Ways of Giving
Deductibility of Charitable Contributions
Payers of Individual Income Tax can deduct up to 30 percent of their taxable income for public benefit contributions to NPOs [Regulations for the Implementation of the Individual Income Tax Law, Art. 24]. Payers of Enterprise Income Tax can deduct up to 12 percent of their taxable income [Enterprise Income Tax Law, Art. 9].
According to the Regulations on the Implementation of the Enterprise Income Tax Law of the People's Republic of China, the term “public interest donations” as used in Article 9 of the EIT Law refers to donations made by an enterprise via “public interest social bodies” or the people’s government on the county level or the instrumentalities thereof to the public interest undertakings as prescribed in the Public Welfare Donations Law.
The term “public interest social bodies” includes any foundation or charity organisation that meets the following conditions:
1. It is lawfully registered and has the status of a legal person;
2. It serves the purpose of promoting public interest and does not adopt profit-making as its purpose;
3. All of its assets and profits belong to the legal person;
4. Its proceeds and operational surplus are used primarily for the cause for which the legal person was established;
5. The surplus property after the termination of the enterprise is not distributed to any individual or profit-making organisation;
6. The organisation refrains from engaging in any business that does not relate to its purpose of establishment;
7. It has a sound financial and accounting system;
8. The donor does not participate in the distribution of the property of the social body in any way; and
9. Other conditions as prescribed by the departments of finance and taxation of the State Council in collaboration with the civil affairs department of the State Council in charge of the administration of the registration of social bodies.
Payers of Foreign Invested Enterprise and Foreign Enterprise Income Tax can also deduct up to 12 percent of their taxable income [Enterprise Income Tax Law, Art. 9]. The Enterprise Income Tax Law has replaced the Regulations for the Implementation of the Foreign Invested Enterprise and Foreign Enterprise Income Tax.