Pakistan Needs to Introduce CSR

[third eye]

That is huge, and reflective of flourishing business I guess.

Indeed it is a flourishing business.

I know companies doing sterling work in the NE & getting tax benefits too.

Suits all parties involved

 

[I.R.A]

I know companies doing sterling work in the NE & getting tax benefits too.

Suits all parties involved

Actually I was talking about giving them double the tax benefit, set aside a percent from your annual profit, totally exempt from tax and then allow them that shared profit further as a deductible expense from their taxable profits. Plus obviously the non monetary benefits / incentives are huge, if one values them.

 

[VCheng]

How and why is it necessary? Why the latter cannot be started simultaneously (at small scale), while trying to fix the government mess (which would take ages) .......? It's a known fact that private sector holds more competency, will and capability compared to government sector. I have been to CDA offices and believe me there is no hope, you cannot willingly stay there for half an hour.

Briefly, such CSR attempts, even on a small scale, impose additional costs of doing business, specially upon mid and small size concerns. The environment in Pakistan is ill-suited in its present form to bear such costs with the bureaucratic and taxation burdens in place. Enforcing such practices will entail additional pain for both businesses and their customers, directly or indirectly.

What you are proposing here is for others to do what is rightfully the government's responsibility: schools, hospitals, roads etc. CSR can be effective only when the government does its job first and lays down the proper foundations. Just because the private sector is more efficient than the government is no reason to transfer the responsibilities to it. After all, ask yourself just what is the government there for, if not for the people?

 

[I.R.A]

After all, ask yourself just what is the government there for, if not for the people?

I don't intend to transfer the responsibility or hold the private sector responsible, there is no justification for that. I agree its the government's duty and job first and then come the citizens (including the businesses) to play their part. But

Please do tell me where do I raise this question, whom do I ask? I don't expect you to have missed the sad state of affairs of Pakistani government(s) ........... and act naive. If I hadn't asked myself the question, why would I want Pakistani government to at least introduce CSR ........ hoping that it may kick start the lazy government machinery, and may carry some positive influence or create a pressure situation by making common people aware ... that things can get done ... if a private business can do it, so can the government.

 

[hassan zohaib]

Corporate Social Responsibility.

I see so much potential and benefit by making legislation in this regard. It would also help reduce dependency on NGOs (which remain a controversial matter). Plus it doesn't have to be some strict punishment style laws, tax rebates and credits can be given in lieu, plus it helps them (businesses) with projecting their positive image, buying goodwill of masses, sort of marketing for their brand. I think it can help a lot with infrastructure and welfare. Like construction companies before allowed to build any project in any city, are asked to build school, hospital, clinic, park, orphanage, night homes etc. Oil and exploration companies asked to contribute to areas like Sui village (wherever they are busy in exploration), or just take those mattress supplying Diamond foam etc, provide subisdised / foc mattresses to hospitals. Auto industry to build ambulances, fire fighting vehicles etc. Like any corporation can help beautify any area at least.

I wonder why its missing. Or if there is something in black and white, then why it hasn't been implemented.

@Hell hound @The Sandman @Cookie Monster @PakSword

@padamchen @Nilgiri

Completely disagreed because there are lots of Political, Economical, legal and social issues 2 make CSR compulsory. Leave alone the others but considr this " if a govt asks a pvt firm to undertake development projects or csr then what purpose will b for the govt to exist if it can't do the duties of its"... Afterall u can't make a person realize his responsibilities if he doesn't want to.....

Csr is basically the self driven realization of an organization to do something for the stakeholders of its, if it is made compulsory then u r siphoning of the more money from the earnings of a company, which already is paying more than 35% of its earnings in taxes hence imposing another new tax...

Social and competitive factors are even more difficult to align with....so leave them

 

[I.R.A]

Csr is basically the self driven realization of an organization to do something for the stakeholders of its, if it is made compulsory then u r siphoning of the more money from the earnings of a company, which already is paying more than 35% of its earnings in taxes hence imposing another new tax...

Companies are not paying 35% tax anymore. And believe me they are actually not paying what they are supposed to pay, call it incompetence of our taxation system ..... plus the law itself is designed to help them with tax avoidance. And companies are not interested in any self driven Social responsibility as well, its Pakistan .... where a mehran costs you a Million rupees ..... profit margins are very unrealistic in many sectors.

