Moreover, the new law stipulates that registered charities that have been operating for at least two years can apply to the civil affairs department for permission to raise funds from the general public.
It also responded to the common complaint that businesses making large donations do not get enough tax concessions.
The government waived corporate income tax on donations made by companies from their profits, but this only applies to companies that donate 12 percent of their profits or less.
The new law stipulates that if a company's donation exceeds the 12 percent in one year, the balance can be deducted from the taxable income over the following two years.
This provision is a major step and will encourage more enterprises and wealthy people to donate to charity projects, said Xu Yongguang, chair of the Narada Foundation, a private foundation that helps the children of migrant workers access education, and disaster relief.
"The new law is like building a large reservoir of charity money," Xu said.
TIGHTER SCRUTINY
The new law adopts strict regulations to prevent fraud and imposes tighter supervision on the management of charity groups.
Recognizing that Internet fundraising is popular but also an easy platform for fraud, the law requires that charities post clear information either on their own websites or on gateways designated by the Ministry of Civil Affairs.
Groups or individuals raising funds from the public without a license will have to return the donations and may face a fine of up to 200,000 yuan.
Charities may have their registrations revoked if they engage in or sponsor activity deemed to undermine state security or public interests. They may face punishment from other law enforce agencies.
The law asks charities to publish their articles of association and information on their executives and supervisory bodies. They should also give annual reports complete with financial statements, details of projects launched as well as staff pay and benefits.
A charity with permission to gather donations from the public should have its financial report audited. It should also minimize operational costs, keeping them below 10 percent of the amount it raises.
The bill was submitted for its third reading at the annual session of the National People's Congress (NPC) that just concluded Wednesday, after two readings at the bi-monthly sessions of the NPC Standing Committee.
NPC deputies pushed about 90 amendments to the bill during the deliberation, including doubling the maximum fine imposed on charity groups that embezzle or misuse donations.
