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.

Source: China Daily