99% of Chinese firms never donate to charity (Xinhua) Updated: 2005-11-22 09:24
No more than 100,000 Chinese companies, a
merely one percent of the country's total ten million registered firms, have had
a history of making donation to charity, said Chen Xinnian with the National
Development and Reform Commission.
But the rest 99 percent enterprises that never engage in charity work feel
unfair to be called "parsimonious". They complain of the current tax law under
which corporations' donations are exempted from income tax if the amount is
within 3 percent. The ratio is 30 percent for individuals.
"It's not we don't have goodwill, but charitable work does not deserve
corresponding result under present tax law," said Wang Jianlin, chairman of the
board of Dalian Wanda Group, a famous company in northeast China's Liaoning
province. "The more you donate, the more tax you have to pay."
"Given the low ratio of tax exemption, enterprises in China lack the economic
incentive to donate," said Xu Yongguang, vice-chairman of China Charity
Federation.
It is estimated that by the end of 2004, about 5 billion yuan (US$617
million) had been donated to China's charitable organization, accounting for
0.05 percent of the gross domestic product. In comparison, it was 2.17 percent
in the United States.
"Despite differences of national conditions, such a large gap should set us
thinking," said Xu.
Wang Zhenyao with Ministry of Civil Affairs's Disaster Relief Department
attributed this to an under-developed tax policy.
"People in our country have not realized they can enjoy tax exemption if they
make donations, which is one of the reasons why the tax policy is lagging
behind." said Wang.
"Even if one knows that making donation can get tax exemption, he may give it
up because of too much red tape to go." added Wang.
Speaking on his own experience, he said he once
went through 10 official procedures in two months in order to get 50 yuan (US$6.16)
tax exemption for his 500 yuan's personal donation (US$61.6).
"The procedure could frustrate anyone who try to regain tax exemptions from
donation," Wang said.
However, any donations made by foreign-funded companies in China are totally
exempted from tax. In 2003, the State tax watchdog allowed full tax exemption on
donations to only seven designated charity organizations.
"We are negotiating with taxation and financial departments to work out the
new tax reduction system for donations," Wang said,
At the two-day China Charity Conference, began Sunday,
Chinese government promised to provide a convenient and standardized service in
donation-related tax reduction and exemption.
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