A Study Of Corporate Charitable Giving And Its Tax Aggressiveness

Philanthropy has always been an important part of China’s public welfare and a strong support for the social security system.Since the founding of New China,due to ecological changes on the political and social fronts,there has been insufficient awareness of charity and much of it has been actively promoted by the government.In 1994,the establishment of the China Charity Federation symbolised a major breakthrough and opened a new chapter in the development of charity in China.Against this backdrop,the enthusiasm of corporate charitable giving was greatly encouraged.Especially under the influence of natural disasters and economic problems,the enthusiasm of corporate giving became even higher.However,due to the influence of egoism,altruism and mixed motives,companies make charitable donations not only to fulfil their social responsibility,but also for other motives.At the same time,there has been a widespread problem with corporate tax aggressiveness.Taxes are a loss for businesses,but a revenue for the government and an integral part of the state’s income.If companies do not pay taxes or pay less taxes it reduces government revenue and lowers government spending on public infrastructure development,education,culture,health and so on.As a result,aggressive corporate taxation is seen as a failure of corporations to actively fulfil their social responsibility.However,within the broader framework of corporate social responsibility,the question of whether corporate charitable donations are intended to fulfil social responsibility or tax aggressiveness is worth pondering.By studying the relationship between corporate charitable giving and its tax aggressiveness,it will help the government to better formulate relevant policies to guide corporations to make charitable donations in a positive manner.This paper analyses the relationship between corporate charitable giving and tax aggressiveness from both theoretical and empirical perspectives.Firstly,the relevant literature on charitable giving and corporate tax aggressiveness at home and abroad is explained,and on this basis,the research direction and focus of this paper is determined,and how domestic and foreign enterprises use charitable giving to avoid taxes is studied.Subsequently,on the basis of theoretical analysis,this paper selected a total of 6,346 observations of listed companies from 2004 to 2016 as the research object,and after measuring the relevant indicators,a model was established for empirical testing.Through theoretical and empirical correlation analysis,this paper draws the following conclusions:Firstly,charitable giving by enterprises is not simply for the purpose of fulfilling their corporate social responsibility,but also has certain tax avoidance motives.After 2008,corporate charitable giving has increased significantly,and corporate tax aggressiveness has increased further.Secondly,empirical evidence from subgroups suggests that non-state enterprises may be more inclined to use charitable donations for tax avoidance purposes than state enterprises,and that larger enterprises are more motivated to use charitable donations for tax activism than smaller ones.In terms of the business environment,differences in the business environment faced by firms may also affect the relationship between charitable giving and tax aggressive behaviour.Finally,based on the empirical results,recommendations are made:the government should further clarify the grey loopholes in the tax law and define tax aggressiveness,and also formulate a reasonable tax system to find a moderate balance between charitable giving and corporate tax aggressiveness,so as to better promote corporate charitable giving;on the part of the tax authorities,they should further improve tax collection and administration,reasonably standardise the collection process and strengthen the work of the tax authorities.In the process of tax audit and tax inspection,the tax authorities should focus on enterprises with large donations and abnormal donations;on the part of enterprises,they should establish good corporate cultural values,strengthen the awareness of social responsibility and pay attention to the rationality and standardization of business operation.