The Chinese government is considering tax breaks on charitable donations in line with international practice, the Ministry of Civil Affairs said.

"We are negotiating with taxation and financial departments to set up a new tax reduction system for donations," said Jiang Li, Vice-Minister of Civil Affairs, while meeting with seven domestic charity foundations for orphans.

According to present tax law, corporate donation can be exempted from income tax only when the amount is within 3 percent of its annual revenue, the ratio is 30 percent for individuals.

"This policy indicates that the more you donate, the more tax you have to pay." said Wang Jianlin, chairman of Dalian Wanda Group, based in northeast China's Liaoning Province.

"New policies would stimulate companies and individuals to donate," Jiang Li said.

It is estimated that by the end of 2004, about 5 billion yuan (US$617 million) had been donated to Chinese charities, accounting for 0.05 percent of the gross domestic product, compared with 2.17 percent in the United States.

"Despite differences in national conditions, such a large gap should set us thinking," said Xu Yongguang, vice-chairman of China Charity Federation.

(Xinhua News Agency May 31, 2006)