Tax policy on charity widened

By Guan Xiaofeng (China Daily)
Updated: 2007-01-20 08:46

Corporations and individual donors will now be able to claim tax deductions for donations to any licensed non-profit public welfare organization.

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The new policy was announced by the Ministry of Finance and the State Administration of Taxation on Friday.

In the meantime, the draft of the country's first law on charity is expected to be presented to the top legislature for examination and approval later this year.

At present only donations to about 20 major charity organizations are tax deductible, according to a policy issued last year.

But Ge Daosheng, a researcher at the Chinese Academy of Social Sciences' Institute of Sociology, doubted whether the policy could be faithfully carried out at all levels.

"The procedures for donors to claim deductions in taxes are often extremely complicated in many places," Ge said.

Experts have called for legislative transparency and less government involvement in charity activities.

The Ministry of Civil Affairs, which has overall responsibility for the nation's charity affairs, said on Wednesday it had finished drafting the Law of Charity and would submit it to the National People's Congress for examination.

The Beijing Times quoted Vice-Minister of Civil Affairs Li Liguo as saying the law would encourage any kind of charity or voluntary body to promote public welfare, and would strengthen supervision of charity organizations in their use of donations.

"There has been a strong voice in recent years to promulgate a charity law to standardize charity practices and give people more freedom to participate in public welfare undertakings," said Yang Tuan, a researcher with the Chinese Academy of Social Sciences.

However, Yang said the controversial draft might take another two to three years before it becomes law.

Yang, director of the academy's Social Policy Research Center and an expert involved in the draft law, said a major point of controversy was the government's role in charity activities.

He said the government should play a less dominant role and give non-governmental charity organizations more scope to grow.

Yang said the tough requirements for approval from the government to establish a charity organization hinders China's charity development.

"The law should make establishing charity or public welfare organizations as easy as registering businesses," Yang said.

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