The Private Enterprises' Tax Avoidance Effect Of Charitable Donations

The donation of private enterprises occupies an important position in the contribution of charitable donation in China.However,compared with state-owned enterprises,private enterprises face more severe situation of lacking property rights protection and fairness.But why private enterprises are still generous in making charitable donations is worth studying.According to the theory of Resource Exchange,private enterprises can help the local government accomplish social and political tasks and then establish political connection with the government by the means of charitable donations.As a return,the local government gives tax incentives to private enterprises.Charitable donation,which is used as a means of establishing political connections for enterprises,has the tax avoidance effect.In other words,the internal mechanism of the tax avoidance effect can be explained by the hypothesis: “charitable donation-political connection-tax avoidance”.This paper mainly studies the tax avoidance effect of charitable donations in private enterprises and examine whether charitable donation really has the tax avoidance effect.Further confirm the inherent mechanism of the tax avoidance effect of charitable donations proposed in this paper,and prove it with game theory and empirical research method..The paper used the sample of 2006-2016 A share private enterprises to study the tax avoidance effect of private enterprises' philanthropy.From the perspective of the change of central leadership in local government(the secretary of the municipal Party committee).examine how the break of political connection affect the tax avoidance brought by private enterprises' charitable donations.The study found that the higher the amount of charitable donation in private enterprises,the lower the actual tax burden,and there is a positive correlation between the private enterprises' charitable donation and tax avoidance.Investigation of the influences of local government leadership's change on the tax avoidance effect of charitable donations found that tax avoidance of charitable donations is weaker in the area where the central leadership change.It shows that the change of central leadership prevent private enterprises from reducing the actual tax burden,and has a negative moderating effect on the tax avoidance effect of charitable donations.Further study found that,compared with the new central local government leadership generated from internal promotion,the central leadership of the local government,which is transferred from other places,has more negative moderating effect on the tax avoidance effect of the private enterprises' charitable donations.It indicatesthat when the central leadership of the local government is transferred from other places,the political connection between the enterprises and the government is completely broken,the impact on the private enterprises is greater and the practice of establishing political connections by the means of charitable donation to reduce the actual tax burden is more inhibited.Therefore,the change of the central leadership of the local government restrain the tax avoidance effect of charitable donations.The above conclusion proves the internal mechanism of "charitable donation-political connection-tax avoidance" proposed in this paper.That is to say,when the local government changes,the political connection between the government and enterprises will break and prevent the tax avoidance effect of the private enterprises' charitable donations.The change of central leadership has a negative moderating effect on the tax avoidance effect of charitable donations.Therefore,the internal mechanism of the tax avoidance effect of charitable donation is achieved through the establishment of political connection.As a means of establishing political connection,charitable donation has a tax avoidance effect,which ultimately leads to the relief of the actual tax burden for the private enterprises.Based on the conclusion of the study,the thesis deeply analyzes the negative moderating effect brought by the private enterprises' tax avoidance behavior through establishing political connection and the means of charitable donations.After that,put forward the policy suggestions from three aspects: building Concerned-Incorruptible political and commercial relations,the construction of the law,building a service-oriented government,which not only supports the content of NPC &CPPCC and the 19 th National Congress of the Communist Party,but also has the important effect of theoretical guidance for administrative authorities to create a fair and competitive market environment and to motivate enterprises to voluntarily participate in the cause of philanthropy.