The Study On The Tax Policy Of Charitable Donations

It is published by the Seventeenth National Congress of Communist Party of China to announce that "In order to improve the social security system, we should base on the social insurance, social relief, social welfare as well as focus on basic pension, basic medical care, the minimum living standard security system and supply with charity industry and commercial insurance". A new requirement about the improvement in charity was clearly stated by the governments’work reports in 2011:"To achieve new development in charity". The programmatic documents pointed out the position of charity and the direction of development. To be more specific, improving the social security system for civil public welfare is the goal in our charity industry. It is really a imperative component of social security system.Throughout the factors of development history of modern charitable, the year of 2008 is an important milestone in philanthropy’s history, in that it started a brand new era of philanthropy. The Wenchuan earthquake had inspired the enthusiasm of the whole citizens’ charitable senses. During a short period of two months, the amount of community’s donation reached to more than 400 billion. It is not only greatly enriched the conception of charity in public, but also changed the weak positions which the charities had been in the secure community in real-life. It was a climax of voluntary service which had been setting off from Beijing Olympic Games to Guangzhou Asian Games. Some civil organizations began to monitor the path of charitable money, after the Wenchuan earthquake, and published their research reports. What they had done means the development of philanthropy came into a brand new course.The most outstanding feature of Chinese charity industry is the vital role played by governments. The charity months, from November to December, when governments will dedicate in every region. During the two months, a great number of donation activities which are lead by government in some places such as "Charity Donation Day", "Offer Warm and Love". In the year of 2007, daily donations of the civil society system in December received about 1.97 billion yuan, almost equaled with the early 11 months. It is obviously that government can play an important role in charity course. Since 2008, some documents about the development issued by the relevant national ministries charity and others related to tax preferential policies had been achieved 20 pieces, which were mostly deducted from donations, income tax benefits, public welfare bills and other charitable supports.This paper is aimed at sorting the preferential tax policies issued by the government since carrying out the ’revenue-sharing-scheme’, but some new problems were emerged since the new income tax laws published, and then doing from the view of government. The ultimate aim is to find the way to optimize the preferential tax policies by comparison analysis.The charitable donation studied in this paper including:In the preface, as a premise, replenished with the vacant by charitable organization is quite necessary in social public products supplied. This article from the perspective of supplied policy charity factors of preferential tax policies in brief. In summary, empirical studies such as marginal tax rates, time series models, double number of models can be seen obviously by abroad experts’individual donation study, and individual donations would be divided into effects of price elasticity and income elasticity. Because of lack of relative data, domestic experts analyzed those aspects from qualitative views. And explained the effects of donations by mathematical models of individuals and companies. This paper comparing domestic tax policies with charitable donation’ feathers.I draw my own conclusion at the end based on nearly every aspects of experiences of certain countries and regions.Before describing the status of charitable donations in China, government failure and market failure are the first perspective of my statement, which is the theoretical basis. The government should shoulder the responsibility to offer the public products, but it does not mean the administration should supply all of public products and services. But the low efficient would be seen obviously because government bureaucracy own and they pursuit of their interests maximized and other reasons. So we can safely conclude that the market mechanism could make up part of the effects of government failure. The market mechanism should be guided by the price mechanism, thus under the guidance of the profits will inevitably trigger imbalance between supply and demand. Most populations from humble ground could not effectively get the protection of public services. Under the circumstance of government failure and the market failure, it is imperative for charitable organizations to interfere to manage the supply of public products. As the non-profit, voluntary, unpaid sources of funding and operation of openness for the charitable organizations, they could really replenish with the vacant.Through sorting with the charitable donations in current situation, we can see clearly that it has rapidly develop in contemporary society in China. It also presents some characteristics as follows:To start with, the amount of donation funds has been gradually increased. It illustrates different degrees of concern with the sizes and scope of radiation hazards severity of the disaster. Moreover, some relative donation funds mainly limited by special departments or institutions, and society organizations also received a small proportion of donation funds. Thirdly, most donor funding of social arrangements were government departments offered, except the directed donor wishes of ones in accordance with the arrangement. The remaining funds were offered by the co-ordinated arrangements for civil reconstruction work or welfare. Fourthly, various methods of donation, it continues to emerge beyond the traditional model of given charitable ones. Fifthly, donation awareness of the public directly promoted the development of our charity industry. Otherwise, corresponding with the charitable donation, tax policies showed the following characteristics:The first one, certain of the recipient. The second one, the charitable donation tax incentives play a guiding role. The third one, expression of charitable donation in tax preferential tax policies was concentrated. The last one, other taxes had less incentives. The knowledge of the current situation noted that the tax incentives existed to enjoy the narrow range, such as, it did not reflect the enabling role of tax incentives, the donation’s method was limited to the traditional way of cash donations, other forms are lack of appropriate legal support, charitable contributions deduction lack for allowing to carry forward the provisions, the existing tax incentives are complex processes and so on. At the same time, construction and development from their own lack of charitable organizations, and other aspects of external legal support were not enough to encourage charitable donations on our current tax policies. They related to the slowly development in the wandering in the analysis of the causes.After analyzing some relative situations as well as policies and reasons of problems, this paper selected representing different legal systems and the related more developed philanthropy in four countries and regions, like American, British, Japanese, Taiwan, in order to introduce their tax incentives for charitable donations. Through the four countries and regions were described about charitable donation tax policy. It could be seen something in common:a clear definition of charity recipient, relatively high deducted, donations can be carried forward over, physical donations and cash donations can be deducted before taxed, tax incentives set up completely, which is a relatively complete system.Compared with developed countries and regions, the charitable donation is a relatively late start in China. Based on what I was mentioned before, this article describes something to increase the development of charity law system, enhance preferential tax policies and strengthen tax management, optimize Chinese preferential tax policies related to charitable donations. In improved charitable giving tax incentives aspects, it mainly talked about two aspects:giving a suggestion from income tax and turnover tax incentives and property behavioral tax and other aspects. In terms of tax management, including strengthen the tax information, it played by charitable giving to the positive role of tax incentives, simplify the tax deduction program actively, reduce tax compliance costs of taxpayers, strengthen the tax management, preferential tax policies to prevent abuse of the taxpayer and so on.