the control of the affairs of the trust vests, being not less than three years or one-third of the total number of the members of such a body, whichever is greater.