MCS Markup’s Tax Advisory Partner explains how donations can be deducted from Corporate Income Tax and the Social Contribution on Net Income
The devastating scenario in Rio Grande do Sul continues to move the entire country and mobilize Brazilians, who are maintaining the pace of donations to the thousands of people affected by the tragedy. Companies contributing to the people of Rio Grande do Sul through donations to legally constituted, non-profit civil organizations operating for the benefit of the community where they are active may deduct these donations from the calculation of Corporate Income Tax (IRPJ) and the Social Contribution on Net Income (CSLL). The deduction is permitted up to a limit of 2% of the company’s operating profit, before the calculation of this expense, and is provided for under Law 9.249/95.
For the deduction to be applicable, the company must verify certain requirements: when the donation is made in cash, it must be transferred directly to the beneficiary organization via bank account credit, the donating legal entity must maintain the donation receipt on file and available for inspection, and the beneficiary organization must be a Civil Society Organization or a Civil Society Organization of Public Interest (OSCIP).
Tax Advisory Partner at MCS Markup, Fernanda Rorato highlights that the measure may serve as an incentive for further donations at a still very delicate moment for the population of Southern Brazil:
“There are many non-profit organizations and OSCIPs in the Rio Grande do Sul region doing excellent work supporting the population, which is still very much in need of assistance. Some of our clients raised questions about the existence of legislation that would allow these donations to be deducted from the IRPJ and CSLL calculations. As this question may be common to many business owners and entrepreneurs across the country, we felt it was important to share this information”, explains Fernanda.
IN THE MEDIA
Companies contributing through donations to organizations working to minimize the effects of the tragedy in Rio Grande do Sul will be able to deduct these amounts when calculating Corporate Income Tax (IRPJ) and the Social Contribution on Net Income (CSLL). The deduction is permitted up to a limit of 2% of the company’s operating profit, before the calculation of this expense, and is provided for under Law 9.249/95. Donations to Southern Brazil may be deducted in the same month in which they are made.
Fernanda Rorato, Tax Advisory Partner at MCS Markup, a business management firm, explains that certain rules must be followed for the deduction to be correctly applied.
“When the donation is made in cash, it must be transferred directly to the beneficiary organization via bank account credit. The donating legal entity must also maintain the donation receipt on file and available for inspection. Furthermore, the beneficiary organization must be a Civil Society Organization or a Civil Society Organization of Public Interest (OSCIP)”, she explains.
In her view, the measure may serve as an incentive for further donations at a still very delicate moment for the population of Southern Brazil.
“There are many non-profit organizations and OSCIPs in the Rio Grande do Sul region doing excellent work supporting the population, which is still very much in need of assistance. Some of our clients raised questions about the existence of legislation that would allow these donations to be deducted from the IRPJ and CSLL calculations. As this question may be common to many business owners and entrepreneurs across the country, we felt it was important to share this information”, explains Fernanda.
