Tax Provision on Donation

Tax Provision on Donation

PPN - 04 Dec, 2023 09:12 WIB

Jakarta, Ideatax -- In mid-July 2021, the Indonesian public was shocked by a report from an independent organization stating that Indonesia is the most generous country in the world. The report was released by the Charities Aid Foundation (CAF), a philanthropic organization registered in the UK. In its report, CAF (2021) said that Indonesia is the country with the highest World Giving Index (WGI) in the world in 2020, which is 69%.


Compared to the previous year, Indonesia's WGI score in 2020 has increased by 38%. In 2019, Indonesia's WGI score was 50%, or ranked as the tenth most generous country in the world. Even compared to neighboring countries, Indonesia's WGI score is still superior. Australia, for example, has a WGI score of 49% in 2020. This value also places the Kangaroo country as the 5th most generous country in the world, like New Zealand, which has a WGI value of 47% or is ranked as the seventh most generous country in 2020.


Picture 1: The World's Most Generous Countries in 2020

Source: Charities Aid Foundation, 2021


To illustrate, the World Giving Index (WGI) is an index that ranks the generous behavior of people in the world. Three main aspects assessed in the WGI are as follows:

  1. The willingness of people in a country to help or donate to strangers
  2. The willingness of people in a country to donate money for social activities
  3. The willingness of people in a country to become social volunteers


It is not without reason that Indonesia ranks as the most generous country in the world. According to the Indonesian Philanthropy Institute (2021), there are four factors that make Indonesia the most generous country. First, Indonesia is known as a religious country. The strong influence of religion teachings and local traditions related to social generosity makes it easy for Indonesians to be involved to carry out social activities. Second, compared to other countries, economic conditions in Indonesia are relatively better despite experiencing economic contraction due to the pandemic. BPS (2021) noted that in the second quarter of 2020, or shortly after the COVID-19 pandemic entered Indonesia, Indonesia's economic growth had contracted by -5.07%. However, slowly but surely, economic growth is gradually improving. Even in the second quarter of 2021, BPS (2021) reported that economic growth in Indonesia was 7.05%. Third, there is a massive transformation of philanthropic activities. Philanthropy that was once conventional has gone digital with the emergence of new platforms. Fourth, the involvement of influencers in humanitarian activities makes it more prevalent today.


Tax Provisions on Donation
In relation to donations, the tax provisions regulate it specifically. Article 4 paragraph (3) of the income tax law stipulates that assistance or donations, including zakat received by amil zakat agencies or amil zakat institutions established or authorized by the government and received by the entitled recipients of zakat or religious donations that are mandatory for adherents of recognized religions in Indonesia, received by religious institutions established or authorized by the government and received by the entitled recipients of donations, the provisions of which are regulated by or based on


Government Regulations are exempt from tax objects
Furthermore, Article 6 paragraph (1) letters i, l, and m also stipulates that donations in the context of national disaster management, donations of educational facilities and of sports development whose provisions are regulated by Government Regulation can be deducted from gross income to calculate the amount of taxable income.

However, Article 9 paragraph (1) of the Income Tax Law mandate that donations other than those referred to in Article 6 paragraph (1) above cannot be deducted from gross income to calculate the amount of taxable income.
Technically, the tax regulation on donations is further regulated through Government Regulation Number 93 Year 2010. According to the provision, there are five types of donation that can be deducted from gross income in the context of calculating taxable income:

  1. National disaster management donations are donations for victims of national disasters that are donated directly through disaster management institutions or donated indirectly through institutions or parties that have obtained permission from authorized agencies/institutions to collect disaster management funds.
  2. Research and development donations are donations for research and development conducted in the territory of the Unitary State of the Republic of Indonesia submitted through research and development institutions.
  3. Donations of educational facilities are donations in the form of educational facilities submitted through educational institutions. 
  4. Donations of sports coaching are donations to foster, develop, and coordinate or a combination of branch organizations/types of sports achievements channeled through sports coaching institutions. 
  5. Social infrastructure development costs are costs incurred for the purposes of building facilities and infrastructure for the public interest and are non-profit.


The provisions of Government Regulation Number 93 of 2010 also clearly stipulate that there are four conditions that must be met by taxpayers who make donations so that the donations made can be deducted from gross income:

  1. Taxpayers have fiscal net income based on the Annual Income Tax Return for the previous fiscal year.
  2. The provision of donations and/or expenses does not cause a loss in the Tax Year the donation is given. 
  3. The donation is supported by valid evidence. 
  4. The institution that receives the donation and/or fee has a Taxpayer Identification Number, except for entities that are exempted as tax subjects as stipulated in the Law on Income Tax.


Furthermore, the provisions of PP No. 93/2010 also stipulate that the amount of donations and/or social infrastructure development costs that can be deducted from gross income as referred to in Article 1 for 1 (one) year is limited not to exceed 5% (five percent) of the total net income of the previous tax year. In addition, donations are also not deductible from the gross income of the donor if the donation is made to a party with a special relationship.
On the other hand, recipients of donations are obliged to submit reports on receipts and expenditures to the Director General of Taxes. As for disaster management organizations that receive donations, they are obliged to submit reports every three months. As for other donation recipient institutions, they are obliged to report donations no later than the end of the tax year of receipt of donations.


Based on the above, taxpayers can charge humanitarian donations and other donations in calculating the amount of taxable income as long as they fulfill the provisions of Government Regulation Number 93 of 2010. Nonetheless, to improve the optimization and supervision of donations in taxation provisions, there are several things that need to be considered by the government. First, the provisions of the Government Regulation have not explicitly regulated the sanctions given to taxpayers who give and receive donations if they do not report the donations to the Director General of Taxes. Second, the provisions of GR No. 93/2010 have not regulated in detail the forms and procedures for reporting donations. Third, the existing provisions do not explicitly mention whether donations can be made to overseas institutions.

BPS. (2021, Maret 10). [Seri 2010] Laju Pertumbuhan PDB menurut Pengeluaran (Persen), 2020. Retrieved from Badan Pusat Statistik:
Charities Aid Foundation. (2021). CAF World Giving Index 2021: A global pandemic special report. London: Charities Aid Foundation.
Donor Tracker. (2021, October 16). Japan ODA funding trends. Retrieved from Donor Tracker:
Filantropi Indonesia. (2021, September 29). Indonesia Kembali Jadi Negara Paling Dermawan di Dunia. Retrieved from Filantropi Indonesia:
Japan Embasy. (2021, October 21). Half Century of Partnership Official Development Assistance from Japan to Indonesia. Retrieved from Japan Official Development Assistance:
Lembaga Dana Kerjasama Pembangunan Internasional. (2021). LAPORAN KEUANGAN: BA 999.02 Pengelolaan Hibah kepada Pemerintah Asing/ Lembaga Asing TA 2020 (Audited). Jakarta: LDKPIP.

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