When the Christmas season approaches and companies are already preparing the traditional Christmas gifts to send to their clients.
A widespread practice is the gift of Christmas baskets, calendars, diaries, pens... Gifts that, apart from being pleasant for the recipient, also serve to promote the company, since they usually have advertising logos printed on them. This type of gift constitutes representation expenses , the deduction of which has been limited by the tax reform to 1% of the turnover.
And what are representation expenses? Well, all those aimed at promoting the business and reaffirming the confidence and satisfaction of the client. We are talking about hospitality phone number in philippines expenses (invitations to meals or paid stays), travel (trips), organization of corporate events, invitations to shows, leisure or wellness centers, gifts. What distinguishes representation expenses is their purpose, which is to obtain a future benefit . It would be about securing the client or getting a new one, depending on the case. It would be understood that this type of expense is necessary for consolidation and expansion of the business or to launch a new branch of activity.
These expenses must be included in a regulatory invoice in order to be deductible, apart from being able to prove that they derive from the purposes we have just explained. They would be marketing and public relations actions inserted in a business strategy. The latter is what causes most of the disputes with the Tax Agency, which could consider them as a liberality ; that is, an expense not necessary for obtaining income. In this case, it would not be deductible.