The Ministry of Finance and the State Administration of Taxation issued Announcement No. 72 of 2023 "Announcement of the Ministry of Finance and the State Administration of Taxation on Confirming the Pre-tax Deduction Qualifications of Public Welfare Donations from 2024 to 2026 by the Red Cross Society of China and Other Mass Organizations", confirming that the four mass organizations that meet the pre-tax deduction qualifications for public welfare donations from 2024 to 2026 are the Red Cross Society of China, the All-China Federation of Trade Unions, the China Soong Ching Ling Association, and the China International Talent Exchange Association. What are the conditions for public welfare organizations to obtain pre-tax deduction qualifications?Under what circumstances can I cancel?What are the pre-corporate income tax deduction regulations?The author analyzes and explains them one by one.
According to Article 1 of the Announcement of the Ministry of Finance and the State Administration of Taxation [2021] No. 20 "Announcement on Matters Concerning the Pre-tax Deduction of Public Welfare Donations through Public Welfare Mass Organizations", the donation expenses of enterprises or individuals used by public welfare mass organizations for public welfare and charity in accordance with the law are allowed to be deducted in accordance with the provisions of the tax law when calculating the taxable income.
According to Article 53 of the Regulations for the Implementation of the Enterprise Income Tax Law, the part of the public welfare donation expenditure incurred by the enterprise in the current year and carried forward from previous years is allowed to be deducted if it does not exceed 12% of the total annual profit.
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.
The second is the qualification conditions for obtaining pre-tax deductions for public welfare donations
According to Article 4 of Announcement No. 20 of 2021 of the Ministry of Finance and the State Administration of Taxation, mass organizations that are eligible for pre-tax deduction of public welfare donations shall meet the following conditions at the same time:
1) Meet the conditions specified in Paragraphs 1 to 8 of Article 52 of the Regulations for the Implementation of the Enterprise Income Tax Law, namely.
1.Registered in accordance with the law and with legal personality;
2.For the purpose of developing public welfare undertakings, and not for profit;
3.All assets and their appreciation are owned by the legal person;
4.The proceeds and operating balances are mainly used for businesses that are compatible with the purpose for which the corporation was established;
5.The property remaining after termination shall not belong to any individual or for-profit organization;
6.Do not carry on a business unrelated to the purpose for which it was established;
7.There is a sound financial accounting system;
8.The donor does not participate in any form in the distribution of the property of the legal person;
2) The establishment departments at or above the county level directly manage their establishments;
3) The income from donations and the expenditures made with the income from donations shall be accounted for separately, and the proportion of expenditures for public welfare and charitable undertakings shall not be less than 70% of the total income received from donations in the three consecutive years prior to the declaration.
The third is to cancel the pre-tax deduction qualification for public welfare donations
Where public interest mass organizations have any of the following circumstances, and their qualifications must not be reconfirmed in the year in which they were disqualified and in the next three years:
1) Accepting donations in violation of provisions, including attaching conditions that constitute a return of benefits to the donor, engaging in for-profit activities in the name of donations, using charitable donations to promote tobacco products or products and matters prohibited by law, accepting donations that do not conform to the purpose of the public interest or violate social morality, and so forth;
2) Carrying out activities that violate the articles of association, or accepting donations for purposes other than those specified in the articles of association;
3) Designate a specific beneficiary when determining the use and beneficiary of the donated property, and the beneficiary has a clear interest relationship with the donor or the management of a public interest mass organization;
4) Receiving an administrative penalty (except for warnings or a single fine of less than 10,000 yuan).