Circular of the Ministry of Finance, the State Taxation Administration and the Ministry of Civil Affairs on Relevant Issues of Pre-tax Deduction of Charitable Contributions for Public Welfare Purposes

Circular of the Ministry of Finance, the State Taxation Administration and the Ministry of Civil Affairs on Relevant Issues of Pre-tax Deduction of Charitable Contributions for Public Welfare Purposes

Cai Shui [2008] No.160

December 31, 2008

Finance departments (bureaus) and offices of the State Taxation Administration, local taxation bureaus and civil affairs offices (bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the State plan, and the Civil Affairs Bureau and the Finance Bureau of Xinjiang Production and Construction Corps,

In order to implement Law of the People's Republic of China on Enterprise Income Tax and the Law of the People's Republic of China on Individual Income Tax, relevant issues concerning the pre-tax deduction of charitable contributions for public welfare purposes are hereby notified as follows:

I. Where an enterprise make a charitable contribution through public welfare social organizations or people's government above county level or its departments, pre-tax deduction of the part of the charitable donation within 12% of the annual total profits such contributions shall be permitted. The annual total profits refer to a sum more than zero calculated by the enterprise in accordance with the national uniform accounting system.

II. Pre-tax deductions shall be permitted before the payment of individual income tax of charitbale contributions for public welfare purposes granted by individuals through social organizations and State organs according to current tax laws, administrative regulations and relevant policies.

III. Charitable contributions for public welfare purposes in Article 1 hereof refer to charitable contributions for public welfare purposes stipulated in the Law of the People's Republic of China on Charitable Contributions for Public Welfare Purposes, including:
1. activities by social groups or individuals in disaster relief or poverty relief, or in supporting the disabled;
2. educational, scientific, cultural, public health and sports services;
3. environmental protection and public utility construction; and
4. other public and welfare services to promote social development and progress.

IV. Public welfare social organizations in Article 1 and social organizations in Article 2 hereof refer to public welfare social organizations such as foundations and charities registered with the civil affairs authorities according to provisions of the Regulations on Foundation Administration and the Administrative Regulations on Registration of Social Organizations and satisfying the following conditions:
1.
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