Policy Issue: Tax Incentives and Barriers

For food donors, fiscal barriers, such as high transportation and storage costs are a barrier to donating to food recovery organizations. Tax regimes can play a crucial role in discouraging or incentivizing donation.

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Atlas Research: Tax Incentives and Barriers

Issue Brief

The issue brief provides an overview of various considerations for ensuring a maximally effective tax policy to enhance food donation activity, including design of incentives and how to remove potential tax barriers.

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Best Practices: Tax Incentives and Barriers

Implement a Tax Incentive for Food Donation

Include a charitable tax credit or deduction for in-kind food donation in national tax schemes, raise tax deduction caps (to exceed 10% of taxable income), and remove deduction limits.

Example Best Practice: Colombia

Ensure the Tax Scheme is Not a Barrier to Donation

Effectively exempt food donation from the value added (VAT) scheme and permit donors to reclaim the VAT credit attached to donations.

Example Best Practice: South Africa

Offer a Tax Credit Instead of a Deduction

Offer a tax credit as a supplement or alternative to tax deductions to incentivize donation among small-scale, low-margin producers and businesses, such as farmers.

Example Best Practice: Canada

Countries with Strong Policies: Tax Incentives and Barriers

Colombia

Recent tax reform in Colombia allows donors to claim a tax credit up to 25% of the value of donations made to food bank members and other organizations that promote health, environmental protection, human rights, and poverty reduction.

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Additionally, the tax scheme does not create a barrier to donation as most food items are not subject to the standard valued added tax rate of 19% and donations made to registered food banks are exempt from the tax.

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Mapping food donation policies around the world

The Atlas evaluates laws and policies across the most relevant issue areas relating to food donation and food loss and waste. Explore the map to compare and contrast existing legislation and learn from best practices around the world.

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