Public welfare donations made by enterprises within the range of total profit 12% are allowed to be deducted before tax, and the part that exceeds the ratio of profit 12% is subject to tax increase to increase taxable income. Enterprise income tax is calculated on an annual basis and paid in advance on a monthly basis. The following is an example to illustrate the income tax treatment method for public welfare donations in advance and final settlement. \x0d\ x0d \ Individual donations to public welfare undertakings are deducted before individual income tax calculation \ x0d \ According to the provisions of Paragraph 2 of Article 6 of the Individual Income Tax Law of the People's Republic of China, individuals' donations to education and other public welfare undertakings are deducted from taxable income in accordance with the relevant provisions of the State Council. \x0d\ According to Article 24 of the Regulations for the Implementation of the Individual Income Tax Law of the People's Republic of China, the term "individuals donating their income to education and other public welfare undertakings" mentioned in Article 6, paragraph 2 of the Tax Law refers to individuals donating their income to education and other public welfare undertakings as well as areas suffering from serious natural disasters and poverty-stricken areas through social organizations and state organs in China. The part where the donation amount does not exceed 30% of the taxable income declared by the taxpayer may be deducted from its taxable income. \x0d\ In addition, according to Article 8 of the Notice of the Ministry of Finance and the Ministry of Civil Affairs of State Taxation Administration of The People's Republic of China on Relevant Issues Concerning Pre-tax Deduction of Public Welfare Donations (Caishui [2008] 160), when accepting donations, public welfare social organizations and people's governments at or above the county level, their constituent departments and directly affiliated institutions shall use the public welfare donation notes printed by the Ministry of Finance or the financial departments of provinces, autonomous regions and municipalities directly under the Central Government respectively, and affix their own stamps. If an individual asks for a donation bill, it should be issued. After the newly established foundation applies for the pre-tax deduction of donations, the donors of the original fund can enjoy the pre-tax deduction according to law with the donation bills. \x0d\ For some approved foundations, such as Rural Compulsory Education Foundation, Soong Ching Ling Foundation, china welfare institute and China Red Cross Society, the income donated by individuals can be fully deducted before tax when calculating individual taxable income according to regulations.