Tax reporting for non-profit organizations (NPOs) in Malaysia

This study attempted to examine the relationship between financial characteristics and tax payment of non-profit organizations (NPOs) in Malaysia. So far, there have been no studies conducted on this issue and little is known about the extent of the problem. Therefore, this exploratory study was carried out to examine the tax reporting of NPOs registered with Registrar of Societies (ROS) in Malaysia. The objectives of the study were to examine the financial characteristics of taxable and non-taxable NPOs, and to investigate how donations and other income received such as, members´ expenses, professional fees and members´ accumulated fund could be associated with the taxation paid by them. Therefore, considering the importance of NPOs and their contribution of income tax revenue to the country, the current study had provided significant results on the relationship between financial characteristics of the NPOs and their tax payment. Hence, this study had contributed to the body of knowledge and should be of assistance to policymakers with regards to the financial behavior of the taxable NPOs, so as to further review the tax system, especially, the deductibility of donations made under section 44 of the Income tax Act 1967.