Should a business entity deduct gifts or donations on their income tax return?

Almost all of us love to give and receive gifts. This is because we enjoy making people feel happy. What many are unaware of, is that gifts and taxes don’t go along well.

Tax-deductible gifts, donations or works of charity are contributions in cash or kind made by corporations to government-recognized institutions such as research bodies in agriculture, health and animal husbandry.

Tax-deductible gifts and acts of liberality can reduce the taxable income for the fiscal year.

Let’s see what the Cameroon General Tax Code says about the gifts and donations when it comes to deductions to obtain the taxable income.

Anyhow, that’s now our business for now even though we can use it as a lesson. I will share with you what the Cameroon tax code says when it comes to gifts, subsidies and acts of liberality.

Tax-deductible donations or gifts

According to the General Code of Cameroon, these expenses are non-deductible from profits, though with some exceptions. Below are some of the exceptions:

• Should not exceed 0.5% of the turn-over – payments made to research and development bodies, sports, collective philanthropic works, scientific, educational, social and family institutions based in Cameroon. This shall be deductible if there is proof of payment and the amount doesn’t exceed 0.5% of the business’ turn-over. The excess amount is reinstated into the business’ profit and income tax applied.
• Should not exceed 5% of annual turn-over – donations or subsidies given to clubs in elite national competitions or organizations that are responsible for the organization of official sports competition. Just like above, the excess is reinstated in to the taxable profits of the business.
• Totally deductible – amounts granted to state or decentralized institutions for the fight against HIV / AIDS. This is also applied to grants given to authorized research and development bodies in the health, agriculture and animal husbandry sectors. Note that the research and development body must be based in Cameroon.

Tax-deductible donations during disasters

As concerns donations or gifts during disasters (natural and man-made), the sums donated shall be deducted following the conditions put in place by the Minister of Finance.

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