Tax Incentives to Encourage Companies Doing Well to Donate to Charities
Ministry of FinanceSpeakers
Summary
This question concerns Ms Hazel Poa’s inquiry on whether the Government will enhance tax incentives to encourage corporate donations to charities facing fundraising difficulties. Deputy Prime Minister and Minister for Finance Heng Swee Keat replied that the current 250% tax deduction for donations to Institutions of A Public Character and corporate volunteering is high compared to other jurisdictions. He highlighted that these incentives are complemented by matching grants, though the government must balance tax benefits with the need for revenue following COVID-19's fiscal impact. Consequently, the Ministry must ensure sufficient tax revenue for recovery and spending while reviewing measures to encourage sustained charitable giving. The Government will continue to assess both tax and non-tax measures to support charities while maintaining a stable fiscal position.
Transcript
3 Ms Hazel Poa asked the Deputy Prime Minister and Minister for Finance in view of the difficulties that charities are encountering in raising funds under the current climate, whether the Ministry will enhance tax incentives to encourage companies still doing well to donate.
Mr Heng Swee Keat: The Government adopts a multi-pronged approach to encourage charitable giving from individuals and businesses. This complements Government funding and support for our charities and their beneficiaries.
Currently, the Government provides a 250% tax deduction to qualifying donations1 made to Institutions of A Public Character (IPCs). In addition, through the Business and IPC Partnership Scheme (BIPS), businesses can enjoy 250% tax deduction on wages and related expenses for corporate volunteering. Beyond tax incentives, the Government also supports charitable giving through grants that match donations raised.
The current 250% tax deduction on qualifying donations to IPCs is relatively high, compared to other jurisdictions such as Australia, Hong Kong, and United States. Companies that are doing well, and choose to give or volunteer generously, will benefit from lower taxes.
However, we must also pay attention to our fiscal position which has been weakened by the impact of COVID-19 on our economy. Hence, we have to strike a balance between granting tax benefits to encourage charitable giving, and ensuring sufficient tax revenue for our recovery and spending needs.
We will continue to review how best to encourage sustained giving through tax and non-tax measures.