BEIJING, 21st December, 2015 (WAM) — China is considering offering greater tax deductions for charitable contributions made by enterprises, according to revisions to the draft charity law, Xinhua news agency reported today.
The draft law, submitted for the second reading on Monday at the National People’s Congress (NPC) Standing Committee’s bimonthly session, said the country offers special tax concessions for philanthropic activities.
The new draft said that if a company’s spending on philanthropic donations exceeds the limit of deductions from its taxable income in a certain year, the excess amount can be deducted from the taxable income in following years.
The revision was made to address the common complaint that tax concessions for businesses making large philanthropic donations is not enough, according to a report delivered at Monday session.
The new draft also said the standards for annual spending and management cost of charitable organizations will be determined by civil affairs, finance and taxation authorities, among other departments under the State Council, China’s cabinet.
However, if the standard is spelled out in the donation agreement, the agreement standard will take precedence over the ministry standard.
The new draft also removed the wording that would allow individuals to act as the fiduciary of philanthropic trusts, limiting the role to charitable organizations and financial institutions.
The revision was made on the grounds that philanthropic trusts are still nascent in China, according to a report to the top legislature.