Friday, April 15, 2022

Sponsorship expenditures, donations and aids of corporate taxpayers (Commissioned and Joint Stock Companies) in Turkey will be considered as a discount in determining the corporate tax base within the framework of the explanations below.

In case the donations and aids are not made in cash, the cost value or the recorded value of the donated goods or rights, and if this value is not available, the value to be determined by the Valuation commissions in accordance with the Tax provisions. The Procedural Law is based.

Sponsorship expenditures, donations and aids made by institutions are recorded as expenses in the accounting records at the time of expenditure or donations and aids. It is then shown as sponsorship expenditure in the Corporate Tax return.

Sponsorship expenses

Sponsorship expenditures within the scope of the Law No. 3289 on the Organization and Duties of the General Directorate of Youth and Sports and the Law No. 3813 on the Establishment and Duties of the Turkish Football Federation; In determining the corporate tax base, the declared corporate income can be deducted for amateur sports branches determined in accordance with the aforementioned laws, and 50% for professional sports branches.

Sponsorship expenses are expenses that are not directly related to commercial income or that cannot be measured with commercial income, have a social purpose and differ from advertising expenses that are directly related to commercial income.

Provided that the name of the sponsoring organization is stated,

Field, hall or facility rental fees for official sports organizations, Subsistence, travel and residence expenses of the athletes,
Cost of sports equipment, expenses in kind and in cash for sports facilities approved by the General Directorate of Youth and Sports, Testimonial fees for the transfer of athletes,
Cash and in-kind premium payments to athletes or athletes according to the results of sports competitions

Such expenditures will be considered as sponsorship expenditures.

Expenditures that provide direct commercial benefit such as placing emblems, brands, names and similar signs on sports fields, sportswear, and that will provide and aim to promote the institution in the virtual environment with the help of written or electronic signals are considered as sports equipment advertising expenditures of the institution or athletes or other interested parties. For this reason, it is important to evaluate whether the expenditure falls within the scope of advertising expenditure within the scope of the regulation.

In addition to sponsorship activities, it is possible to separate the expenditures made for advertising and promotion activities as advertising and sponsorship expenditures in accordance with their precedents and specified in the contract. For example, if an athlete transfers an athlete to a club by paying the transfer fee and uses it in advertisements to promote the company or its products, expenses related to advertising activity will be considered as advertising expenses according to the contract and their peers. .

The procedures and principles regarding the sponsorship application are regulated in the Regulation of the General Directorate of Youth and Sports Sponsorships published in the Official Gazette dated 16/6/2004 and numbered 25494.

According to Article 8 of the Regulation, a written contract must be signed between the sponsor and the sponsor, which includes the rights and obligations of both parties, and the person, institution or organization receiving the sponsorship service is authorized to make a contract with the sponsorship. The information that should be included in the contract to be made is specified in the aforementioned article.

There is no special regulation that the supports given in kind or in cash to the persons, institutions and organizations receiving the sponsorship service must be bound to the documents prepared in accordance with the Tax Procedure Law.

In Article 4 of the aforementioned Regulation, “document” is the document regarding sponsorship and advertising services and transactions; “cash support”, monetary payment made by the sponsor to the sponsor; “support in kind” is defined as the expenditure related to the purchase of goods and services made by the sponsor related to the sponsorship business.

In the 12th article of the regulation, it is stated that the sponsorship fee incurred in connection with the service and work subject to the sponsorship can be spent by the sponsor himself or it can be deposited into the account of the sponsor; It has been stated that the provisions of the legislation to which the sponsor is subject will be applied for the expenditures related to this amount, which is recorded as income by the sponsor.

In the event that the sponsors provide cash support to the persons, institutions and organizations receiving the sponsorship service and this support is deposited into a bank account opened on behalf of the service recipients, the receipt or receipt to be given by the banks for the amounts deposited to the sponsors should be accepted as the supporting document of the donation. However, a statement stating that the money has been deposited “for sponsorship purposes” must be included in the bank statement or receipt.

The said cash support; If it is delivered in cash to the recipients of sponsorship service, the receipt to be issued by the people, institutions and organizations receiving the service can be accepted as a supporting document regarding the donation.

On the other hand, if the support is made in kind, not in cash;

Issuing invoices for the delivered values, in case the support made in kind from the assets of the enterprise is delivered to the persons, institutions and organizations receiving the sponsorship service; Include in the invoice information that the delivery is for sponsorship purposes, leaving no room for doubt, regarding the type, type and amount of the delivered values; the invoice is issued on behalf of the service recipients; the back of the invoice must be signed by the service recipients or their legal representatives,

In case the in-kind values are donated to the recipients of sponsorship services by the taxpayers from outside, the receipt of receipt is issued for these values to be received by the service recipients and the values, type, quantities, number, etc. of the donated assets are specified in the receipt. matters are included in a way that leaves no room for doubt.

is essential.

In addition, the back side of the invoices issued on behalf of the taxpayers regarding the donated values ​​must be signed by the person or legal representatives who receive the service within the aforementioned explanations.

However, it is not possible for taxpayers to consider donations or aids made without a receipt as a discount.

Expenditures made in cash or in kind within the scope of the Sponsorship Regulation may be considered as a deduction by corporate taxpayers in the year in which the expenditure is made.

There is no obligation to submit any documents attached to the aforementioned declarations for the reduction of sponsorship expenditures, the scope of which is stated above.
Real and legal persons cannot be sponsors indefinitely; they should not have any tax liabilities. For this reason, in order for institutions to become sponsors, they must apply to the tax office to which they are affiliated, receive a letter stating that they do not owe any tax, and submit a copy of the sponsorship agreement to the relevant tax office.

In case the sponsors do not pay the tax debts accrued during the sponsored periods, the relevant tax office will immediately notify the situation to the Provincial Directorate of Youth and Sports with a letter.

 

 

Disclaimer: The information in this article is provided for general information purposes only. It is not intended for a professional informational purpose specific to a person or institution. Although it is similar to the subject, each business may have different situations due to its own special conditions. For this reason, it is in your best interest to consult an expert before taking any decision that will affect your business based on the information provided in this article. Karen Audit or any of the persons or institutions it is associated with is not responsible for any loss or damage that may arise as a result of the use of the information contained in this document by private or official, real or legal persons, institutions and organizations.