Research on Tax Incentives for Charitable Donations of Non-Monetary Assets by Chinese Corporations

Abstract

Corporate donations form a substantial part of social charitable donations
in China. Corporate non-monetary asset donations are important in
this regard as they bring goods and materials to areas where they are
desperately needed. However, the current scope and scale of corporate
donations are narrow due to a lack of tax incentives. This paper will
explain the incentive effects of the current tax regime by analysing how
asset donations are treated by Chinese taxation laws, from the perspective
of macroeconomic policies and market demands. It focuses particularly
on the relatively heavy tax burden and limited scope for tax exemptions
on corporate asset donations in China. In light of this, we propose some
pragmatic suggestions on incentivising policies that are more suitable for
China¡¯s current situation, such as increasing the exemptions before tax
and allowing exemptions to roll over to future years, developing incentive
policies on indirect and property taxes, and establishing the mechanism
for third-party price evaluation and equity donation regulation, etc.