The virtue of giving back

By SENATOR MANNY VILLAR

March 17, 2011, 11:04pm

 MANILA, Philippines – Let us be reminded by the saying “Give and it shall return to you a hundred fold.”

This is the evolving concept from which the Corporate Social Responsibility (or CSR) Bill sprung — the virtue of giving back.

For the longest years, Capitalism has driven our economy. Businesses are measured by their bottom-line — whether they report a profit or a loss. In the new millennium, however, consumers, investors, and employees alike are beginning to be more discerning. They have started to judge these enterprises according to their corporate morality.

This is mainly caused by the people’s realization that everybody is intertwined. People cannot solely depend upon the government to do everything for them. Each person or entity has a role to play.

Clearly, the daunting task of bridging the gap between the haves and have-nots cannot and should not be dependent upon the government alone. People, or entities with considerable wealth should freely channel resources to an array of programs and activities that will improve the community that surrounds them.

Thus, the materialization of this bill.

We shall now outline the bill’s most significant features:

Number (1). Tax incentives.

By virtue of the CSR bill, a corporation may be given the chance to deduct reasonable CSR-related expense from its taxable income. The grant of this incentive is actually twofold. First, admittedly, there are already established corporations who involve themselves voluntarily with CSR activities.

Hence, we want to reward these philanthropic deeds. Second, we want more companies to embrace CSR. By granting an incentive, we are hopeful that more corporations will be willing to embrace CSR.

Number (2). Preferred Related Activities.

Corollary to the incentives, however, we want to ensure that there is optimal use of these funds. As such, these expenses shall be directed to related activities as provided for by law or the regulations, which should be parallel to the goals of the government.

These activities are as follows:

1. Charitable.

2. Scientific.

3. Youth and sports development.

4. Cultural or educational purpose.

5. Services to veterans and senior citizens.

6. Social welfare.

7. Environmental sustainability.

8. Health.

9. Disaster relief and assistance.

This way, the corporations’ CSR activities will in some way complement the government’s goals as delineated in whatever policy it may choose.

Number (3). Mandatory allocation of net income for CSR activities.

Also, the CSR bill makes it mandatory for “large taxpayers,” as defined by the National Internal Revenue Code and as identified by the Bureau of Internal Revenue (BIR), to allocate a reasonable percentage of their net income to CSR.

At present there are 1,376 identified large taxpayers. From these large taxpayers, the BIR collects over 60 percent of its taxes each year — this is reportedly worth P439 billion in taxes.

In recent developments, particularly, the issuance of BIR Revenue Regulations 17-2010, last Nov. 26, the BIR reported that the large taxpayer base is expected to double and is hoped to account for 80 to 85% of collections. In fact, the BIR large taxpayer service is tasked to collect P485.15 billion of the BIR's P860.4-billion goal for the year.

Therefore, we are looking at, at least 2000 large tax payer corporations mandated to involve themselves in CSR activities.

Number (4). Reporting.

Finally, this bill provides for a reporting requirement. The large taxpayers will be required to submit, as part of their annual report to the Securities and Exchange Commission (SEC), the list of activities relative to their corporate social responsibility. The SEC shall be the principal repository of all public records related to CSR.

In conclusion, the CSR bill aims to institutionalize Corporate Social Responsibility among the identified large taxpayers. Based on the assumption that these corporations are partners of the government in nation-building — the CSR activities are expected to complement the government’s goals or policies whether short-term or long-term.

On this note, we earnestly hope for the favorable action by this august body on this measure.