A not-for-profit organization is a type of organization that does not earn profits for its owners. All of the money earned by or donated to a not for profit organization is used in pursuing the organization’s objectives. Typically not-for-profit organizations are charities or other types of public service organizations. They cannot distribute corporate income to shareholders.
The Law defines that not-for-profit are two types – associations and foundations, according to their device as legal persons. The Association is a union of physical or legal entities for achieving non-profit goal. The Foundation is a legal person without membership composition, performing community service or activity for private benefit. The Foundation can also support projects which are implemented abroad.
Not-for-profit organizations are subject to income tax for the taxable benefit they accumulate. Income from donations and sponsorship is not regarded as business income and cannot be subject to corporate tax.
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