 

[hassan zohaib]

Companies are not paying 35% tax anymore. And believe me they are actually not paying what they are supposed to pay, call it incompetence of our taxation system ..... plus the law itself is designed to help them with tax avoidance. And companies are not interested in any self driven Social responsibility as well, its Pakistan .... where a mehran costs you a Million rupees ..... profit margins are very unrealistic in many sectors.

This is totally a different set of topics but tell me when by books u have to pay 35% tax and other CSR activities out of your profits,suppose 50% total, then who is gonna invest here?

I didn't want to go further but will say that a whole new contract of social harmony and responsibility and honesty is necessitated before going into Such deep waters of social realization....

My friend if a govt doesn't support you in your "loss days" but asks for in your "profit days" then a detrimental factor comes in....

Once again will point out that it's self realization when csr is done not othrwise...if so then it isn't csr infact

 

[I.R.A]

This is totally a different set of topics but tell me when by books u have to pay 35% tax and other CSR activities out of your profits,suppose 50% total, then who is gonna invest here?

You need to check the taxation rate, it's not correct. I don't wish to sound expert but your assumption of 50% profit sharing is flawed. On ground taxation is very messed up area .... and most of the times companies do get to avoid taxes .... as I said the law itself is designed to avoid taxes and benefit many stakeholders in all this taxation and related litigation system.

Secondly you are ignoring that almost every company does have this Donations head included in their financial statements. I want that to count and matter.

My friend if a govt doesn't support you in your "loss days" but asks for in your "profit days" then a detrimental factor comes in....

My friend ......... business entities are allowed to carry forward their losses for tax purposes (losses appearing in their financial statements, which may actually not be the losses at all) .... not only entity itself but the Holding or parent company can also claim those losses.

You need to understand that audited financial statements are never the whole truth, a lot can happen and does happen before arriving at numbers reflected in those statements. Accrual based accounting does miracles and is a handy tool for window dressing.

 

[hassan zohaib]

You need to check the taxation rate, it's not correct. I don't wish to sound expert but your assumption of 50% profit sharing is flawed. On ground taxation is very messed up area .... and most of the times companies do get to avoid taxes .... as I said the law itself is designed to avoid taxes and benefit many stakeholders in all this taxation and related litigation system.

Secondly you are ignoring that almost every company does have this Donations head included in their financial statements. I want that to count and matter.



My friend ......... business entities are allowed to carry forward their losses for tax purposes (losses appearing in their financial statements, which may actually not be the losses at all) .... not only entity itself but the Holding or parent company can also claim those losses.

You need to understand that audited financial statements are never the whole truth, a lot can happen and does happen before arriving at numbers reflected in those statements. Accrual based accounting does miracles and is a handy tool for window dressing.

As per reality, i totally agree with you. The tax avoidance, tax theft, can't b ignored. Yes these happen but i am saying what if you legalize the cover then who sane person would invest. And as u know the more the strict the income tax laws, rates etc the more the tax avoidance occurs so in Countries where the topic has come from do impose leniant tax regimes but in pak case a scenario isn't favorable for motivation to these things...


Yup these have segments.i agree but how could we make donation compulsory. There are different purposes behind such things like tax rebates, personal gains etc. So donations can't b legalized. It is like forcing one to do a good work without his intentions. So when doing this then who will define what is good or bad?

Btw, donations may be part of CSR but CSR can't b donations completely...


Didn't differ with u in this. They can carry forward but only to reduce their tax liability.... And if csr is legalized then can we need not to give such window to companies?

That's where corporate governance, laws, convention and standard come into play...

 

[I.R.A]

As per reality, i totally agree with you. The tax avoidance, tax theft, can't b ignored. Yes these happen but i am saying what if you legalize the cover then who sane person would invest. And as u know the more the strict the income tax laws, rates etc the more the tax avoidance occurs so in Countries where the topic has come from do impose leniant tax regimes but in pak case a scenario isn't favorable for motivation to these things...


Yup these have segments.i agree but how could we make donation compulsory. There are different purposes behind such things like tax rebates, personal gains etc. So donations can't b legalized. It is like forcing one to do a good work without his intentions. So when doing this then who will define what is good or bad?

