Did you know that the income tax declaration can be a solidary act? The Brazilian legislation allows that, instead of paying the entire income tax to the government, companies and individuals can allocate part of the value to projects in the sectors of culture, sports, social assistance (children, adolescents and the elderly) and health. This is due to the so-called “tax incentive laws”.
It is as if the government gave up receiving part of the money so that society could put it directly into civil society projects and organizations. Thus allowing them to receive greater support for their projects.
“This is an initiative at no cost to taxpayers, who can exercise the power of choice and choose to direct the tax to contribute decisively to the maintenance of various social projects. The potential for donations is enormous, mainly from companies. Our role is to raise the awareness of as many people as possible and make a difference in the lives of so many others”, emphasizes Daniela Balbina Marra, controller of the Ramacrisna Institute.
According to Revenue data, less than 3% of taxpayers make donations with Income Tax, the main reason for this being lack of information. The total amount available in 2022 for allocation directly to the individual income tax return program was approximately BRL 9.64 billion. Of the R$ 4.82 billion available for childhood and adolescence funds, only R$ 143 million were allocated, that is, close to 3%. Of this same amount available for elderly rights funds, the amount was even smaller: R$ 78 million, representing about 1.6%.
In Minas Gerais, the collection potential of taxpayers residing in the State was more than R$ 800 million. The amount raised in the declarations, however, was less than R$ 17 million for childhood and adolescence funds and just over R$ 10 million for elderly rights funds.
Know how it works
A company that wants to allocate part of its taxes to social projects needs, first, to be taxed on real profit. Thus, it can be redirected specifically to projects of 5 different federal incentive laws (Federal Culture Law, Federal Sports Law, Audiovisual Law, Fund for the Elderly and Fund for the Rights of Children and Adolescents).
With Law 12,594/2012, the limit for allocation made by legal entities is now 1% for each of the funds, provided that they are taxed based on taxable income and allocated during the calendar year. The amount donated cannot be declared as a company operating expense.
At the end of the statement, two DARF’s (Federal Revenue Collection Document) are generated. One of them refers to the discharge of the first installment or single installment of the IR due and the other is the proof of donation to the beneficiary institution. In order for the donation to be duly declared and deducted from the amount, the taxpayer must pay the documents by the deadline for submitting the income tax return. Otherwise, you will be obliged to refund the amount donated.
For individuals, the limit donation value is up to 6%, in case the person decides to make these donations throughout the year. When deciding to donate at the time of declaration, it is necessary, however, to respect the limit value of 3% of the income tax due. First of all, the person needs to declare their Income Tax (IRPF) by the complete model so that this is possible.
Good examples
The Ramacrisna Institute received in the last year (2021) the amount of BRL 670,000, coming from donations from individuals and companies, which were allocated to 4 art, culture, education and sports projects. The expectation is that this number will grow by 10% in 2022. “When you make a donation, the taxpayer is also promoting local development, as the resources are used to purchase products and hire personnel and services. In addition, the allocations made by those who live in large centers and more developed regions to funds in cities with lower indicators, collaborate to reduce regional inequalities in our country”, evaluates Daniela Marra.
Companies such as Essencis, which is in the field of sustainable technologies for the treatment, recovery and disposal of waste, has been donating to the Fund for the Rights of Children and Adolescents (FDCA) for over 2 years, as part of its corporate governance goals. The money donated goes to the Ramacrisna Young Orchestra, one of the main projects of the Institute. Students arrive at the project with little or no knowledge in the area. Then, they go through the lessons of the chosen instrument and the teaching of music theory.
“We are very concerned about choosing partners that truly transform the community through structured projects and that are serious institutions, with transparent management and the capacity to operate in a network with other initiatives”, emphasized the Communication and Socio-Environmental Responsibility analyst at Essencis , Fred Mendes.
