Corporate Social Responsibility on the Agenda

A debate has taken off in Kazakstan about a proposed law to encourage philanthropy and sponsorship. Most of the analysts interviewed by NBCentralAsia agree that despite the risk of charitable activity being used as cover for money-laundering, properly-designed legislation could increase the number of philanthropists.



On November 11, Culture and Information minister Yermuhamet Yertysbaev said a law of this kind was already being drafted. He said the legislation was needed, and said the government would use tax and other benefits to create incentives for corporate social responsibility, or CSR.



Kazakstan’s National Security Committee has raised concerns that a poorly conceived system of tax breaks could be misused to make money or even commit crime.



Pavel Kazantsev, president of the Association of Entrepreneurs in the capital Astana, believes that at heart, business is already socially responsible insofar as it provides people with jobs. But any desire to engage in more substantial philanthropic work is killed off by the taxes imposed on charitable donations.



“I’m not asking for tax breaks for my business, just not to pay tax on the money I give to charity,” said Kazantsev. “The state penalises me for my social responsibility. That’s the main reason why this law is needed.”



Kazantsev accepts that fake charities will appear that exploit the tax concessions to launder cash, but he believes cut-and-dried laws that eliminate legal loopholes will minimise that risk.



Alexander Gusinsky, a member of the Senate or upper house of the Kazak parliament, agreed that current laws make it disadvantageous to engage in charitable activity.



“There are many good-hearted people who sincerely want to make their contribution as philanthropist, but fall into the taxation trap,” he said.



Gusinsky added as a warning that the draft legislation would need to be meticulously reviewed and pruned to avoid repeating past mistakes, in which “good intentions went astray”.



Viktor Yegorov, a member of parliament’s lower house, said CSR is already a feature of big business in Kazakstan, so the new law should focus more on small and medium-sized businesses, offering them tax cuts when they spend on social programmes.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)