Tax Limitations – Some Give Quietly, Some Loudly, but Everyone Would Give Even More

Many Croatian companies consider corporate social responsibility (CSR), especially donations for those in greatest need or for projects that change society for the better, an integral part of their business. For Atlantic Group, Adris, T-HT, Croatian Post, Enna Group, Konzum, and other companies that we could not cover in this story, donations are an obligation to return at least part of the profit they earn in the domestic market to the community in which they operate and of which they are a part. For some, even disclosing information about whom and how they allocate these donations is a matter of almost sensitive nature, something they do not push to the forefront, something that does not earn them public points because they do it quietly, while for others it is a matter of pride, even a more elevated mission, so they have raised the entire story about donations to a higher level with their own foundations that significantly change society and individuals for the better.

The Corporate Income Tax Act also encourages this, regulating donation issues for cultural, scientific, humanitarian, sports, and other public benefit purposes. It states that up to two percent of revenue earned in the previous year is considered a tax-deductible expense if it is the amount of donations. If the percentage were higher, donations would be more generous, companies say.

COVID-19 Dominates

Atlantic Group is one of the companies that do not talk about donations and how they allocate them because they believe that the position of those to whom they donate is sensitive and that their goal is not to highlight themselves or the company through these activities.

– Exceptions are possible if it concerns activities important for society, when information in the public can help the wider community get involved in assistance. However, active communication is not the focus even this year, when we were exceptionally active in supporting the fight against the spread of COVID-19. Donations totaling 28 million kuna to local headquarters and health institutions in regional countries, where we mostly operate, were a significant item in the company’s overall budget this year, and will likely dominate next year as well – said Neven Vranković, Vice President of Atlantic Group for Corporate Activities, emphasizing that he believes most companies do not invest in the community to gain direct benefits from it.

Impact on Lives

Corporate social responsibility of Adris Group hardly needs special introduction. This company has been proving its social responsibility and commitment to the common good for years through numerous activities and projects, of which the Adris Foundation is certainly the most well-known. It is, they say from the company, focused on promoting knowledge and discovery and solidarity in Croatian society. Since its establishment in 2007, it has allocated more than fifty million kuna for projects and individuals that promote innovation, creativity, scientific development, preservation of Croatian natural and cultural heritage, and goodness and solidarity in Croatian society.

Particularly noteworthy are donations to hospitals, clinical hospital centers, and institutes for important scientific research projects in the field of medical sciences aimed at improving and protecting health and preventing diseases. Nearly 350 scholarships have also been awarded to outstanding students, undergraduate and graduate students, participants in postgraduate professional and scientific training, and doctoral studies. It is difficult to enumerate all the excellent results achieved by these projects, as well as individuals supported by the Foundation, within the confines of this limited text, but it should certainly be emphasized that they have changed the world and the course of many lives for the better.

– Understanding the seriousness of the situation caused by the coronavirus pandemic and the circumstances in which our country found itself at the beginning of the crisis, we reacted quickly and this year’s budget of the Adris Foundation of three million kuna was directed by the Foundation’s Management Board, led by President Korado Korlević, to hospitals for the procurement of equipment for respiratory centers and those affected by the earthquake. The Foundation has also continued to finance its scholarship holders, outstanding students, who continue to achieve exceptional results in this academic year – they stated from the company.

Restrictive Policy

Energia naturalis group (Enna Group) also has its foundation. It is called Novo sutra and was founded by Pavao Vujnovac, the owner and CEO of the company. Since its establishment in 2016, the Foundation has been promoting excellence by allocating funds to development projects and student scholarships.

– So far, we have supported 25 projects and 64 scholarship holders, with a total of nearly 4.8 million kuna. This year, the Foundation’s Management Board approved funding for projects worth nearly one million kuna, and instead of the planned ten scholarships, fifteen were approved – emphasized Dorotea Lazanin Jelenc, Head of Corporate Communications at Enna Group.

