Companies to be encouraged to give small percentage of their profits to good causes
Incentives and write-offs on offer to support charities through corporate social responsibility programmes, as official says ‘It’s time to pay back something’
Companies are to be offered government guidance on how to kick-start corporate social responsibility programmes, building the nation’s spirit of philanthropy and marking the UAE Year of Giving.
The percentage of business profits to be earmarked for charity will be announced by the year’s end, but one senior government official said it was time companies taking advantage of the UAE’s tax haven status “pay back something”.
Donations will not be mandatory, said Ahmad Julfar, director-general of the Community Development Authority, which is among the government organisations that have made recommendations to federal authorities on the subject.
“The CDA will have a role in implementation in Dubai. In Abu Dhabi and other emirates, there will be other authorities that will establish the criteria of the CSR initiatives, find opportunities and measure the quality of activities,” he said.
“We have recommended to the ministry that companies should contribute to CSR because the UAE is a tax haven. There are many benefits to businesses here, so it’s time they pay back something.”
Companies will be offered incentives and write-offs for supporting plans identified by the Government and the percentage of the donation could depend on the size of the business, he said.
“It will be a benefit for companies because the more they do for society, they will be rewarded. It could be concessions or reduction of government fees depending on how much the company has contributed,” Mr Julfar said.
“This is being studied on how it will be applied to private, public, family, big and small companies,” he said.
A website showing projects and plans will be launched by the CDA by the end of the year to help companies choose where to direct their donations.
“We are creating a platform so people can go to a portal to see the CSR opportunities available in the social services sector and pick what they want to participate in. They will also know what it will cost them. We will update the portal so companies can see what has been achieved and report back to their board – there will be complete transparency,” he said.
The CDA hoped companies would donate time and money.
“We want them to be active in this space. We appreciate monetary contributions, but we would like the whole business community to participate. There are a good number of people already spending a lot on CSR, but they have not been recognised yet.
“We don’t want it to be limited to just a few and we would like the businesspeople who give to be known for their efforts. We want to make the system rewarding,” Mr Julfar said.
The UAE has a long tradition of philanthropy, with organisations called on to take part in several recent initiatives.
A food bank project was launched in April and takes excess food from hotels, restaurants and shops to labourers and low-income families. The aim of the bank is to reduce food waste and provide for the underprivileged.
The Ministry of Economy identified CSR as part of the Year of Giving, aiming to instil a culture across industries to commit funds to philanthropy.
In June, the ministry held its first annual corporate social responsibility event for Zayed Humanitarian Day and revealed government plans to build a database and monitor compliance with policies that include charitable work as part of a company’s social responsibility.
Even as the Ministry of Economy is modifying laws to introduce voluntarily corporate giving, in India it is mandatory for firms to give two per cent of their profits to charity.
Two years ago, India became the first country to require large companies to donate to charities. Businesses with revenue of more than 10 billion rupees must give 2 per cent of their profit to charity every year.
Mr Julfar said: “Social clubs have been in Dubai from the 1950s and they have played a big role. The India Social Club has thousands of members, has built two schools and is a good gathering point for the whole community. Other clubs have also helped their community, but here it is part of the culture.”
Volunteers distribute water to labourers living in the Satwa neighbourhood of Dubai