After the earthquake disaster, which is described as the disaster of the century that deeply affected and saddened our country, many companies and businesses provide cash and in-kind aids in order to meet the needs of the earthquake victims. The donations and aids made provide the opportunity to be shown as an expense according to the published laws. So how should it be?

The conditions regarding the status of donations and aids due to the earthquake, which were announced on the official website of the Revenue Administration, in the tax legislation, were determined quickly. We report in detail in our blog post the ability to write off donations and aids in kind and in cash in accordance with the legislation.

Matters of recording donations and aids as expenses,

With the President's decision numbered 3483 published on February 3, 2021, it was decided to carry out aid and donation campaigns under the management of AFAD for the disaster victims directly affected by earthquakes and disasters that may occur in our country.

According to Articles 89 of the Income Tax Law and Article 10 of the Corporate Tax Law initiated by the Presidency, all in-kind and cash donations made against receipt can be reflected as a deduction from the tax base of the relevant year.

The conditions for writing an expense are as follows:

•  It should be made to determined institutions and organizations. (For example: AFAD, Kızılay etc.)
•  It should be limited to the (financial) profit of the company. If the loss has occurred, the expense cannot be written off.
• The amount of donations and aids that cannot be recorded as expenses in the relevant year cannot be carried over to the next year.

Cash benefits:

•  100% of the donations made to AFAD in a way not to exceed the profit can be written off as expense.
• 100% of the donations made to the Red Crescent and Green Crescent in a way that will not exceed the profit can be written off as expense.
• Foundations and associations working for the public benefit can show the amount of donations they make as expenses, not exceeding 5% of the profit.

In-kind donations:

• In in-kind deliveries, expenses can be recorded, provided that a document is prepared regarding the content of the goods subject to donation and their receipt by the relevant institutions.

 If the company is making donations from its own resources, an invoice without VAT should be issued for these products and it should be written "VAT has not been calculated since it is donated to those in need on the condition of aid".

•  If the donated products are outsourced, the VATs charged may be subject to a discount, provided that a receipt is issued by the relevant institutions.
• If there is a monetary donation, the donation campaign must be stated on the bank receipt.

List of tax exempt foundations and associations

The list of foundations whose tax exemption is defined has been published on the website of the Revenue Administration. There is also a list of associations working in the public interest. You can find this list under the title of “Associations working for the public benefit” at siviltoplum.gov.tr.