Following the earthquakes centered in Kahramanmaraş Pazarcık and Elbistan, 11 provinces were declared disaster zones. After the heavy loss of life and the collapse of many buildings, numerous aid shipments and donations arrived from across the country and abroad to assist recovery efforts.
Both individuals and organizations participated actively in the relief campaigns launched after the quake. After several companies announced donations amounting to billions of Turkish lira, questions arose about the tax treatment of those contributions. Claims that companies were donating primarily to reduce taxes also became a subject of debate.
What is the tax treatment of cash donations and aid?
Under current practice, the relevant provisions of the Income Tax Law and the Corporate Tax Law state that in campaigns initiated by the President, cash or in-kind donations made against receipts are fully deductible when determining the taxable base for the relevant tax year.
Cash donations and aid made to accounts announced by the Disaster and Emergency Management Authority (AFAD) for those affected by the earthquake can be deducted by both income and corporate taxpayers. Similarly, donations to accounts announced by the Turkish Red Crescent (Türk Kızılay) qualify for the same treatment. Receipts or transaction records are sufficient documentation for claiming the deduction.
What about in-kind donations and aid?
A similar approach applies to in-kind donations after the earthquake. In addition to being deductible from the tax base, such donations are exempt from VAT calculation, and VAT incurred on donated goods can be claimed as a deduction by businesses.
The method applied for both cash and in-kind donations under this scope is treated as a tax base (matrah) reduction. A key requirement is that the donations must be made to AFAD or to accounts declared by Türk Kızılay. In-kind donations may be made directly to AFAD or to public institutions and organizations designated by AFAD. These provisions are set out in the relevant articles of the Corporate Tax Law and the Income Tax Law, allowing eligible entities that donate for earthquake relief to benefit from the tax base reduction.
Legal references
Relevant provisions include the Income Tax Law (Article 89), the Corporate Tax Law (Article 10), and the Presidential Decision numbered 3483, which regulate the tax treatment of donations and aid in disaster campaigns.