The pre-tax deduction standard for public welfare donations is: the part of the public welfare donation expenses incurred by the enterprise within 12% of the total annual profit is allowed to be deducted when calculating the taxable income; the part exceeding 12% of the total annual profit is allowed to be carried forward.
Deducted when calculating taxable income within three years.
The total annual profit refers to the annual accounting profit calculated by the enterprise in accordance with the provisions of the national unified accounting system.
Public welfare donations are public welfare and relief donations (hereinafter referred to as public welfare donations), which refer to donations made by taxpayers through non-profit social groups and state agencies in China to education, civil affairs and other public welfare undertakings, as well as to areas affected by natural disasters and poverty-stricken areas.
Legal basis: Article 9 of the "Enterprise Income Tax Law of the People's Republic of China" (amended in 2018): The part of the public welfare donation expenditure incurred by the enterprise within 12% of the total annual profit is allowed to be included in the calculation of taxable income.
Deduction; the portion exceeding 12% of the total annual profit is allowed to be carried forward and deducted when calculating taxable income within the next three years.
Article 51 of the "Regulations on the Implementation of the Enterprise Income Tax Law" (2019 Amendment): The term "public welfare donation" as mentioned in Article 9 of the "Enterprise Income Tax Law" refers to the donations made by enterprises through public welfare social groups or people's governments at or above the county level and their departments.
Donations to public welfare undertakings stipulated in the "Public Welfare Donation Law of the People's Republic of China".
"Announcement of the Ministry of Finance, the State Administration of Taxation, and the Ministry of Civil Affairs on Matters Concerning the Pre-tax Deduction of Public Welfare Donations" Enterprises or individuals use public welfare social organizations, people's governments at or above the county level and their departments and other state agencies for public welfare and charity that comply with legal provisions.
Expenditures for business donations are allowed to be deducted when calculating taxable income in accordance with tax laws.
The pre-tax deduction qualification for public welfare donations is valid nationwide and is valid for three years.
In the first situation stipulated in Paragraph 3 of Article 5 of this announcement, the pre-tax deduction qualification for public welfare donations shall be calculated from January 1 of the year following the announcement of the list.
In the second and third situations stipulated in Article 5, Paragraph 3 of this Announcement, the pre-tax deduction qualifications for public welfare donations shall be calculated from January 1 of the year when the announcement is made.
9. If a public welfare social organization has any of the following circumstances, its pre-tax deduction qualification for public welfare donations shall be cancelled, and its qualification shall not be reaffirmed: (1) Engaging in illegal political activities; (2) Engaging in or funding activities that endanger national security or social welfare.
***Profit activities.