Govt asked to revise taxation law to boost philanthropy

Govt asked to revise taxation law to boost philanthropy

Leo Wahyudi S, The Jakarta Post, Jakarta

Public Interest Research and Advocacy Center (PIRAC) chairman
Zaim Saidi has urged the government to review the taxation law so
as to accommodate large companies that wish to set aside part of
their revenue for philanthropic purposes.

"Through the revision of the taxation law, the government
should establish a formal mechanism for corporate philanthropy to
further promote social welfare," he said here on Thursday.

The formal mechanism was badly needed to avoid confusion in
fund-raising activities between the government and
nongovernmental organizations as well as private companies, he
said.

The formal mechanism was also required to help speed up fund-
raising mobilization, Zaim said at a public discussion on
corporate philanthropy.

He explained that a formal mechanism would enable companies to
prepare their accounts more easily.

Zaim reiterated that revision of the taxation law was
essential because the government had failed to set up a policy
dealing with the state's duty to promote social welfare.

He cited that many countries had in place a similar system,
which enabled companies to benefit from a reduction in taxation
for any social assistance it made.

Zaim also underlined the importance of a comprehensive study
on corporate philanthropy in a bid to help optimize the large
potential.

The collection of corporate donations on a large scale was
considered routine as the benevolence simply involved short-term
plans, he said.

"The companies are mostly motivated to help people in need
instantly rather than on a long-term basis," Zaim said.

Of 180 companies shown to have fulfilled their corporate
social responsibilities last year, 80 percent channeled their
donations through coincidental activities, such as social service
or other emergency assistance.

"The primary motivation for the philanthropy was related to
religion," he said, adding that at least 42 percent of the
companies' social activities took place during the Ramadhan
fasting month.

The social funds collected from the 180 companies reached Rp
115 billion (US$11.5 million) last year and were spent on 279
social activities, Zaim said.

The largest contribution (amounting to Rp 34.9 billion) was
from mining companies, followed by transportation and automotive
companies (Rp 14.3 billion).

Zaim said the education and research sector got the highest
proportion of donations, at Rp 66.8 billion, followed by social
welfare, at Rp 38 billion.

He further urged the companies to set aside any promotional or
other corporate motives when making donations.

He said that total social funds, including alms, in Indonesia
were roughly estimated at Rp 1 trillion last year, very much
lower than the Rp 2,030 trillion (US$203 billion) in the U.S.
over the corresponding period.

However, Zainal Abidin, one of PIRAC's staff members, said
that none of the companies had made a donation for legal aid or
advocacy.

"I think that legal aid has a low priority because the
companies see little benefit in it," Abidin said.