According to the Charity Law, foundations in China (jijinhui) are a legal form of social organizations. They are non-profit organizations, mission-driven and founded and governed by private individuals. Foreign governments and embassies, international organizations and individuals can establish foundations in China. Certain laws and regulations are applicable to foundations in China. If you want to establish a foundation and need legal advice on the matter, you can rely on our attorneys in China.
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Legal provisions for foundations in China
Foundations are a legal form of non-for-profit organization promoting public benefit through grants and donations. According to the Regulation on the Administration of Foundations (RAF), a foundation’s assets are donated by individuals, legal persons or other organizations.
A foundation in China has to be registered with the Ministry of Civil Affairs in Beijing or with a provincial, municipal or local Civil Affairs Bureau. The Civil Law in China distinguishes between public foundations (that engage in public found raising) and private foundations (that engage in non-public fund raising). Private foundations are usually founded through a major donation by a family or Chinese corporation. The public foundation status is quite difficult to obtain in China. Most public foundations in China are government organized NGOs (GONGOs). The activities that a foundation in China can undertake are:
• disaster relief, assistance to the handicapped and to social organizations in needy situations;
• cultural, educational, public health, scientific and athletic activities;
• construction of public facilities and environmental protection.
Our law firm in China can provide you with an in-depth presentation of the legal provisions regulating foundations in this country.
Taxation of foundations in China
According to the Public Welfare Donations Law, the development of public benefit undertakings is encouraged by the state which grants support and preferential treatment to foundations in China. These benefits are related to the individual income tax, the enterprise income tax and import duties and VAT. Charitable contributions to foundations in China are tax deductible. Any payer of individual income tax can deduct up to 30% of his/her taxable income for public benefit contributions made to a Chinese foundation. As a result of these fiscal advantages, Chinese enterprises have established a large number of private foundations. Donations to public benefit causes come mainly from corporations.
If you want to establish a foundation in China and need to know how to benefit from the fiscal incentives available to these organizations, don’t hesitate to contact our Chinese lawyers.