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What is public welfare donation?
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A:
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According to the 51st Article of Implementation Regulation of Enterprise Income Tax in People’s Republic of China, the public welfare donation in the 9th Article of Enterprise Income Tax Law refers to any donation made by companies through charitable social organisations, government or its directly supervised departments at county or above levels, which meant to be used for legitimate charitable and public welfare events.
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What are the tax deductible rates and calculation base for public welfare donation?
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According to a Notice of Related Regulations about Enterprise Income Tax Deduction and carry forward for Public Welfare Donation (MoF & STA [2018] No.5): donation made by enterprises to chartable events and public welfare business through public welfare social organisations or government and its directly supervised departments at county or above levels, is allowed to be deducted before enterprise income tax calculation for the part within 12% of annual net income. For the part exceed 12% of annual net income, it should be deducted in the following three years.
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For the part exceeds 12% of annual net income that is allowed to be deductible in three years, which year does it start to count as “three years”?
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The carrying forward deductible three years starts from the preceding year of the donation made. For example, the deductible leftover for “limited deductible public welfare donation” made in 2020, is allowed to be deductible before enterprise income tax calculation in the year of 2021, 2022, 2023. The last year to be deducted from enterprise income would be 2023. If there is still deductible amount remains at the end of that time, it would not be allowed to be carry forward.
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Is it a deductible item if the donation is made to government or street administration office at country level?
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The recipient of public welfare donation must be government or its direct supervised departments at county level or above. If the recipient is at country level, it cannot be deducted when calculating enterprise income tax.
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What vouchers should be obtained for public welfare donation?
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Public welfare donation voucher printed by MoF department at or above provincial level, which has stamped with recipient’s company seal. Or non-taxable income payment proof which stamped by recipient’s company seal.
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What is the deductible order for public welfare donation made in the year and brought forward?
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According to Notice be MoF and STA Related Regulation about Enterprise expense on Public Welfare Donation Deductible before Enterprise Income Tax (Mof & STA [2018] No.15): Article 4, When enterprises have public welfare expense for EIT deduction, they should use the brought forward amount first if there is any, then use the deductible amount of the public welfare donation made in the year.
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