Earthquake Fund: Tax-deductible donations | L’Economiste
«One of my institutional clients has just called me to ask about the tax and accounting treatment of the donation he plans to make to the special fund for managing the effects of the earthquake», confides a chartered accountant to L’Economiste, who claims that this question is symptomatic of the questions many companies are asking themselves at the moment. This chartered accountant is not the only professional to report such questions from potential donors. What is at issue is the surge of solidarity generated by the consequences of the earthquake on the populations of the affected regions, but which is hampered by ignorance of the tax treatment of donations.
Businesses, public institutions, and state-owned enterprises, as well as individuals keeping accounts, who wish to make donations, find themselves in a wait-and-see situation. It should be noted that the Amending Finance Law no. 35-20 for 2020 had instituted a provision designed to encourage donations to fight the negative impacts of the health crisis. This is Article 247-bis-I which represents a permanent measure, even though it is included in Article III on miscellaneous provisions, which generally contain transitional provisions.
Article 247 bis-I treats sums paid in the form of contributions, gifts, or bequests on behalf of the Government by companies subject to the corporate tax or to the income tax on professional and/or agricultural income determined in accordance with the actual or simplified net income schemes as tax-deductible expenses. These amounts will be deductible over five financial years.
The same tax and accounting treatment will be applied to donations made by donors to the earthquake relief fund.
«Taking care of people left without shelter or resources, as well as rebuilding and rehabilitating disaster areas, will require the mobilization of substantial resources. And the contribution of as many people as possible is required, in particular that of the business community who could, as was the case during the Covid-19 health crisis, benefit from the deductibility of donations from taxable income by spreading them over several financial years up to a limit of 5 years, as stated in the General Code of Accounting Standards (Code Général de Normalisation Comptable., CGNC), thus mitigating the impact on their results as well as on the country’s tax revenues», emphasizes Salah Grine, chartered accountant, partner at the Al Moustachar firm. The spreading of the cost over several years is also explained by the fact that «the use of the donations and the positive impacts induced by their allocation was about to extend beyond 2020, the year of the Covid pandemic», explains the National Accounting Board (CNC) consulted by the Economic Watch Committee.
Hassan EL ARIF
