Deduction of donations and aids from the corporate tax base

The deadline for filing corporate tax returns has been extended until the end of Friday, May 5, 2023, by the Revenue Administration. Therefore, let’s continue with articles related to tax returns. Today’s topic is the deduction of donations and aids from the corporate tax base, which is a common practice.

Fields that must be completed in the tax return There are numerous lines that need to be completed in the corporate tax return regarding donations.

Companies that will deduct their donations from their corporate income must first add the total donation amount to the base, and then write the amount that can be deducted to the relevant lines, depending on where the donation was made.

If we also consider sponsorship expenses within this scope, there are six separate lines in the tax return regarding donations and aids. It is important to write the donation amount in the correct line. Attention should be paid to this matter.

Limits for the deduction of donations and aids from the tax base Depending on the area or institution to which the donation is made, there are various limits for the deduction of donations and aids from the corporate income. If we make some brief reminders for some common donations and aids, we can say the following:

• Direct donations and aids made to individuals in need cannot be deducted from the corporate income. However, donations made to exempt foundations or public benefit associations established and operating to help those in need can be deducted from the base up to five percent of the corporate income.
• Cash donations made to the Turkish Red Crescent and Turkish Green Crescent can be deducted from the base without being subject to the five percent limitation on income or corporate income.
• Donations made to exempt foundations and public benefit associations can be deducted from the base within the five percent limit of the corporate income. Donations and aids made to foundations and associations that do not have exempt foundation or public benefit association status are generally not deductible from the corporate tax base.
• The full amount of donations made to places of worship that will be constructed under the supervision and permission of the provincial administrative authority or widespread religious educational institutions under the supervision of the Presidency of Religious Affairs can be deducted from the base.
• Donations made to municipalities can be deducted from the base up to five percent of the income or gain.
• The entire cost of food, cleaning, clothing, food, and fuel materials donated to associations and foundations engaged in food banking activities can be deducted from the base.
• All kinds of cash and in-kind donations and aids made for the construction and donation of facilities, such as schools, health facilities, and student dormitories, which are listed in the law, or for the continuation of the activities of these facilities, made to public institutions and organizations can be deducted from the base.
• Is it possible to deduct donations and aids made to related parties from the corporate income? The topic is long and multifaceted, but to put it briefly, in tax practices, transactions with related parties must be the same as transactions made with unrelated institutions.

Therefore, as a general rule, when a company makes a donation to an unrelated institution, it makes deductions within certain limits. The same limits apply when a company makes a donation or aid to a related party.

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