Lucky Firdaus Ivan Ansori

Research Method

Literature Review

INTRODUCTION

Human is a social creature that requires to get along each other in order to solve a common

problem. They have limitation of ability that causes unable to reach the goals without the existence

of cooperation. This problem that builds an idea about having organize in the society level to helps

solve the social problem together. Therefore, non-profit organization appears as the answer of the

social problem and helps them to conquer it. Non-profit organization is combining the passion of

a social mission with an image of business like discipline, innovation, and determination

commonly associated with (Dees, 1998). This organization formed to support some issues in

society that grab the public attention and for uncommercial purposes without having interest to

gain profit from it. The examples of non-profit organization are religious organization, hospital,

foundation, public clinic, politic organization, volunteer organization, non-private school and

others. Despite all the understanding of this organization, there are some organizations that against
the nature of non-profit organization by gaining profit from it. Therefore, this paper will explain

how the non-profit organization is required to pay income tax from the activity that they are

running.

Non-Profit Organization

Non-profit organization is an organization which support social issues appear in society or

something which relate grab the public attention for non-commercial purposes and having no

attention to gain profit from it (Sri, Wanti, & Estrely, 2009). It is different from the profit

organization which the source of funding is coming from the operational activity which makes

profit. However, the source of funding from non-profit organization can be from contributor which

they do not expect something in return from their contribution or economic benefit which

proportional with the contribution. There are some sources of funding from non-profit

organization, APBN/APBD, donor, grant, project cooperation, or fundraising.

Because of the working in non-profit organization is unique and the nature from source of

funding makes the organizer has to maintain the cash flow effectively and responsible from it.

Because there is no such internal control for this non-profit organization that can supervised the

cash flow from funding properly. The current issue from non-profit organization is how to manage

the funding from some sources to run the social program to achieve the goals which already agreed
among the funder or donor. In addition, the organizer also must spend some of the funding into

the necessity of the operational activity such as paying the salary, a claim, and tax.

Non-profit organization as a formed of social organization that from society and go back

to society is expected to prepare a very accountable and transparent financial report. People put

faith on this organization because donators are aware of the social issues that appearin public and

would like to help by funding to the social organization. As the member of the organization must

be doing for society interest and they have responsibility to prepare the financial report to the

donator, creditor, members, and other parties. Since the sources of funding are coming from

contribution, therefore the financial report is becoming essential part as a responsibility from the

organizer to the external parties who contribute to the funding to build trustworthy among the

donator.

a. School

One of the non-profit organization around our society is school that is built by the (or

government) private business in order to reduce the number of uneducated children and serve to

the society importance (Santos, 2012). The purpose of the school must prioritize the education of

student and school must not oriente to the profit from the parents on running the school and must

be managed seriously. Because when school becoming profit organization the put aside the service

and focusing on how to enrich the teacher’s profit. School must be placed for students to learn and
this is a responsible for the teacher to provide a good facilities and serving excellent to achieve the

objective of building a school. Building a good environment must be number one priority for

school instead of increasing the fee for student to enroll to the school. It is already supplied by

governance for public school and for private school must be funded from the private business, so

it would be improper if the fee for the monthly paying is always increasing year by year. In fact,

there are still a lot of people who are not able to go to the school because they cannot afford the

fee to enter the school. If refers to the nature of non-profit organization appears because there are

some social problem and this organization will help to solve the problem. Therefore, school is

already funded by external party or donator to run the business and solve the social problem. They

must provide an excellent service to help people surround solving the social problem.

b. Foundation

Foundation or institute is a legal entity which the properties are separated to allocate for

social, religion, and humanity purposes. Foundation has no formal membership and in order to

form foundation must be followed the exist regulation. In Indonesia the constituent which rule the

founding of foundation is based on constitution number 16 year 2001 and constitution number 28

year 2004 (Purwanto, 2007). Foundation receives the source of funding from contribution which

is not binding to the foundation. The foundation gets contribution voluntarily either from

governance or other parties with purposes to help the foundation run the social, religion, and
humanity program. The foundation also can receive grant from someone who is still alive to give

their wealth with the willingness of the owner. The owner can give the grant to anyone even to

foundation with no binding between the owner and the foundation. The other source of funding

from foundation is another income such as dividend from investment activity. This income can be

from interest from saving and other trading activity in the foundation. Therefore, foundation must

prepare an accountable and responsible financial report to another party, donator and the member

of the foundation. This financial report will be used as an assessment and warranty to the donator

and make sure the program activity is well ran In order to achieve the social, religion and humanity

purposes.

