November 30, 2009
China -- Tax Rules for NPOs and Donors Announced in Circulars
The Ministry of Finance (MoF) and the State Administration of Taxation (SAT) issued two circulars in November to clarify the tax treatment of CSOs/NPOs and to provide rules for donors to them. Both circulars are retroactive to January 1, 2008, the effective date of China’s new Enterprise Income Tax Law. With respect to the former, Circular [Caishui] 122 says that exempt items include gifts, state subsidies, membership fees, interest on bank accounts, and other income as determined by the MoF and the SAT. The second Circular [Caishui] 123 describes the procedures whereby CSOs/NPOs seeking to qualify themselves as appropriate donees of tax deductible contributions can do so. It also describes attributes of such NPOs, including governance and conflict of interest rules. This is a reissuance of a Circular first issued in 2007, and it is described in detail in Karla W. Simon, Regulation of Civil Society Organizations in China: Necessary Changes after the Olympic Games and the Sichuan Earthquake, which was published 32 Fordham International Law Journal 943 (2009). The translated texts of the Circulars will be available on the ICCSL website in the Documentation Center.
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