Taxpayers who suffer losses from a natural disasters of such as floods, windstorms, fires or other type including and those who support disaster relief through donations either in cash or in kind for disasters which have occurred after 1 January 2011 shall be eligible for a tax exemption in accordance with the Royal Decree 527 (“RD 527”) as follows:
- Compensation received from the Government.
- Donations or aid in excess of the above which does not exceed the value of the damages incurred.
- Insurance compensation obtained from an insurance company in respect of damages arising from a natural disaster which exceeds the net book value after deduction of wear and tear and depreciation of assets.
Tax exemptions are applied only in the year that the above compensation is received and are subject to the rules, procedures and regulations as prescribed by the Director-General.
Business entities that have suffered disruptions may be entitled to exemption for from corporate income tax under RD527 as mentioned in item 3 above, subject to the terms and conditions of the insurance’s policyies.