What is the objective of the Law of Cultural Donations?

What is the objective of the Law of Cultural Donations?
Encourage private investment in artistic-cultural projects and donations for cultural purposes. The law contemplates benefits and tax credits for donors, as long as they are within the taxpayers indicated in its text.

Who can donate and benefit from the benefits of the law?
Previously, only companies with profits and taxpayers of the complementary global tax could use the law. With the change, other contributors may be donors.

Taxpayers who can take advantage of the tax benefits of the law are:

  • First Category Income Taxpayers who declare income through full accounting (in general, companies), and who have profits (taxpayers under presumed income are excluded).
  • To these, are added:
  • First category taxpayers with tax loss for the year.
  • Complementary Global Tax Payers,
  • Taxpayers of the Second Category Single Tax (dependent workers),
  • Taxpayers of the Additional Tax (taxpayers domiciled outside of Chile),
  • Taxpayers of the Assignment Tax due to death of Law No. 16,271, on Inheritance Tax, assignments and donations.

 

What companies are expressly excluded from having the tax benefit?
State companies can donate and those in which the State, its agencies or companies and the municipalities have a stake or interest greater than 50% of the capital, but the inadmissibility of the tax benefit is maintained when they are donors.

Who can receive these types of donations?

  • State and private universities and professional institutes, recognized by the State.
  • Libraries open to the general public or the entities that administer them.
  • Non-profit corporations and foundations.
  • Functional community organizations constituted in accordance with Law No. 19,418, which establishes norms on neighborhood councils and community organizations.
  • Public interest organizations regulated by Law No. 20,500, whose purpose is the research, development and dissemination of culture and art.
  • State and municipal museums, as well as private museums that are open to the public and that are owned and administered by non-profit entities or legal persons.
  • The Council of National Monumentsand the Directorate of Libraries, Archives and Museums.
  • The owners of properties that have been declared a national monument, whether public or private.
  • The owners of the properties of historical conservation.
  • The owners of properties that are located in sectors or sites published on the world heritage list, which is drawn up by Unesco.
  • Non-profit corporations and foundations, functional community organizations, regulated by Law No. 19,418 and public interest organizations regulated by Law No. 20,500, municipalities and other State bodies, provided they present a restoration project and conservation of typical areas and historical conservation areas.

Can you only make money donations?
No, the law also allows donations in kind, both tangible and intangible (provision of services, for example). Donations in kind are not taxed with VAT.

In cases where the donation is made by an Additional Tax payer, the donation in kind has no tax benefit for the donor or for the recipient.

What is the Private Cultural Donations Qualifying Committee?
It is an instance in charge of evaluating, authorizing and issuing donation certificates to institutions that have presented projects that are the object of cultural donations.

This committee is made up of: the Minister President of the National Council of Culture and the Arts or his representative; a representative of the Minister of Finance; a representative of the Senate, appointed by two thirds of the senators in office; a representative of the Chamber of Deputies, appointed by two thirds of the deputies in office; a representative of the Confederation of Production and Commerce; two representatives of cultural, artistic, urban planning or architecture and patrimonial organizations, and one recipient of the National Prize for Plastic Arts, Musical Arts, Performing Arts or Literature. The Qualifying Committee of Private Donations is chaired by the minister president of the National Council of Culture and the Arts or his representative,

What is a project?
It is the plan or program of specific cultural or artistic activities that the beneficiary or beneficiaries intend to carry out within a specified time.

The project must be presented to the Executive Secretariat of the Cultural Donations Qualifying Committee, specifying the name of the beneficiary, the objectives of the organization and a review of its activities.

The projects must contain a detailed explanation of the activities and the acquisitions and expenses that they will require.

How does the Internal Revenue Service find out about the beneficiaries of the tax credit?
The Committee must send the Internal Revenue Service, before January 31 of each year, in the manner determined by it, a list of the beneficiaries and projects approved in the previous calendar year.

Does the approval of my project by the Grant Qualifying Committee guarantee the obtaining of funds?
No, it only guarantees that the project can receive donations, so now you must find interested donors who want to finance the initiative under the  Law of Cultural Donations .

Are there any restrictions on the use of donation money?
Yes, the monies should only be destined to:

  • Acquisition of tangible assets intended to carry out the proposed activities.
  • To the payment of expenses necessary to carry out the activities included in the project.
  • The operation of the beneficiary institution.

 

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