More substantial steps should be made to implement the
stipulation in a new act for encouraging corporate charity, says a
signed article in Beijing News. An excerpt follows:
According to the Corporate Income Tax Law newly adopted by the
National People's Congress, businesses can have their donations
exempt from income tax when the amount is within 12 percent of
annual revenue.
Compared with the previous stipulation, the new rule offers much
greater incentive to encourage corporate donations by raising the
tax-deductible percentage from 3 to 12 percent. This change will
become a significant stimulus for businesses to contribute to
charity once the law takes effect on January 1, 2008.
However, many other substantial steps should be taken to further
promote corporate donations in China.
Businesses need a clear definition of the charity donations that
can be calculated in the income tax exemption.
The definition of the charity donations described in the Welfare
Donations Law adopted in 1993 includes donations made to almost all
types of charity organizations.
However, the eligible organizations were narrowed down to no
more than 30 according to the regulations issued by the taxation
authorities, which means the businesses could not enjoy any tax
deductions unless they donated to the designated groups.
The businesses also have to spend some time and resources on the
rules, regulations and files from the taxation authorities to
figure out the specific procedures of donation for donating to
different organizations.
Tax benefits are used in many countries to encourage corporate
charity, but it is far from being enough to create an atmosphere
enticing the corporate donation.
(China Daily March 23, 2007)