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Deductions for charitable donations are modest and recipients have to be approved by the state by Sriwipa Siripunyawit

Making donations to charity can not only earn spiritual merit, but can put you in a better position when tax time comes. According to the Income Tax Law, charitable donations made by individuals and companies are tax-deductible, but to a limited amount relative to many other countries. 

Donations, like other allowances, can be deducted from personal income and company net profits to ease tax burdens, But what can be deducted, and to what limit, varies under the personal and company tax regulations.

The Personal Income Tax Law states that money donated to government-owned clinics, educational institutions and groups promoting public benefits, such as charities, can be 
deducted as a donation allowance. A deduction equal to the amount donated is allowed, but it cannot exceed 10 % of all deductions, including personal expenses and other allowances.

Personal expenses can be deducted to the value of 40 % of total assessable income, but cannot exceed Baht 60,000.- for general employees. Deductions also apply for spouses, 
lawful or adopted children and children of the spouse.

The cost of insurance premiums is also tax-deductible, as are provident fund and social insurance fund contributions, among other things. 

The law clearly states that the allowed limits for deductions and calculations are based on taxpayers' assessable income. For companies, the Company Income Tax Law says money donated to charities or to public service programmes approved by the Finance Ministry is deductible up to the value of 2 % of net profits. Money paid for educational or athletics purposes, as approved by the ministry, can be deducted to the same limit.

Under the Revenue Code Amendment Decree, several charitable causes qualify, among them:
- Donations for the promotion and conservation of protected wildlife species;
- Protection and maintenance of national parks, national forests and natural environments;
- Control and prevention of danger from spreading of pollutants;
- Donations to educational institutions, libraries or research institutions;
- Educational awards or scholarships;
- Government institutions;
- Donations to the Athletic Authority of Thailand, the Physical Education Department and the Amateur Athletic Association are also tax deductible.

However, Tawee Khositjiranun, head of tax consulting at the Siam Premier International Law Office, believes the maximum allowances for charitable donations are too small to encourage individuals and companies to give.

"If individuals or companies donate more than the percentage allowed for tax deductions, they have to include the excess amount in their tax calculations", he said. "That means they have to pay tax for the amount that is already donated. And that discourages people from donating, especially big sums."

Mr. Tawee believes there are many good-hearted people willing to give to charities and says they should beoffered better tax relief than what is currently allowed. 

Bangkok Post, December 10, 2001

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