An Empirical Analysis Of The Effect Of Tax Policy On The Donation Behavior Of Chinese Private Enterprises

Corporate donation has become the main driving force of charitable donations in China in recent years,with private enterprises showing their increasing influences on the transformation and development of the Chinese charitable donation to the more professional approach.On the micro level,donation of private enterprises is based on the capital of the company and the belief of their decision-makers.On the macro level,the donation level is effected by taxation reducing policy of corporate income tax and relevant institutional environment.The research object of the paper is the donation of private enterprises and influences on taxation policy on enterprise donation.The tax policy in this article involves only the change of corporate income tax policy(prior to 2008 using the old" enterprise income tax law”,after 2008 and 2008 for the new "enterprise income tax law")and the enterprise income tax,other taxes will not be considered.Based on the research and analysis of influential factors on corporate donation,this article reaches the conclusion that taxation policy can imply significant influence on corporate donation.According to economics theory,corporate donation is performed based on generation consideration of profit and cost.Based on the economic assumptions of corporate profit and utility maximization,taxation reducing policy could foster corporate donation,thus influencing its profit and effect.To prove it,this article performs empirical analysis on panel data of 484 private enterprises listed on the A-stock market from 2004 to 2015.First,this article calculates influence of taxation policy reform(in different institutional environments)on corporate donation.Second,further discuss the actual rate of income tax on corporate and its influences on corporate donation in different institutional environments.According to the result of empirical analysis,reform of income taxation policy could greatly improve the aspiration and level of corporate donation.The result indicates,the worse the institutional environment would be,the higher the aspiration and level of corporate donation is.The influence research of income tax rate on corporate donation shows,the higher the income tax rate is,the lower the aspiration and level of corporate donation would be.When taking the rate of income tax under different environments into consideration,the worse the environment and higher the rate,the lower the aspiration and level of corporate donation would be.In order to further validate the results,this article performs robustness test through DID model--double difference method with the conclusion that reform of corporate income tax has a significant positive relationship between corporate donation.Based on previous-mentioned results,this article concludes that a reasonably-designed taxation deduction policy on corporate donation will promote corporate donation effectively,thus further improving the development of charity in China and achieving the win-win situation of corporate cause-related marketing and public welfare.