Daily Times

ISLAMABAD: A small non-governmental organisation (NGO), Sungi Development Foundation, evaded around 34 million rupees on account of income tax during the last three years.

The government had tightened its grip on the general public particularly the poor people by imposing taxes on basic amenities but on the other hand the corporate sectors including NGOs and other institutions were averting billions of rupees income tax every year.

On every loading of Rs. 100 on mobile phones, the government taxes are Rs 24, like the charging of taxes on electricity bills. The government even charges a withholding tax on education from white collared parents of students studying abroad.

In the light of such a tight grip around the poor and the middle class, the corporate and NGO sector is trying to seek ways for tax evasion.

According to the documents available, Sungi Development Foundation enjoyed tax exemption until December 2013, but the Federal Board of Revenue (FBR) withdrew the non-profit status of this NGO, which was highlighted by audit firm M/s Ernst & Young in its management letter to the Sungi Board of Governors during the last two years.

The calculated income tax amount is about 12 million rupees per year imposed on Sungi.

Sources revealed that, instead of listening to the advice of its auditor, Ms. Humair Malik, Chairperson Sungi Development Foundation, Khalid Saleem a USAID employee who runs the NGO and Finance Director Ahmed Kamal, allegedly engaged a Chartered Accountant consultant to avert the tax but M/S Ernst & Young firm did not agree with the consultant and recommended the NGO to pay the income tax as per rules.

Sungi quietly changed its auditor to another company. Sources further revealed that the NGO had allegedly invested huge amounts of funds received from donors in a private company named Sungi Organics (Pvt.) Ltd, which is against the Societies Act 1860 under which it is registered.

The Sungi Organics is exporting its products and making millions but the management never ever bothered to recover its agreed three per cent share from the annual income of Sungi Organics (Pvt.) Ltd to cover up their own hidden interests.

When contacted, the Director Finance Sungi NGO, Syed Ahmed Kamal, said that they used to get audit of NGO affairs every year from an independent audit firm. He admitted that the audit firm had advised the NGO to pay income tax after the cancellation of tax exemption status by the FBR.

He, however, said that the management then contacted a consultant who advised it to not pay the taxes as the NGO was a non profit organisation.

It may be mentioned here that there were about 100,000 NGOs in Pakistan, and only a few of them were exempted from income tax. Even if an NGO pays 100,000 rupees income tax per year, the total amount from all the NGOs would come to around 10 billion rupees per year.

With the tightening of rules by the interior ministry to get all the NGOs registered and get their licences re-validated due to security reasons, every NGO was rushing towards the Pakistan Centre of Philanthropy (PCP) to get registrations so as to enable them to get NOCs from the Economic Affairs Division, the Ministry of Interior and the NPO status from the FBR.