Donate 20% of the corporate income tax
With the update of the New Fiscal Code in 2015 by Law no. 227/2015, it provides that any company may direct 20% of the corporate income tax to an NGO that supports a social cause. But even at this moment, few managers know that they have this freedom of choice, which costs them absolutely nothing.
How to donate if pfa:
The targeting method is very simple: the company calculates the amount related to the 20% of the corporate income tax, then concludes a sponsorship contract with the supported NGO, the expenses being deductible
EXTRACTS FROM THE TAX CODE, TITLE 2, CAP. II, ART. 25, ALIN. 4, LIT. I)
(…) The taxpayers who carry out sponsorships and / or patronage acts, according to the provisions of Law no. 32/1994 regarding the sponsorship, as subsequently amended, (…) subtract from the corporate income tax due the amounts related to the minimum limit specified below:
- 5% (per thousand) to the turnover;
- 20% (percent) of the corporate income tax due.
Sponsorships can be done in money or goods
Sponsorship involves the conclusion of a contract in two copies between the sponsor and the beneficiary, with stamp and signature respectively registration number. In order for this contract to have legal value, there must be proof of the sponsorship offer / receipt.
- receipt or payment order in the case of money sponsorships.
- minutes of delivery or receipt of invoice for goods.
The sponsor will make the following accounting records:
- 6582 – “Grants and grants awarded” =…%
- 5121 – Bank (if made by transfer)
- 5311 – House (if cash payment is made)
- 6582 – “Grants and grants awarded” = 3XX (if sponsorship is done in products)
What are the benefits?
At the micro level, the company that chooses to direct 20% of the corporate income tax to an NGO that supports a social cause benefits from the following advantages:
- the freedom to choose the destination of an amount that, under other conditions, would reach the state anyway;
- contribution to a noble cause through a 100% transparent procedure, without any expense.
At the macro level, the contribution of each company to this program would make a significant progress in solving and preventing social problems.
Accounting record of sponsorships:
Sponsorship in money or goods will be recorded in the accounting records of the sponsor and the beneficiary of the sponsorship, if by law they have the obligation to organize and manage their own accounting, based on the documents attesting the payment or the delivery of the goods respectively.
In the case of goods, they are evaluated as follows:
- at the sponsor’s sale price, excluding VAT, if the goods are produced by the sponsor;
- at the purchase price on the market, excluding VAT, if the sponsor only sells those goods, a fact proved on the basis of the purchase tax invoice;
- at the customs value of the goods received as sponsorship from abroad.