How to handle supplier or customer gifts?

in order to ensure the commercial promotion of a business, an employer may decide to offer its main customers and suppliers goods or services to thank them for their loyalty. In the face of legal constraints, some public accountants propose a compliance audit mission to ensure that companies manage their client or supplier gifts.

Definition of a gift as a customer or supplier within the meaning of the law

The material gifts: it can be for example packed baskets (terrines, chocolates, champagnes ...), promotional items or other material goods (cars, phones ...) The immaterial gifts: it can be invitations to sporting events (tennis tournaments, introduction to golf ...), cultural (museum, galas ...), political ... or invitations to the restaurant , at a seminar organized by the company. This distinction will make it possible to assess the thresholds to be respected for the statement of overheads (see below).

Tax destructibility conditions for gifts

Regardless of the tax system of the business (income tax, or corporation tax), corporate gifts wholesale singapore made to suppliers or customers can be deducted from taxable income.

As an expense, it must meet the following fund and form conditions: 

• It must be exposed in the company's corporate interest, or be part of a normal management act.

• It must not be fictional,

• it must be supported by proof (invoice),

• it must be attached to the fiscal year for which it was incurred.

This implies that, contrary to conventional wisdom, no maximum deductible amount exists for customer or supplier gifts, as long as they meet the definition of the normal acts necessary for the good activity of the company.

The latter must only be able to justify that the gift corresponds to a normal management act, in order to retain a customer or a supplier, and that the expense is not excessive.

Here are some examples of possible justifications: 

End-of-the-year gifts as a reward for the loyalty of a customer / supplier, thank you for the contribution of a big contract. It is up to the company to provide proof of proportionality between the burden borne and the commercial advantage obtained, not to the tax authorities. Thus for security purposes, it must therefore retain all the evidence it deems necessary for this purpose (invoices, names of customers / suppliers concerned ...)

Exceptions to the right of deduction

The law expressly prohibits the deduction of expenses related to hunting and recreational fishing, as well as to sumptuary expenses (rentals of leisure villas, yacht rentals, etc.).

Statement of overhead

When the material gifts exceed the sum of 3000 Dollar TTC per year. in addition to information on gifts, it should also mention the remuneration of the top 5 or 10 employees of the company according to the total number of employees of the company (more or less than 200 employees). Regarding the intangible gifts, the threshold to be taken into account to be in the obligation to carry out the form 2067 or 2031 is 6 100 Dollar TTC per year . The thresholds must be evaluated without taking into account gifts of low value (69 $ TTC in 2019).