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Food banking is a donation method that allows commercial firms to record their donations (food, clothing, heating materials, cleaning supplies) as expenses, thereby qualifying for tax deductions. These donations are delivered free of charge to those in need.

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We ensure that the activities we carry out under our "Non-Profit Association" status yield beneficial results for the community. With this practice, we contribute to the formation of social awareness regarding the prevention of waste, taking a significant step towards achieving social justice.

Under the Food Banking initiative, primarily in Turkey and across our region, we can meet various needs of our brothers and sisters living there, and together we can improve the harsh conditions they face during the winter.

Donations Under the Food Banking Initiative

I. Goods Subject to Donation and the Nature of the Donation

Donations made under the Food Banking initiative must consist of food, cleaning supplies, clothing, and heating materials. The donations must be made unconditionally (to be distributed free of charge to those in need).

Products that do not fall under the categories of food, cleaning supplies, clothing, and heating materials are not considered donations under the Food Banking initiative.

The bylaws or charter of the association or foundation that will accept the donation must include provisions for providing food, cleaning supplies, clothing, and heating materials to those in need. However, the fact that the association or foundation also engages in activities in other areas does not have any practical importance in terms of whether it is a non-profit association or a tax-exempt foundation.

II. Tax Advantages Provided to Taxable Donors by Income and Corporate Taxes

Recording Expenses for Commercial Businesses: When goods (food, cleaning supplies, clothing, and heating materials) included in a commercial business are donated, the cost of these goods is recorded as an expense under Article 40 of the Income Tax Law. This process is carried out by also recording the invoice as an expense.
VAT Exemption: Donations made under the Food Banking initiative are exempt from Value Added Tax (VAT) according to Article 17/2-b of Law No. 3065. VAT taxpayers will declare the total amount of donations made during a tax period by including it in lines 6 and 7 of the relevant period's tax return.

According to Articles 30/a and 32 of the same Law, the Value Added Tax (VAT) amount included in the partial exemption delivery (donations of food, cleaning supplies, clothing, and heating materials) can be deducted from the purchase documents of goods and services subject to donation or from the VAT included in the costs of these goods and services, as per the provision added to the article by Law No. 7104 effective from January 1, 2019, under paragraph 17/2-b of the VAT Law.
Recording Donations Not Included in Business Operations: If the donated food, cleaning supplies, clothing, and heating materials are not included in the business operations, the cost of the donated goods will be recorded in the section related to donations and assistance in the annual tax return, under Article 89 of the Income Tax Law and Article 8/1 of the Corporate Tax Law, and will be considered as a deduction in determining the taxable income.

III. Documentation to be Prepared by the Donor

Under the provision added to Article 40 of the Income Tax Procedure Code (GVK), donations that qualify for deductions must be documented with an invoice, even if the value of the donated goods is below the invoice issuance threshold specified in Article 232 of the Tax Procedure Code (VUK). (Handwritten cash receipts are not accepted.)

The invoice, which must contain complete information about the donated goods, will be issued in the name of the association or foundation receiving the donation. The cost of the goods, excluding VAT, will be listed as the value of the donated items on the invoice. Additionally, a waybill will be prepared for transportation purposes.

The person or institution making the donation is not required to be engaged in the trade of food, cleaning supplies, clothing, and heating materials. Even if the donor does not trade the products in question (for example, an electronics retailer, a pharmacist, etc.), they can still donate (food, cleaning supplies, clothing, and heating materials) under the Food Banking initiative.

In similar situations:

The purchase invoice for the donated materials will be issued in the name of the donor.
The donor will issue their own invoice for the same materials in the name of the association or foundation to which they are donating, in accordance with the format mentioned above.

IV. Documentation to be Prepared by Associations and Foundations

Associations and foundations will prepare the documents required by their own regulations and provide a copy to the donors.

Invoices prepared by those engaged in commercial activities will be retained by the associations and foundations.

V. Bookkeeping, VAT Exemption, and Reporting in Tax Returns

When goods (food, cleaning supplies, clothing, and heating materials) included in a commercial business are donated, the cost of these goods is recorded as an expense by businesses subject to income tax and corporate tax, under Article 40/10 of the Income Tax Procedure Code (GVK). This process is carried out by recording the invoice as both an expense and revenue.

VAT taxpayers will report the total amount of donations made during a tax period in the "Exceptions - Other Refund Generating Transactions" section of the relevant period's tax return, specifically in the "Partial Exemption Scope Transactions" table under the row "229 - Food, Cleaning Supplies, Clothing, and Heating Materials Donated to Associations and Foundations Engaged in Food Banking Activities." The VAT charged line refers to the VAT paid by the donor when purchasing the donated goods. Since the VAT paid upon purchase is not subject to refund, this line can also be reported as zero.

Tax Rulings Before and After January 1, 2019:

Before January 1, 2019: Since donations were exempt from tax, the value-added tax (VAT) shown in the purchase documents or included in the cost of these goods and services cannot be deducted. It is not possible to deduct the VAT amount included in the partial exemption delivery. The undeductible VAT can be recorded as an expense or cost according to Article 58 of the VAT Law. Therefore, in the period when the donation is made, the VAT amount incurred due to the acquisition of the donated goods must be calculated and included in the VAT return for the same period. The same amount should then be deducted from the "Deductible VAT" accounts and transferred to the expense accounts.
After January 1, 2019: According to the provision added to the article by Law No. 7104 (the provision in parentheses in Article 30/a of the VAT Law was added by Article 9 of Law No. 7104, published in the Official Gazette No. 30383 on April 6, 2018, and came into effect on January 1, 2019), the value-added tax (VAT) shown in the purchase documents or included in the cost of goods and services subject to donation under paragraph 17/2-b of the VAT Law can be deducted.

If the donated food, cleaning supplies, clothing, and heating materials are not included in the business operations, the cost of these goods will be recorded in the section related to donations and assistance in the annual tax return, under Article 89/6 of the Income Tax Procedure Code (GVK) and Article 8/1 of the Corporate Tax Law (KVK), and will be considered as a deduction in determining the taxable income.

Examples

Mr. A, a Trader in Food Banking Materials:
- When Mr. A, who trades in materials covered by food banking (food, cleaning supplies, clothing, and heating materials), wants to donate rice from his stock:
  - He issues a sales invoice based on the cost price of the rice.
  - He writes the phrase "This is donated to help those in need and is therefore exempt from VAT" on the invoice and issues it to the foundation/association without calculating VAT.
  - Based on this invoice, the relevant aid organization issues its own donation receipt in the name of the donor.
Mr. B, Not a Trader in Food Banking Materials:
- When Mr. B, who does not trade in materials covered by food banking (food, cleaning supplies, clothing, and heating materials), wants to donate rice he has purchased:
  - The company from which Mr. B purchases the rice issues the invoice in the name of the donor.
  - The donor uses their own invoice to issue a new invoice for the rice in the name of the foundation/association. The invoice must include the phrase "This is donated to help those in need and is therefore exempt from VAT."
  - Based on this donation invoice, the association/foundation issues its own donation receipt in the name of the donor individual/company.