Abstract

The Law of the People’s Republic of China on Enterprise Income Tax regulates that in relation to the expenses from charitable donations incurred by Enterprises, the portion within 12% of the total annual profit may be deducted from the taxable income. The application of this Article is helpful for simplifying the calculation of enterprise income tax and encouraging tax-payers to engage in charitable donations. However, there is some problems and defects in practice. In this paper, by means of comparative analyses, authors explore the contradiction between the calculation of deduction limits for donations based on total annual profits and the principle of enterprise income tax calculation, together with the absence of rationality in operation, and further argue some new thoughts for improving the pre-tax deduction of charitable donations.

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