Income tax may be offset from personal and corporate donations

May 19 – As Dezan Shira & Associates advised last week, the Beijing tax bureau has issued today new guidelines for the treatment of tax on charitable donations.

Personal donations
For employees in China wishing to make personal donations, the donated amount will be exempt from individual income tax. A receipt from a China registered charity is required.

Tax deduction ratio
Pursuant to the current tax regulation, donations those made to earthquake disaster areas via non-profit making social and government organizations are tax deductible. The maximum deduction is 30 percent of the tax payer’s taxable income.

However, donations made to the following organizations are fully deductible (i.e. 100 percent):

Donations to the Red Cross Society of China (RCSC) or activities organized or recognized by the RCSC.

Donations to China Charity Federation, Beijing Charity Association, and other charities permitted by tax authority and finance ministry are fully tax deductible

Important: Donation receipts
Please note a donation receipt from the respective charity is required for the individual income tax deduction as evidence of donation. Donations made via corporations may also be deducted from individual income tax amount due if the corporation can provide a comprehensive donor list and additional copies of the donation.

Useful links
http://shiju.tax861.gov.cn/temp/rdwt_display1250221.htm
http://nafu.tax861.gov.cn/12366/jrrx_display.asp?more_id=1249995
http://nafu.tax861.gov.cn/12366/jrrx_display.asp?more_id=1249994

Dezan Shira & Associates is providing pro bono assistance to anyone wishing to make a donation and requiring assistance. Please email tax@dezshira.com with “Charity Donation” in the subject line.