What Is Endowment Accounting?

Donation expenditure is the value of various assets donated by enterprises

Donation expenditure

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Income according to the People's Republic of China

According to the provisions of the current tax law, deductible public welfare relief donation expenses are divided into three types: deductible at a 3% limit (non-financial enterprises), deductible at a 10% limit, and deductible at a full amount. The laws and regulations have successively stipulated that there is no uniform stipulation on the calculation of their deduction limits, which makes taxpayers encounter difficulties in practical operations. The analysis of how to correctly calculate the deduction limits is as follows:

The calculation and declaration of donation expenditure are mainly based on the declaration form of Schedule VIII Details of Public Welfare Relief Donations, which must also be performed in accordance with the provisions of the form in the calculation.

1. Fill in this Schedule to report all public welfare relief donations made through non-profit social organizations or state agencies during this period;

2. Fill in the use column for the purpose of public welfare relief donation, which can be reported according to the purpose;

3. "Deduction limit for charitable relief donations" = (Line 43 of the main table, "earnings before taxpayer adjustment" + total donation expenditure + tax adjustment items) × statutory deduction rate

4. "Total donation expenditure" fill in all donation expenditures listed in non-operating expenditures;

5. "Tax adjustment for donation expenditure" = "Total donation expenditure"-the amount of public welfare donations actually allowed for deduction.

At present, the calculation of the deduction limit of donation expenditure is not clear in practice: one is whether the donation expenditure that can be deducted in full should be deducted from the tax adjustment item in step 3 above; The limit is calculated as a deduction limit of 3% for non-items, a deduction limit of 10% for non-items, a deduction limit of 13% for non-items, or a deduction limit should be calculated separately.

The current tax laws and regulations do not clearly indicate whether the deductible donations should be deducted in full. Assuming that deductions are not made, the deductible donations can be deducted in full in the subsequent calculations. Here, it can be deducted according to a certain ratio, so that the same expenditure is deducted twice, which is obviously not in line with the principles of fair tax burden and promotion of competition in tax law. Therefore, the author believes that the full deductible public welfare Donations are deducted.

Article 6 (2) (4) of the Interim Regulations on Enterprise Income Tax ^[1] states that "deductions for taxpayers' donations for public welfare and relief purposes within 3% of the annual taxable income shall be deducted." The three paragraphs stipulate: "Except for the second paragraph of this article, other items shall be deducted in accordance with laws, administrative regulations and relevant state taxation provisions." The deduction items referred to in paragraph 3 in accordance with laws, administrative regulations and relevant state taxation regulations refer to the laws formulated by the National People's Congress and its Standing Committee, the administrative regulations issued by the State Council, the taxation regulations of the Ministry of Finance, and the State Administration of Taxation on taxation. The relevant tax deduction items specified in the adjustment regulations. "Because the statutes formulated by the State Administration of Taxation stipulate that deductions for cultural undertaking donations are deducted at the 10% limit, it should be regarded as a deduction item separately specified by the State Administration of Taxation. Therefore, it should be calculated item by item, but its calculation base is the same.

[Example] A non-financial enterprise adjusted its taxable income in 2002 in addition to donation expenditure in accordance with the relevant provisions of the tax law to be 1.5 million yuan. In 2002, donated 100,000 yuan to poverty-stricken areas through state organs, 50,000 yuan to a national key symphony orchestra through the Chinese Cultural Enterprise Development Foundation, and 300,000 yuan to the Red Cross cause through the Chinese Red Cross. The calculation process of the donation expenditure tax adjustment is:

1. General donation deduction limit = (100 + 10 + 5 + 30-30) × 3% = 34,500 yuan. The actual donation amount is greater than the deduction limit, and the deduction limit is 34,500 yuan.

2. The deduction limit for donation to propaganda and cultural undertakings = (100 + 10 + 5 + 30-30) × 10% = 11,500 yuan. The actual donation amount is less than the deduction limit, and the actual donation amount is 50,000 yuan.

3. Donate 300,000 yuan to the Red Cross cause for a full deduction.

4. Tax adjustment for donation expenditure = (10 + 5 + 30)-(3.45 + 5 + 30) = 65,500 yuan.