9 de September de 2024
Escrito por: Edison Sayay
Non-profit private institutions will be exempt from paying income tax, as long as they use their assets or income for specific objectives and meet up the requirements established by law.
In addition, Tax regulations establish that at least 5% of the total income must come from contributions or donations.
On September 11, 2024, the Internal Revenue Service clarified, through Circular No. NAC-DGECCGC24-00000006, what will be considered as donations and contributions for private non-profit institutions to access the Income Tax exemption:
- Donations: Donations can be made in the form of monetary contributions or legacies, (such as goods and volunteer work), from members, founders, or others, including non-reimbursable cooperation and service compensation.
- Contributions:
- Contributions include: expenses, quotas, and/or contributions made by partners, members, founders, or others, to legally established private non-profit institutions, such as those for religious worship, charity, promotion and development of women, children, and families, culture, art, education, research, health, sports, professional, union, political parties, community organizations, indigenous people, co-ops, unions, federations, confederations of co-ops, and other legally recognized associations of farmers and small producers.
- Contributions are also considered those obtained, maintained, generated, or received as income in compliance with their statutory objectives, resulting from self-management or activities carried out, measurable in cash or in kind, as long as their assets and income are allocated to their specific purposes and only to the extent that they are directly invested in them.