Legal Issues On Tax Incentives For Charitable Donation

Charitable donation is a behavior on one’s free will, belong to the scope ofprivate law. But in view of the significance of the charitable donations to achievesocial justice, improving social governance structure, and maintain social harmony,the state should take action to motivate it through a variety of ways. According to theanalysis of the economics, tax policy influences charitable donation behavior byincome effect and price effect. This can be proved in practice, many countries usedtax incentive system to encourage public welfare undertaking very early, and thesystem still in use today. Public welfare undertakings in China started late, theconstruction of the relevant laws and regulations lag, in1993, one can get a pre-taxdeduction right if one donate income to public welfare organization. Thereafter, theprovisions in this regard were modified many times, such as unify the deductproportion between domestic enterprises and foreign enterprises in2007, the pre-taxdeduction eligibility can be given to any organization which compliance withstatutory conditions in2008. Comprehensive comparison of China and foreigncharitable donations tax incentive system, we will find the preferences in China is notlow, but the implementation of tax incentive system of charitable donations is notsatisfactory. This is reflected not only in the scale of donations needs to be improved,but also reflected in the failure of incentive system. These problems reflect thecharitable donations tax incentive system needs to be improved. Problems in practice provided an opportunity for further theoretical research.The first chapter explains the basic issues of the charitable donations，including the itsconcept, and the necessity for its incentives, and possible legal incentive path werediscussed. The second chapter analysis the theoretical basis in the view of tax law,and then analyzed the legitimacy of tax incentives for charitable donations accordingto three criteria about tax incentives. Chapter three introduce the existing laws andregulations of the current system to sort out, and inspect the existing system based onbasic theory of tax law. Chapter four gives the recommendations of the Perfection ofthe charitable donations tax incentive system.