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Thursday, Oct. 13, 2011

EDITORIAL

A friendlier environment for NPOs

The tax system and the law on nonprofit organizations have been recently revised to help NPOs in tax matters. These revisions are expected to lead NPOs to expand their activities not only in usual fields such as education, culture, sports, social welfare and community building but also in the efforts to help the areas hit by the March 11 quake, tsunami and the Fukushima nuclear crisis.

There are some 43,000 officially recognized NPOs in Japan. But as of July 1, only 223 of them were eligible for tax privileges designed to lessen the tax burden of those who donate money to them. A survey shows that some 70 percent of the officially recognized NPOs face financial difficulties.

The revision of the tax system will greatly increase the incentive for people to make donations to NPOs. In the past, the donated amount was deducted from a donor's taxable income. But the revision has introduced a tax credit exemption system.

To calculate the tax credit, first the donated amount minus ¥2,000 is halved. The newly obtained amount will be deducted from the income and residential taxes that a donor has to pay. This new provision also applies to public-service foundations, educational corporations and welfare corporations.

In the past, NPOs were able to receive the tax privilege status for donors only when 20 percent or more of their revenues were from donations. But from now on, they can also receive the status if 100 or more people each donate ¥3,000 or more to them or if the prefectural governments and government-designated major cities recognize them as eligible for the status.

The easiest way to receive the tax privilege status is for NPOs and other nonprofit corporate bodies to get 100 or more people to each donate 3,000 or more to them. Many such organizations are reportedly eager to clear this rather low hurdle.

New fields were also added to the activities of officially recognized NPOs — promotion of tourism, development of agricultural and fishery villages and mountain communities, and activities specifically recognized by the prefectural governments and government-designated major cities.

It is hoped that the revisions will encourage more people to donate money to NPOs and increase the opportunities for NPOs to tackle various problems in communities in close cooperation with local residents.



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