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A New Introduced Tax – The Corporate Social Responsibility Tax (CSRT)

The Corporate Social Responsibility (CSR) Tax is widely understood to entail compliance with ethical and regulatory standards, promoting accountability for businesses’ actions that can lead to a positive impact on the communities and markets in which they operate. With the introduction of this new tax certain businesses have had some reservations about its implementation. After consultations with the business community, the Ministry of Finance, Trade and Investment after taking on board some comments of the private sector has decided to amend the provision of the law. Businesses now have two (2) choices when paying the CSR tax.

Who should pay the CSRT?
The CSRT is payable by entities which:
  • had a turnover of SR 1 million or more in 2012;
  • are not be listed in the exemption list of the second schedule of the Business Tax Act of 2009
  • do not fall in categories 2 – 6 listed in the Seventh Schedule of the Business Tax of 2009 (SI 66 of 2012)
How and when is CSRT paid?
The entities that are eligible to pay the CSR Tax do so, on a monthly basis based on their current turnover- in the same way that they are currently paying VAT. All payments must be paid by the 21st of every month using the Business Activity Statement (BAS).

What is the rate of the (CSR) Tax?
The rates of Corporate Social Responsibility (CSR) Tax effective 30 April 2013 are:

(a) 0.25% on the monthly turnover of the current year of payment; and
(b) 0.25 % offset against any donations made, sponsorships or projects paid for by the business during the current year of payment and approved by a Corporate Social Responsibility (CSR) Tax Committee; or
(c) 0.5% on the monthly tumover of the current year of payment.

Example 1: A business will pay 0.25% on its monthly turnover of SCR100,000 which will be: SCR 100,000 * 0.25% = SCR250 and make donations, sponsorships for projects of 0.25%.

Example 2: A business will pay 0.5% on its monthly turnover of SCR 100,000 which is: SCR 100,000 * 0.5% = SCR500

Example 3:
(a) A non-VAT registered entity:In June 2013, a company’s turnover is SCR 100,000. Its CSR liability will be 0.5% of SR 100,000 which is SCR 500.

(b)A VAT registered entity:In June 2013, a VAT registered company’s turnover is SCR 100,000. Then approximately SCR 15000 of the SCR 100,000 will be VAT. Its CSR liability will therefore be calculated as 0.5% of the VAT exclusive turnover which is 0.5% of SR 85000, which is SCR 425.

For more information
Please do not hesitate to contact our Advisory Centre on 4293741/4293742, Manager Provision of Advice on 4294937, Manager Registry on 4293726, Manager Returns and Payment Processing on 4294972 or Mrs Woodcock on 4293724.

Website Published Date: 29th May 2013

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