China is considering a range of rules and regulations, including
a charity law, to encourage and regulate charitable activities.
This was revealed yesterday at the China Charity Conference.
"The law would aim to coordinate relations between governments,
charity organizations and foundations, companies and individuals in
this field," a source at the conference said.
An outline of the law is almost complete, with a large part
focused on encouraging people to participate in charitable
activities.
"The law will include favorable tax policies for charitable
deeds. About 13 current tax policies might be affected in the final
proposal," he revealed.
The Ministry of Civil Affairs is now pooling ideas for the
proposed charity law, as well as related regulations for lotteries
and donations.
The current law states that domestic corporations' donations are
exempted from income tax if the amount is within 3 percent of
taxable income. The ratio is 30 percent for individuals.
Donations made by foreign-funded companies are completely
tax-exempt.
"The lack of encouragement inherent the system is a major
problem," said Chen Xinnian, a director from the Economics Research
Institute affiliated to the National Development and Reform
Commission.
"There is no preferential policy of tax exemption for domestic
enterprises that make donations," Chen said. "In any case, domestic
non-governmental organizations (NGO) have little influence on the
public."
China has more than 10 million enterprises; however, only less
than 100,000 have a record of making donations. Donations made
account for just 0.1 percent of the country's gross domestic
product, according to Chen.
By comparison, foreign-funded enterprises are seen actively
involved in the country's charitable causes. Novartis, a Swiss
pharmaceutical company, donated 500 million yuan (US$61.65 million)
last year towards the treatment of leukemia patients in China. The
company was presented an award for its contribution at the
conference.
Chinese enterprises and entrepreneurs are stepping up the
awareness of their social responsibilities. In January this year,
Ding Lei, the founder of Netease Corporation, personally donated
US$1.2 million to the Red
Cross Society of China to help victims of the South Asia
tsunami.
(China Daily November 22, 2005)