Tax

Tax is a fee charged by a government on a product, income, or activity. If tax is levied

directly on personal or corporate income then it is a direct tax (Wahyudi, 2015). If tax is levied on

the price of a good or service, then it is called an indirect tax (reference). The purpose of taxation

is to finance government expenditure. One of the most important uses of taxes is to finance public

goods and services, such as street, lighting and street cleaning. Since public goods and services do

not allow a non-player to be excluded, or allow exclusion by a consumer, there cannot be a market

in the good or service is sometimes only applicable to profit organization which has stable income

every year. In Indonesia, non-profit organization is not necessary to pay the tax because they have
special treatment from government as they are running for social benefits. As time goes by,

commercial business feels unfair with the treatment because sometimes the non-profit organization

does a business activity which make profit for the sake of the owner or the business. Start from

1994 tax regulator in Indonesia reduces the treatment and makes it equal with commercial business

(Prasetyo, 2017). Based on the rules from ministry of finance about non-profit organization which

does not need to pay income tax is which business entity in the area of education, research, and

religion are not required to pay income tax., for foundation which already I business entity and

based on the constitution that rules the income from foundation it is part of the tax subject. For

example, foundation pays salary to employee which makes the foundation counted in the PPH 21

and they need to pay income tax (Wahyudi, 2015).

It is important to register foundation in the tax office as this form of non-profit organization is

required to pay income tax. The office taxes are necessary to know the business or social activity

that the foundation are running, the purpose of forming the foundation, and the characteristic of

the foundation. Because the source of funding from foundation are coming from external donor

who would like to help social problem surround them by investing in the foundation., the

foundation sometimes take profit from the activity and those activities counted as a business

activity because they earn profit from it. Therefore, the tax offices are able to decide the type of

tax that the foundation needs to pay. For example, foundation is funded by company A for social

purposes such as eradicating uneducated children in city A. The activity and program are clear
given by the company. Sometimes the members are using the funded money to gain more from it.

For example the business is selling the book to the children or parent that they supposed to give it

in free, then they gain income from the foundation activity. So, they are required to pay income

tax from that activity.

Conclusion

Non-profit organization is a social call that will help to solve the social problem around. There

are a lot of type’s non-profit organization and need to be aware how the organization is paying

attention to. Some of them are foundations they type of non-profit organization which they separate

the asset from the organization and the organizer. Their main source of funding is coming from

donor, grant, contribution, and other business activity. Some of them are not aware that they are

supposed to pay income tax from the activity. Because foundation in this era is no longer focusing

on the solving the social problem but more to gain more profit from the existing funding.

Foundation are obligated to pay the income tax because they are now a business entity and will be

cut monthly from the income.

References

Dees, J. G. (1998). The meaning of social entrepreneurship. Innovation, 2006(11-4–06), 1–6.

https://doi.org/10.2307/2261721

Pasetyo, A. (2017). Pajak yayasan bedasarkan undang undang di Indonesia. Retrived from

https://www.jasakonsultanakuntansi.com/pajak-yayasan/

Purwanto, T. (2007). Objek – Buka, (28), 1–11.

Santos, F. F. M. (2012). A Positive Theory Of Social Entrepreneurship. Journal of Business

Ethics, 111(3), 335–351. https://doi.org/http://dx.doi.org/10.2139/ssrn.1553072

Sri, O., Wanti, S., & Estrely, M. (2009). Non ‐ Profit Financial Management, (September).

Wahyudi, D. (2015). Analisis Empiris Pengaruh Aktivitas Corporate Social Responsibility

(CSR) terhadap Penghindaran Pajak di Indonesia. Edisi, 2(4), 5–17.