Advantages and Disadvantages of the Six Methods of Tax Treatment of Corporate Donations: A Theoretical Study of Intellectual Enrichment in the Fields of Taxation and CSR

Younis A. Battal Saleh

International Journal of Finance, Insurance and Risk Management, 2021, vol. 11, issue 4, 120-144

Abstract: Purpose: The objective of this paper is to determine the advantages and disadvantages of possible methods of tax treatment for corporate donations. This theoretical study identified six methods of tax treatment of corporate monetary and in-kind donations that can be adopted by legislative bodies and which stem mainly from six logical visions to explain the meaning and connotation of the term corporate donations. Design/Approach/Methodology: In order to determine the advantages, and disadvantages of these methods, the researcher was obliged to develop three basic criteria that can be used in determining the advantages, and disadvantages of each method. Those criteria are, Legal imbalance, economic impact, the extent to which the tax treatment is consistent with the content of the CSR idea. This study also indicated the importance of harmonizing the tax treatment with the prevailing economic, social, and cultural conditions in society. Findings: All tax treatment methods have disadvantages and advantages, but to varying degrees. Originality/Value: Through this diversity of tax treatment methods - and the advantages and disadvantages associated with these methods, legislative bodies in all countries of the world can evaluate the methods used in tax treatment that they adopt as one of the components of corporate income tax laws in those countries, and also provide an opportunity for those authorities to choose the appropriate tax treatment method that is compatible with the prevailing economic conditions in those countries.

Keywords: Corporate Social Responsibility; Corporate Philanthropy; Legislative Bodies; Visions and Perceptions; Tax Treatment Methods; Tax Incentives; Advantages and Disadvantages. (search for similar items in EconPapers)
JEL-codes: H71 M14 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ers:ijfirm:v:11:y:2021:i:4:p:120-144

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