The Friendship Bridge

“To support friendship bridge's women's education program.”

“In june 2006, the financial accounting standards board (fasb) released fasb asc 740-10, income taxes, that provides guidance for reporting uncertainty in income taxes. For the years ended december 31, 2016 and 2015, the friendship bridge has documented its consideration of fasb asc 740-10 and concluded there is no uncertainty regarding its compliance with u.s. Tax laws. See note 8 for a discussion of income taxes accrued on revenue earned in guatemala as required under the laws of guatemala. Note 8 regarding income taxes guatemala: the friendship bridge has a branch in guatemala which is structured as a not-for-profit and does pay income taxes in guatemala (the friendship bridge started paying taxes in august 2014). Before january 2013, management believed there was no clear tax law defining the tax obligations for not-for-profit organizations providing microloans and receiving interest income. During january 2013, a new tax law was enacted and the tax obligations related to interest revenue were made clearer. However there were questions regarding the amount of taxes due on what income and whether or not a not-for-profit must also pay. On february 17, 2014, the friendship bridge presented a binding consultation to the tax administration, regarding to the specific application of the law. The tax administration replied formally in late july 2014, and indicated that based on the changes in the law (enacted in january 2013), the friendship bridge was deemed to be: (1.) exempt from income tax only on donations received and (2.) subject to tax on interest and education services, based on the fact that both fulfill the "profit" concept (as defined in the income tax law). Based on this response, the friendship bridge: (1.) added the income tax line to its corporate tax registration, without changing its corporate structure, (2.) began making monthly payments of income tax, starting in august 2014, calculated as follows: 7% over the previous month's gross interest income, and (3.) recalculated and adjusted the accrual for tax liability and late fees owed from january 2013 to july 2014. There is a possibility that the tax administration in guatemala will review the friendship bridge's tax treatment of interest received prior to july 2014 and require payment of back taxes. Management estimates that back taxes, if required, would not exceed $461,292 for the period january 2011 to july 2014. Due to the uncertainty of the applicability of the tax laws to years prior to 2013, and based on a professional opinion obtained from local professionals, the friendship bridge has not accrued this potential liability for the years 2011 - 2012; however, a reserve for taxes due during the calendar year 2013 through july 2014 totaling $274,812 has been accrued as a liability as of december 31, 2014 (no additional amounts were added to the reserve during 2015 or 2016). During the years ended december 31, 2016 and 2015, total tax payments aggregated $258,681 and $247,015, respectively. During the year 2011, the banking regulators in guatemala proposed a new regulation specifically for microfinance institutions. The main objective for the proposed regulation is to eliminate money laundering. In april 2016 the congress of the republic of guatemala approved a new microfinance law which went into effect november 2016. The law establishes three types of microfinance organizations: two regulated (mic and mac by their initials in spanish) and one non-regulated. The mic and mac require capital investments of $2m and $5m respectively, to be deposited in the central bank. Both of these types of organizations should be private with shareholders. The nonregulated organizations, such as the friendship bridge, will need to be registered in the ministry of economy and will follow a regulation that has not yet been defined.”

“Special event expenses reported as expense on the financial 19,302. Statements and netted against revenue on form 990,part viii, line 8b.”

“Special event expenses reported as expense on the financial 19,302. Statements and netted against revenue on form 990 part viii, line 8b.”