Donating international firms to be exempted from import tariffs, VAT
China's top legislators on Wednesday reviewed the nation's draft of the first philanthropy law amid rapidly-developing charity activities that have also fallen victim to fraud and corruption scandals, as the nation vowed to continue work on its first law on managing international NGOs in China in 2016. [Special coverage]
According to the draft law, organizations can apply for registration at civil affairs authorities above county level, and those that meet legal requirements must get registered within 30 days. Foundations, social organizations and other social service institutes that have been organizing charitable programs can be identified as charitable organizations at their administrative civil affairs departments within 20 days.
"As the first law on charity, the draft law will boost charity organizational development in China by granting them legal status and offering convenience in registration," Zhang Gaorong, an assistant dean at Beijing Normal University's China Philanthropy Research Institute, told the Global Times.
Instead of an annual examination, the draft law now requires the filing of an annual work report to administrative civil affairs authorities. It also requires organizations to make public their work report, which should include financial and donation accounts as well as wages.
Public concern over embezzlement and the improper management of charities has risen after a series of scandals in recent years. Nationwide donations in 2012 dropped for the second straight year, Xinhua reported in September 2013.
Meanwhile, the draft law proposes incentives, including tax breaks for donors and charitable organizations.
"It is encouraging to see a tax relaxation policy on companies engaged in philanthropy, since many donors have expressed concern. More people may be willing to donate if the policy can be carried out at grass-roots level governments," Zhu Danna, chief program officer of BEAM Alliance, an NGO working to support teachers in schools in rural areas, told the Global Times.
Specifically, the draft law states that international companies making charitable donations will see a reduction or exemption in their import tariff and value-added tax based on related laws.
"In doing so, the draft law may help contain illegal activities in the name of charity," Zhang said.
"But more donations are monetary instead of in kind from overseas," Zhu said.
In most cases, foreign individual donors or companies can directly donate to Chinese organizations under the draft law. However, those involving overseas NGOs have to wait until China's international NGO management law is passed, which will detail China's management of their operations and donations, according to Zhang.
"The draft charity law goes way beyond poverty relief, covering almost all philanthropic aspects of social life," Wang Ming, a professor at Tsinghua University and a member of the 12th National Committee of the Chinese People's Political Consultative Conference, told the Global Times.
Charitable programs have developed rapidly in China, with total social donations rising to approximately 100 billion yuan ($1.54 billion) from less than 10 billion yuan in 2006, the Xinhua News Agency reported on Wednesday.
Li Jianguo, vice chairman of the Standing Committee of the National People's Congress, stressed that charitable programs should be encouraged as a way to alleviate poverty and help those facing difficulty.
