(ECNS) -- The law that governs China's corporate income tax is set for revision to encourage company contributions to public welfare programs.
The draft amendment, a revision to the ninth article of the current corporate income tax, has been submitted to the legislature, or Standing Committee of the National People's Congress, for consideration before it is adopted and goes into effect.
It stipulates that if a company's contribution to social welfare funding exceeds 12 percent of annual profits, the balance can be deducted from its taxable income over the following three years.
The government currently waives corporate income tax on contributions made by companies, but it only applies to those that donate 12 percent of their total annual profits or less. It does not permit the balance to be deducted in following years when the donation exceeds 12 percent.
Experts believe the revision is a major step towards encouraging more enterprises to contribute to charity projects and also fits with the charity law, which was passed in March 2016 allowing an income tax deduction over three years for donations exceeding the legal requirement.
