STA calls on govt to enhance CSR scope for timber players

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KUCHING: The Sarawak Timber Association (STA) calls on the government to look at enhancing the scope of corporate social responsibility (CSR) under the Goods and Services Tax (GST) for timber players especially in Sarawak as the sector has ‘largely’ contributed to the local communities in remote areas.

EY executive director Koh Siok Kiat (left) and Choo during a media briefing yesterday after STA’s GST seminar here.

STA and its consultants are currently in the process of drafting an appeal letter to the Ministry of Finance (MOF) requesting for an expansion of the scope of expenses for providing free supply of other social and community activities to be included in the GST.

“Back in October 2010, a five-day CSR trip was organised by STA, bringing senior advisors from the Customs Department and MOF to visit STA members’ CSR projects in Upper Kuala Baram, Miri.

“Subsequently, the former Tax Review Panel (TRP) held a meeting with STA on July 2012 and agreed that community projects undertaken by the logging companies operating in the extreme remote areas are considered CSR initiatives and are thus eligible for the input tax credit on GST incurred for such projects.

“The former TRP also agreed that these CSR projects are to be classified into four areas, namely infrastructure, environmental, heal are and education.

They also agreed that no prior approval for such CSR expenses is required to be obtained from the former TRP for the recovery of such input tax credit.

“However, in the GST Guide for Forestry Industry as at August 26, 2014, only the supply of free logs to build long houses has been considered as the social and community services to the local community,” STA honorary treasurer Philip Choo said this in his welcoming remarks during STA’s GST Seminar yesterday.

Furthermore, prior approval from the MOF is required in order to relieve companies from charging and collecting GST on the supply of free logs made to the local community before input tax incurred shall be claimable by the logging companies.

The lack of follow up on this aspect propelled Choo to meet with Deputy Finance Minister Datuk Chua Tee Yong when he was in Kuching on September 26, highlighting the matter with the minister.

Chua said to directly send the proposal for his purview.

In this proposal, STA will request for an expansion of the scope of expenses for providing free supply of other social and community activities to be included in the GST in the aforesaid four areas as agreed by the former TRP.

They also call for the input tax incurred in these areas of CSR expenses to be granted and recovered fully by the logging companies.

“STA also calls for an additional provisional sum for emergency CSR expenses without prior approval from the MOF in the event of natural disasters such as floods, landslides, fire or accidents,” he said.

“In such situations, the local communities will require immediate attention and assistance from the logging companies.” The forestry industry in Sarawak has a very distinctive and unique feature that distinguishes itself from other industry sectors, Choo affirmed, as most forestry operations are carried out in extreme remote areas that are difficult to access.

“Besides the free supply of logs, logging companies also provide other social and community services free to local communities residing within the licensed area.

This ranges from the provision of roofing sheets, plywood, sawn timber, fuel, building materials and food supplies to bigger projects such as construction of gravity feed water dam for generating electricity and clean water supplies, community halls, preschools, roads and bridges,” he added.