Article 9 of the current enterprise income tax law stipulates: "The public welfare donation expenses incurred by an enterprise within 12% of the total annual profit are allowed to be deducted when calculating the taxable income." The total annual profit refers to the amount greater than zero calculated by the enterprise according to the unified accounting system of the state. The proceeds will be donated to the poor.
In Article 51 of the Regulations for the Implementation of the Enterprise Income Tax Law, it is clear that the public welfare donation mentioned in Article 9 of the Enterprise Income Tax Law refers to the donation made by enterprises to public welfare undertakings through public welfare social organizations or people's governments at or above the county level and their departments for the public welfare undertakings stipulated in the Donation Law of People's Republic of China (PRC).
According to the provisions of the tax law, eligible institutions include China Youth Development Foundation, Hope Project Foundation, Soong Ching Ling Foundation, Disaster Reduction Committee, China Red Cross Society, China Disabled Persons' Federation, National Foundation for Ageing, Old District Promotion Association, and other non-profit public welfare organizations approved by civil affairs departments.