TAX DEDUCTION OF CROSS-BORDER CHARITIES: SHOULD CROSS-BORDER PHILANTHROPY BE GIVEN DOMESTIC TAX DEDUCTION TREATMENT?

Whether domestic tax law should confer charitable deduction treatments on contributions, arising from cross-border philanthropy is still under dispute. The U.S. has three tax treaties providing with Exemption Organizations provisions, and foreign charitable donations are deductible only if they are made to charities in specific countries approved by the IRS for charitable tax deductions. The European Court of Justice (ECJ) has developed case laws, which have pointed out that giving the same tax treatments to all foreign contributions is in compliance with the free movement of capital, and Comparability Test is therefore worked as a standard for tax authorities in European countries to assess taxpayers' charitable deduction application. This article aims to use fruits of ECJ to explain how sovereign countries should embrace charitable deduction to foreign contributions, and concludes that without tax treaties, that almost all sovereign countries refusing to give the domestic charitable tax deduction treatments to contributions made to foreign charities is not a bad thing.