China is considering a range of rules and regulations, including a charity law, to encourage and regulate charitable activities.

This was revealed yesterday at the China Charity Conference.

"The law would aim to coordinate relations between governments, charity organizations and foundations, companies and individuals in this field," a source at the conference said.

An outline of the law is almost complete, with a large part focused on encouraging people to participate in charitable activities.

"The law will include favorable tax policies for charitable deeds. About 13 current tax policies might be affected in the final proposal," he revealed.

The Ministry of Civil Affairs is now pooling ideas for the proposed charity law, as well as related regulations for lotteries and donations.

The current law states that domestic corporations' donations are exempted from income tax if the amount is within 3 percent of taxable income. The ratio is 30 percent for individuals.

Donations made by foreign-funded companies are completely tax-exempt.

"The lack of encouragement inherent the system is a major problem," said Chen Xinnian, a director from the Economics Research Institute affiliated to the National Development and Reform Commission.

"There is no preferential policy of tax exemption for domestic enterprises that make donations," Chen said. "In any case, domestic non-governmental organizations (NGO) have little influence on the public."

China has more than 10 million enterprises; however, only less than 100,000 have a record of making donations. Donations made account for just 0.1 percent of the country's gross domestic product, according to Chen.

By comparison, foreign-funded enterprises are seen actively involved in the country's charitable causes. Novartis, a Swiss pharmaceutical company, donated 500 million yuan (US$61.65 million) last year towards the treatment of leukemia patients in China. The company was presented an award for its contribution at the conference.

Chinese enterprises and entrepreneurs are stepping up the awareness of their social responsibilities. In January this year, Ding Lei, the founder of Netease Corporation, personally donated US$1.2 million to the Red Cross Society of China to help victims of the South Asia tsunami.

(China Daily November 22, 2005)