Government must improve tax relief and associated support, including Value Added Tax relief for non-government organisations (NGOs) to give them more resources to partner with Government in dealing with poverty and welfare issues, states the Fiscal Review Committee.
The committee states a review of the Income Tax and VAT status of NGOs committed to social services must be undertaken.
“Tax law changes in 2016 brought into the tax net some income (eg investments, rent, etc) of organisations designated as charities, on the basis that this income was earned ‘in competition’ with for-profit organisations and a level playing field was required,” stated the committee.
“This deprives effective charities of funds which they can effectively use on the ground, particularly in periods of high need.
“It also discourages NGOs from investing appropriately to ensure that they have a consistent and sustainable source of independent funding.”
“The Government and FRCS should review the current policy to ensure that charities are able to retain more of their investment income, perhaps on the basis that if it can be shown that the investment income has been spent on core activities, tax relief should be available.
“Charitable organisations must be able to recover VAT paid on food and other goods purchased for distribution and support to poor families.”
