Research On Charitable Giving Preferential Tax Policy In China

Charities are the main component of social security system, vigorously developingcharity can promote social wealth or resources relatively fair distribution, improve the overalllevel of social welfare, maintain social stability and build a harmonious society. Charities arebased on the voluntary contributions of the social members for the economic basis, but underthe conditions of economy market, the "rationality of economic men" decides that the marketsubject is for the eternal pursuit of profit maximization. If we want to make social members totake out their own pocket money actively to contribute to charities, only moral and religiouspersuading is not enough, there must be assurance and follow-up of a series of legalconstruction and system construction as well, following the intrinsic logic of charitiesdevelopment that "charitable persons have their own reward", making donors profitable andmaking them donate their own wealth voluntarily, that is, government should support andpromote the development of charities through a series of policies and measures. As the thirddistribution of the charities can make up for the failure of market and government, but itsvigorous development is inseparable from strong government support, especially on thediscount of finance and tax policy. Comparing with the direct funding of the government,making use of preferential taxation policies is a more tactful and relaxing way, and is moreadvantageous to the long-term and healthy development of charity.The current charities of our country are still at the preliminary stage, and there are many"bottleneck" factors which are limiting its development, and one of them is "tax policybottleneck" which shows mainly the lack of perfect and fine design of a tax legal system, thelack of support to the tax of charities, having not built an effective donation incentivemechanism yet, and a cumbersome process for tax breaks. From the development course ofdeveloped western countries charities we can also see that their development of charitieslargely due to the great impetus of tax policy, that is, excellent preferential tax policy,convenient donation exemption procedures, perfect supporting tax design system and etc.,which makes them win a lot of “invisible and open subsidy" form the government. Learningfrom the advanced experience of foreign countries, we can conclude that we have to rely onthe effective control of tax policy to promote the development of China charities and give fullplay to the tax leverage, which makes China charities increase to a new development level through a series of preferential tax policies. Generally speaking, there are mainly three aspectsabout the charitable giving preferential tax policy. First, directing at the tax breaks for thecharity organization. Second, tax breaks for the enterprises engaged in the charity donations.Third, tax breaks for individual citizens to charity donations. The last two of them can also becalled as the preferential tax for tax donors.Apart from the introduction and the epilogue, the main body is divided into four parts.The first part is the basic theoretical explanations, which first gives definition to charity, taxincentive policy and relevant contents, by comparing the related factors affecting thecharitable donation, concluding that government tax preferential policy has strengths thatother factors can’t match, and the booming development of charities is inseparable from thesupport of the government especially tax policy, and then it analyzes the theoretical basis ofhow the tax policy to promote the development of charities by using related theories. Thesecond part is to investigate the current situation of China charity preferential taxation policy,and then it analyzes the characteristics of the current tax preferential policy and its existingproblems. The third part is to compare with and learn from the preferential taxation policies offoreign charities, which can provide enlightenment and reference to perfect China’s relatedpolicies. The fourth part is the whereabouts of point part and the emphasis of this paper. Theproject of perfecting our country’s charity preferential tax policy is put forward on the basis oflearning from the advanced experience of foreign countries, which makes a suggestion as tothe reformation and perfection for China promoting the development of charity tax policy.