Signing of MOU between NCC and GCCI regarding collaboration on taxation reform that benefits non-governmental organisations in Guyana

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The National Coordinating Coalition Inc. (NCC) and the Georgetown Chamber of Commerce and Industry (GCCI) signed a memorandum of understanding concerning improved tax facilities for non-governmental organisations (NGOs) at 13:00hrs on Friday, 27th January 2017 at the GCCI office located at 156 Waterloo Street, North Cummingsburg, Georgetown, Guyana. The signing of the MoU was done by Mr. Dmitri Nicholson, Chairman of the Board of Directors, NCC and Mr. Vishnu Doerga, President, GCCI.

In 1999, USAID began supporting a core of NGOs involved in HIV/AIDS prevention, care and support activities.  These NGOs formed the NGO Coordinating Committee (NCC) (now called the National Coordinating Coalition Inc.), with responsibility for oversight and coordination as well as monitoring project results. Unfortunately over the years USAID’s financial support through the President’s Emergency Plan for AIDS Relief (PEPFAR) has decreased, which has jeopardized the sustainability of the national HIV/AIDS response.

Recognizing the unique and critical role NGOs play in complementing the national HIV response, and the need to ensure the sustainability of the NGOs and the services provided, USAID created the Guyana Civil Society Leadership (GCSL) project.  Initiated in June 2015, through a three (3) year cooperative agreement between the Volunteer Youth Corps Inc. (VYC) and USAID, one of the project’s objectives is to create an enabling environment for the National Coordinating Coalition Inc. (NCC) and its membership to sustain its health and social services in communities.

 

A pressing issue that NCC intends to focus on is the current taxation arrangement in Guyana that unfortunately does not encourage NGOs, civil society, and social entrepreneurs in economic ventures that can materially sustain the social purposes that their communities so desperately need. This position is supported by the doyen of taxation, Mr Christopher Ram who in a 6th January 2008 post on his eponymous blog explained that:

 

Despite the fact that many of these organisations are in fact doing or complementing the work of the state, they come up with one formidable hurdle which could be so easily removed by the state. The sad fact is that there is no legislative enabling environment for the promotion of civil society, while the tax laws effectively discourage giving and fundraising through creative business initiatives. Just consider how the tax laws would treat a not-for-profit entity that decides to carry on a business to raise funds to be used exclusively in financing its charitable work. The laws will treat the surplus on the business in the same way as it would any for-profit organisation, while disallowing the expenditure on the charitable activity as not being “wholly and exclusively incurred in the production of income”!

 

 

 

Accordingly, NCC and GCCI have decided to partner on addressing the lack of an institutionalised NGO regime which regulates the ecosystem of the Third Sector and hinders the ability of civil society in Guyana to attract and retain financial resources that would allow NGOs to sustain their ventures and eschew reliance on external funding. As Mr Ram clarified, the tax structure does not incentivise charitable giving since Article 35(1) of the Income Tax Act, Cap 81:01restricts taxable deductions to companies who make donations to the government for public purposes or any prescribed institution or organisation of a national or international character in Guyana or elsewhere. There are currently only six (6) such prescribed organisations, which does not include members of the NCC, GCCI, or the myriad other organisations who work assiduously without recognition or reward to improve the wider society.

 

It is anticipated that the MOU would be used as the foundation to achieve the following:

 

  1. Promoting the establishment of a legislative framework that regulates and accredits NGOs. Belize’s Non-Governmental Organisations Act, Chapter 315 could be used as a guideline for developing such a structure which recognises and normalises the relationship between NGOs and the Government as social partners. Scrutiny of the aforementioned legislation would show that apart from providing for the appointment of a Registrar and Deputy Registrar of NGOs, designation of a Ministry to coordinate the activities of and relationship between NGOs and the Government, and the maintenance of an NGO directory, there are explicit allowances for exemptions from certain taxes by NGOS, tax deductions for donations to NGOs, and engagement in commercial income-generating activities once the proceeds thereof are reinvested in the organisation.

 

  1. Using the current framework, advocating for approval or prescription under the following legislative arrangements which authorise tax exemptions:
  2. Section 7 (e) of the Corporation Tax Act by the President;
  3. Section 6 (k) of the Property Tax Act by the Minister; and

iii. Section 6 (w) of the Property Tax Act by way of a resolution of the National Assembly.

(By virtue of section 5 of the Capital Gains Tax Act the exemptions under the Property Tax Act applies to from capital gains tax as well.)

 

  • Promulgating the idea that the reformation of the tax regime will see tax relief for both individuals and companies who make donations for any charitable, social or public purpose. Stressing the concept that such contributions would enhance the ability of NGOs to continue

 

 

 

the implementation of their programmes and even lessen reliance on the State and international organisations for financial support. The advantage of legislative regularisation of fund-raising is that NGOs would have to publicly declare the sources of their funding and for what purposes the financing is to be applied.

 

One of the avenues should be the assignment of NGOs for the purposes Section 35(1) of Income Tax Act via the Income Tax (Prescribed Organisation) Regulations which will allow for tax deductible donations to the NGOs.

