Donation vs Sponsorship
🎁 Pure Donation
No consideration received in return. Outside the scope of VAT. No output VAT on the donation. Input VAT on goods donated may need to be reversed (adjustment required).
📢 Sponsorship
Sponsor receives advertising or branding benefits. This is a supply of advertising services — standard-rated at 10%. Must issue tax invoice. Input VAT on sponsorship costs is recoverable.
Specific Scenarios
🕌 Waqf (Islamic Endowment)
Waqf property transfers are generally outside VAT scope. Rental income from Waqf properties is standard-rated if commercial, zero-rated if residential.
🏥 Medical Donations
Donated medical equipment and supplies. Output VAT adjustment may be required on cost price if input VAT was claimed on purchase.
🎓 Education Sponsorship
Scholarship funding is typically outside VAT scope. However, if the sponsor's name appears on educational materials, it may become a sponsorship supply.