Donations are tax deductible why don't they all donate

Earlier this year, there was a netizen who donated 150 million dollars, which is really an astronomical figure. This donation was interpreted by many as a tax dodge, and others said that he must have had ulterior motives for donating so much money, and that this money would be taxable even if he didn't donate it. Let me clarify that what I am going to say is not to defend this netizen because I don't know him at all. I just want to use data to tell you that donations have nothing to do with tax avoidance. Of course, only after making a donation do you know that this is purely a rumor. Today I'm going to analyze these rumors and give you some knowledge about taxes.

Rumor 1, donations can be used for tax deductions

They say that if this company's profit for a year is $10 million, it needs to pay $2.5 million according to the 25% corporate income tax. If you donate $1 million to a charitable organization, then you only have to pay $1.5 million. The point is that whether you pay taxes or donate the money, it all goes out the door eventually. This is really "bullshit"! According to China's corporate income tax regulations, donations can only be deducted before tax, that is to say, you need to pay the tax of the enterprise assuming that 10 million as the base, then you now donate 1 million, should be based on the 9 million as the base, that is, 9 million multiplied by 25%, the tax should be paid 2.25 million. Careful math, if in order to avoid tax donations of 1 million against 250,000 tax, you say it is worth it?

Rumor two, donations can avoid taxes

To be honest, theoretically this is possible, but is limited to profits of less than 3 million small and micro-enterprises, and this boss if you use this way to avoid taxes, it is definitely the brain was the door pinned. The corporate income tax rate is like this, the part of the profit in the following 1 million, according to 5%, the profit in the 1 to 3 million, 1 million 5%, the middle of more than 1.01 million to 3 million part of the 10%; and the profit of more than 3 million enterprises all in accordance with the 25%.

If your company's profit is 3.1 million, then you need to pay 3.1 million multiplied by 25%, which is 775,000 dollars. However, if you donate 200,000, the profit becomes 2.9 million, this time you only need to pay 5% of 1 million, that is, 50,000. 10% of 1.9 million, that is, 190,000, the total **** is 240,000, plus donations to the expenditure of 200,000, the total **** is 440,000 yuan. So you can see that you're still saving $330k compared to that $3.1m of $775k. But obviously, slightly larger businesses won't be able to latch on to this one.

And it's also important to underline for you, but where you have a little bit of brains and you just want to avoid taxes, you don't use the donation method at all. This 200,000 you can give employees to go out and travel, you can give employees to buy a cell phone, why do you want to use to donate.

Finally, to tell you a simply unexpected, according to the relevant regulations, donations higher than 12% of the annual profits of enterprises, even if you donate to pay taxes. What do you mean? I'll explain, if you have 10 million in profits a year, then the amount of 1.2 million can be used for donations. Suppose you donate 1.2 million this year, then there is no problem, then the tax related to this year will be calculated according to the profit base of 10 million minus 1.2 million, that is, 8.8 million. If you say I donate 2 million, then I'm sorry, the corporate tax is still calculated according to 8.8 million dollars.

In summary, donations you don't say is tax avoidance, you're donating and paying taxes happy double whammy. To be honest, so many people online say that donations can avoid taxes, in fact, there is only one reason, that is, they have not donated.

After reading this, do you still think donations can avoid taxes? Welcome to the comment section to express your opinion.