 

Candace Elias

 

Policy and Advocacy

 

Signing of MOU between NCC and GCCI regarding collaboration on taxation reform that benefits non-governmental organisations in Guyana

The National Coordinating Coalition Inc. (NCC) and the Georgetown Chamber of Commerce and Industry (GCCI) signed a memorandum of understanding concerning improved tax facilities for non-governmental organisations (NGOs) at 13:00hrs on Friday, 27th January 2017 at the GCCI office located at 156 Waterloo Street, North Cummingsburg, Georgetown, Guyana. The signing of the MoU was done by Mr. Dmitri Nicholson, Chairman of the Board of Directors, NCC and Mr. Vishnu Doerga, President, GCCI.

In 1999, USAID began supporting a core of NGOs involved in HIV/AIDS prevention, care and support activities.  These NGOs formed the NGO Coordinating Committee (NCC) (now called the National Coordinating Coalition Inc.), with responsibility for oversight and coordination as well as monitoring project results. Unfortunately over the years USAID’s financial support through the President’s Emergency Plan for AIDS Relief (PEPFAR) has decreased, which has jeopardized the sustainability of the national HIV/AIDS response.

Recognizing the unique and critical role NGOs play in complementing the national HIV response, and the need to ensure the sustainability of the NGOs and the services provided, USAID created the Guyana Civil Society Leadership (GCSL) project.  Initiated in June 2015, through a three (3) year cooperative agreement between the Volunteer Youth Corps Inc. (VYC) and USAID, one of the project’s objectives is to create an enabling environment for the National Coordinating Coalition Inc. (NCC) and its membership to sustain its health and social services in communities.

 

A pressing issue that NCC intends to focus on is the current taxation arrangement in Guyana that unfortunately does not encourage NGOs, civil society, and social entrepreneurs in economic ventures that can materially sustain the social purposes that their communities so desperately need. This position is supported by the doyen of taxation, Mr Christopher Ram who in a 6th January 2008 post on his eponymous blog explained that:

 

Despite the fact that many of these organisations are in fact doing or complementing the work of the state, they come up with one formidable hurdle which could be so easily removed by the state. The sad fact is that there is no legislative enabling environment for the promotion of civil society, while the tax laws effectively discourage giving and fundraising through creative business initiatives. Just consider how the tax laws would treat a not-for-profit entity that decides to carry on a business to raise funds to be used exclusively in financing its charitable work. The laws will treat the surplus on the business in the same way as it would any for-profit organisation, while disallowing the expenditure on the charitable activity as not being “wholly and exclusively incurred in the production of income”!

 

 

 

Accordingly, NCC and GCCI have decided to partner on addressing the lack of an institutionalised NGO regime which regulates the ecosystem of the Third Sector and hinders the ability of civil society in Guyana to attract and retain financial resources that would allow NGOs to sustain their ventures and eschew reliance on external funding. As Mr Ram clarified, the tax structure does not incentivise charitable giving since Article 35(1) of the Income Tax Act, Cap 81:01restricts taxable deductions to companies who make donations to the government for public purposes or any prescribed institution or organisation of a national or international character in Guyana or elsewhere. There are currently only six (6) such prescribed organisations, which does not include members of the NCC, GCCI, or the myriad other organisations who work assiduously without recognition or reward to improve the wider society.

 

It is anticipated that the MOU would be used as the foundation to achieve the following:

 

  1. Promoting the establishment of a legislative framework that regulates and accredits NGOs. Belize’s Non-Governmental Organisations Act, Chapter 315 could be used as a guideline for developing such a structure which recognises and normalises the relationship between NGOs and the Government as social partners. Scrutiny of the aforementioned legislation would show that apart from providing for the appointment of a Registrar and Deputy Registrar of NGOs, designation of a Ministry to coordinate the activities of and relationship between NGOs and the Government, and the maintenance of an NGO directory, there are explicit allowances for exemptions from certain taxes by NGOS, tax deductions for donations to NGOs, and engagement in commercial income-generating activities once the proceeds thereof are reinvested in the organisation.

 

  1. Using the current framework, advocating for approval or prescription under the following legislative arrangements which authorise tax exemptions:
  2. Section 7 (e) of the Corporation Tax Act by the President;
  3. Section 6 (k) of the Property Tax Act by the Minister; and

iii. Section 6 (w) of the Property Tax Act by way of a resolution of the National Assembly.

(By virtue of section 5 of the Capital Gains Tax Act the exemptions under the Property Tax Act applies to from capital gains tax as well.)

 

  • Promulgating the idea that the reformation of the tax regime will see tax relief for both individuals and companies who make donations for any charitable, social or public purpose. Stressing the concept that such contributions would enhance the ability of NGOs to continue

 

 

 

the implementation of their programmes and even lessen reliance on the State and international organisations for financial support. The advantage of legislative regularisation of fund-raising is that NGOs would have to publicly declare the sources of their funding and for what purposes the financing is to be applied.

 

One of the avenues should be the assignment of NGOs for the purposes Section 35(1) of Income Tax Act via the Income Tax (Prescribed Organisation) Regulations which will allow for tax deductible donations to the NGOs.

 

Candace Elias

 

Policy and Advocacy Officer

Guyana Civil Society Leadership (GCSL) Project

policy.vyc@gmail.com

227-1011-13

Officer

Guyana Civil Society Leadership (GCSL) Project

policy.vyc@gmail.com

227-1011-13