As noted in the Ministry of Economy, currently hospitality expenses are allowed to be deducted for tax purposes at the rate of 0.75% of gross income.
In order to deduct such expenses, Government Resolution No. 693/2018 established a laborious process of documenting actions confirming the reception of delegations. For example – the order of the head of the enterprise, issued on the basis of preliminary agreements of the parties, which specifies all the details of the organization of the visit.
The authors of the initiative note that as a result of the existing requirements, taxpayers have to spend a lot of time and effort to document such expenses in order to be able to deduct them for taxation. However, for each organized event it is necessary to draw up an order specifying the composition of the delegation, purpose, program, timing, as well as a report on the results of the visit and expenses incurred. Moreover, in some cases, members of delegations explicitly refuse to be included in the documents/lists to be drawn up, citing personal data confidentiality considerations.
Thus, amendments are proposed to simplify the procedure for documenting hospitality expenses – limiting the deduction of such expenses to 50% of the total amount spent by the taxpayer, while specifying a maximum limit of 0.75% of gross income, only on the basis of primary documents (invoice – for purchases paid with a corporate payment card).
