New Donations Law

by | Jul 29, 2021

The creation of a new digital and public donation web portal, expanding the purposes of donations and the tax benefits currently applicable to them are some of the objectives of the new donation regime proposed by the Executive. 

Last Sunday, July 25th, a new Donations Law proposed by the Executive entered Congress. Among the objectives, it seeks to favor and facilitate the collaboration of private parties in actions aimed at social welfare. To this end, the creation of a digital and public donation web portal is proposed –in line with the increasing State digitization–; the incorporation of new purposes of donations, among them, health, environmental protection, the promotion of diversity and gender equality, the development and protection of children and indigenous peoples; and the expansion of tax incentives. 

Among the proposed tax benefits, there is an exemption from donation tax, VAT and customs duties when applicable; the release of the insinuation judicial process, and the deduction of the total amount of the donation from the taxable income, subject to limits other than the Absolute Global Limit of donations. In turn, it expressly exempts from paying the rejected expense tax (40%) donations made in excess. 

The project makes these benefits applicable to first category taxpayers, to SMEs subject to the tax transparency regime, to contributors of complementary global tax and second category single tax, and even to additional taxpayers; also allowing new donation mechanisms, such as the payroll discount made directly by employers to their workers. 

It is to be expected that this initiative will achieve its objectives, favoring the collaboration of civil society and private companies “in the identification and solution of social problems, as well as in the promotion of various interests and public goods, […] particularly in sectors where, for various reasons, State policies arrive with greater difficulty ”.  

Antonia Menchaca, associate. 



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