Btw, donations may be part of CSR but CSR can't b donations completely...


Didn't differ with u in this. They can carry forward but only to reduce their tax liability.... And if csr is legalized then can we need not to give such window to companies?

That's where corporate governance, laws, convention and standard come into play...

I am not interested in monetary donations, my focus is primarily on donation in kind, for sake of simplicity I will call community service as donations .... and laws should help with making things more transparent. For example take Pakistan Petroleum Limited ..... you know they contribute or contributed something from their sales value to President Surplus Fund that too after all the royalty and sales tax being paid separately. The amount runs into millions if not billions .... and where that money goes nobody knows.

Businesses do benefit from CSR .... it needs not be monetary profit and gains. So the question of forcing CSR is somewhat irrelevant .... its more to streamline it ... and use it to gain maximum for all the stakeholders.

 

[VCheng]

I don't intend to transfer the responsibility or hold the private sector responsible, there is no justification for that. I agree its the government's duty and job first and then come the citizens (including the businesses) to play their part. But

Please do tell me where do I raise this question, whom do I ask? I don't expect you to have missed the sad state of affairs of Pakistani government(s) ........... and act naive. If I hadn't asked myself the question, why would I want Pakistani government to at least introduce CSR ........ hoping that it may kick start the lazy government machinery, and may carry some positive influence or create a pressure situation by making common people aware ... that things can get done ... if a private business can do it, so can the government.

Your passion is clear to me, and I am reluctant to say anything counter to it. May be this initiative will take hold in the new Pakistan. I can only pray.

 

[Nilgiri]

Your passion is clear to me, and I am reluctant to say anything counter to it. May be this initiative will take hold in the new Pakistan. I can only pray.

I basically agree with you as well. There is a core need for the govt to shape up first in our part of the world (sadly)...the negative tentacles it has everywhere is quite large....and I just feel for sustained pragmatic chance, they need to be hacked away at first....so the core itself of "all that" can focus better (where it works best) and hopefully redeem itself over time.

Now if that can be bypassed somehow, someway, I wish all such things the success and best wishes they need...they are just really really rare (Mr. Edhi comes to mind for example).

 

[krash]

Would like to hear what @krash has to say on it.

I personally think its a great idea...but Pakistan needs to focus on improving its bureaucracy as it is (delivery efficiency and meritocracy within there for example) esp if you are going the legislation (top down) route....

By making it (bureaucracy) more lean and mean... there is better buffer for companies/corporates (esp at the more smaller and medium sizes that have a relevance/adaptability of quite important different nature to that of big beefy mini-govt corporates) to have the means to start acting more independently regarding how they can sustainably help the larger society they spring from etc (and get the long term rewards from that...that benefit them as well etc).

Leaping too early into that realm before you sort out those more crucial delivery+scope dynamics of the govt bureaucracy (and institutions)....means you potentially just adding another tool to their arsenal to burden any existing companies philanthropist intent (i.e just another kind of tax/extortion route in the hands of some bad local govt people etc).

I am not too well versed in the specifics of Pakistan regarding this....but I can say that in India its exceedingly difficult to set up an independent privately run education institution (as I have had experience in trying to get this going with few likeminded gents... but we didnt have the means/time back then given the bureaucratic red tape and BS we ran into...but still is something I look to doing at some point...hopefully when things get better)...so I can only imagine what it could be like in other such social responsibility stuff (given you start to step on toes of what some govt thugs think is purely what they should be seen doing etc).

@django @Hell hound @Major Sam @Game.Invade @Desert Fox @Psychic @farhan_9909 @Jungibaaz @waz @Arsalan @Moonlight @Joe Shearer @hellfire @Levina @nair @padamchen @WAJsal @jbgt90 @ziaulislam @VCheng @Indus Pakistan @OsmanAli98 @The Sandman @Oscar @Tps43 @Mentee @war&peace @dexter

Well said. However, I am one who is completely disillusioned by the Pakistani corporate culture and the people who run it. Our's is a country where the employer can demand from you to work 6 days out of the week, totalling at more than 70 hours while not paying you a minute in overtime. What social responsibility do you expect from these organisations?

But then there are some gems in the dirt. Cannot forget Babar Ali and LUMS. Brilliant man. Heard he also treats his employees very well.