Grameen Bank gets back tax exemption after 4-year hiatus
Donations to As-Sunnah Foundation also exempted from tax
The National Board of Revenue (NBR) has granted Grameen Bank a tax exemption until 2029, according to a statutory regulatory order (SRO) issued on 10 October.
Since its establishment in 1983, Grameen Bank had been receiving tax exemption benefits. However, since 2020, the bank has no longer enjoyed the facility.
"This facility came into effect from the date of issue of the order [10 October]," according to the order signed by NBR Chairman Abdur Rahman Khan.
Professor Muhammad Yunus, now chief adviser to the interim government, had served as the managing director of the bank for 28 years since its inception.
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Nur Mohammad, managing director of Grameen Bank, wrote to the NBR a few weeks ago seeking tax exemption.
The letter states that registered NGOs have been receiving tax exemptions on income generated from microcredit activities. The exemption has made a significant contribution to Grameen Bank's poverty alleviation programme, it added.
The letter further states, "Due to the outbreak of the coronavirus pandemic, there has been a slowdown in the operations of Grameen Bank's programmes. If this continues and income tax exemptions are not granted, Grameen Bank will face serious risks." It also mentions, "This will hinder the progress of poverty alleviation efforts for nearly 4 crore people from about 95 lakh landless and marginalised families in the country."
According to Grameen Bank sources, the bank is currently operating its microcredit programme in approximately 82,000 villages across the country through 2,568 branches, serving around 1.06 crore. Each year, nearly Tk25,000 crore is distributed as loans among these members. Grameen Bank's paid-up capital is approximately Tk117 crore, and 96% of the loans disbursed by the bank are successfully repaid.
The letter also states that since the government had granted Grameen Bank unconditional income tax exemptions, the bank has been providing dividends to its shareholders (the government and landless members) since 2006.
When asked why Grameen Bank had not been granted the opportunity for the past four years and what considerations led to its approval now, NBR Chairman Abdur Rahman Khan told TBS, "Other microfinance institutions in the country have also been receiving tax exemptions on their income. Although Grameen Bank carries the name 'bank,' it primarily functions as a microfinance institution. It had been receiving this benefit until 2020. Therefore, based on its request, this benefit has been granted again."
Grameen Bank has been granted exemptions on all types of income, including rental income from properties, bank interest, vehicle rentals, and other earnings.
In explanation, the NBR chairman said Grameen Bank used to receive similar exemptions in the past.
Tax exemption on As-Sunnah Foundation's donations
The NBR also granted tax exemption on donations to non-profit religious charity As-Sunnah Foundation.
According to another notification from the NBR, any donation made to the foundation through banking channels will be considered tax-exempt.
The NBR chairman said, "As-Sunnah Foundation itself has not been granted a tax exemption. Rather, those who donate to the foundation through banks will have their donations considered tax-exempt. There are a few other organisations included in this list as well."