This is not the end of the good deeds and donations of this company, which are logically mostly directed towards Slavonian counties, one of the least developed parts of Croatia, where there are reasons to encourage youth and their actions for a better tomorrow and the preservation of tradition. Enna Group also helps other parts of Croatia; it would be unfair not to mention that. They would certainly allocate more donations if tax policy allowed it.

– We believe that the Corporate Income Tax Act significantly restricts both donations and sponsorships. Namely, if it were amended so that the company’s taxable profit is reduced by the amount of donations and sponsorships, it would be an additional tax relief – said Lazanin Jelenc.

Corporate social responsibility is an indispensable part of the business policy of the retail chain Konzum, and although this year, emphasizes Ivan Širanović, Head of Konzum’s Communications Department, they faced unprecedented challenges, they did not forget those in greatest need.

– Thus, we were among the first companies to react in the crisis and contributed to the fight against the spread of the coronavirus with a donation of 100,000 kuna to the Croatian Red Cross – emphasizes Širanović.

Humanitarian Character

Konzum also states that with other brands they help families of lower income and the most vulnerable in society, children.

– Our largest loyalty program this year, ‘Zumići’, also had a humanitarian character, and we allocated all proceeds from the sale of the plush Ladybug Točkica of 360,000 kuna to the realization of the ‘SOS for Bees’ project, which will finance the removal of bee swarms from urban areas in several Croatian counties – said Širanović.

Donating and being socially responsible can also be a state-owned company like, for example, Croatian Post, in which, emphasizes Mirela Strakoš, Head of the Promotion Department, they are aware of their exceptional role in local communities as their postal workers and post offices are in all parts of Croatia.

– This year, we would highlight the donation of respirators to the Clinical Hospital ‘Sveti Duh’ and the donation of direct mail services to the Croatian Red Cross. Corporate social responsibility is the framework of the Development Strategy ‘Post 2022’, and the role of Croatian Post in times of crisis is more important than ever. In the coming months, we will donate an integral disinfection system to the Clinical Hospital Center ‘Sisters of Mercy’. This system not only disinfects hands and footwear but also automatically measures body temperature, thus facilitating and speeding up the reception of patients and the movement of staff within the hospital – emphasized Strakoš.

Ina, on the other hand, in selecting projects to donate to, primarily follows the criterion of a high degree of usefulness for the wider community and the needs of society. Aiming to help those in greatest need, the donation program has been directed, they emphasize in that company, towards the benefit of children and youth as well as people with disabilities. However, in extraordinary situations, such as the one we are currently in, they immediately react.

– Although we have been investing for years in improving the healthcare system in Croatia, after the situation in which society simultaneously faced the coronavirus pandemic and the consequences of a strong earthquake in Zagreb, we felt an even greater need and responsibility to provide assistance – stated from Ina, adding that they have financially supported hospitals, institutions affected by the earthquake, and donated their disinfectants, Ina Dezinol. They also remind that they have been the main partner of the SOS Children’s Village for many years.

Return to the Community

T-HT is a company that does not differ from others. They donate to youth, sports clubs, the needy, but somehow they are most proud of sustainable development projects and their kind of STEM revolution that they carry out through the donation competition ‘Generation NOW’, which has been financially supporting educational institutions for years and also donating equipment for the creation of creative STEM projects.

– Thus, Hrvatski Telekom has invested more than four million kuna in STEM education in the last four years, and more than 2200 children and young people across Croatia have successfully completed the ‘Generation NOW’ program – they respond from the company.

This year they thought of hospitals, but that is not T-HT’s only good deed. In addition to all that, they increased internet speeds for eight hospitals and 28 cities, counties, and companies providing public services, ensured free data traffic for private and business users on several occasions, along with free use of collaborative tools and free webinars, and provided free access to the ‘School for Life’ program.

Companies operating in Croatia want to return part of their success and profit to the community, which needs it anyway. For everyone to benefit from this, we must allow the economy to work and earn, and it would not be bad to create a slightly more efficient tax framework.

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