How do I know how much I can donate?
1. Identify your annual net earnings to know how much you can donate to deduct from your taxes. This amount is the total of your income minus the expenses allowed by law.
• šExample: Individual: If your net income is $2,000,000.
• šExample: Company: If the company's net income is $10,000,000.
2. Calculate the maximum deductible percentage
Argentine law allows you to deduct up to 5% of your annual net earnings.
• For an Individual:
If your net earnings are $2,000,000, you can deduct up to:
2,000,000×0.05=100,0002,000,000 \times 0.05 = 100,0002,000,000×0.05=100,000.
That is, you can donate up to $100,000 with tax benefits.
• For a Company:
If the company's net earnings are $10,000,000, the limit is:
10,000,000×0.05=500,00010,000,000 \times 0.05 = 500,00010,000,000×0.05=500,000.
This means that the company can donate up to $500,000.
3. Make the donation
You can make the donation by bank transfer, check or cash, credit card online. Make sure you get a donation receipt issued by the exempt entity, which is essential to declare the deduction.
4. Declare the deduction in your tax
In your Income Tax return, include the amount donated as a deduction from your tax base.
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Full Example for Individual:
Annual net earnings: $2,000,000
Maximum deductible percentage: 2,000,000 × 0.05 = 100,000
2,000,000×0.05=100,000
Donation made: $50,000 (does not exceed the limit)
Taxable base before the donation: $2,000,000
Taxable base after the donation: $2,000,000 - $50,000 = $1,950,000
Tax saved: $15,000
If the rate is 30%, the savings are 50,000 × 0.30 = 15,000
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Complete Example for Company:
Annual net profits: $10,000,000
Maximum deductible percentage:
10,000,000 × 0.05 = 500,000
10,000,000×0.05=500,000
Donation made: $400,000 (within the limit)
Taxable base before the donation: $10,000,000
Taxable base after the donation: $10,000,000 - $400,000 = $9,600,000
Tax saved: $140,000
If the tax rate is 35%, the savings are 400,000 × 0.35 = 140,000
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