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The Development for Social Entrepreneurship Innovation: An Extension Tax Theory of Public Good for Social Enterprise in Malaysia
Rabiatul Adawiyah Mohd Ariffin, Zuhairah Ariff Abd Ghadas and Mohd Shahrilnizam bin Md Radzi
Introduction: The concept of social enterprise (SE) has drawn interest on a global scale as an alternative strategy for promoting community social well-being. With the help of this revolutionary paradigm, corporate organisations’ objectives have expanded their conventional focus from making money to addressing social challenges and promoting social cohesion. The idea of social entrepreneurship is not just more broad than that of a non-profit organisation; it also refers to a number of corporate entities or business models that use both profit-making and altruistic objectives. Unlike charitable organisations that received tax exemption treatment, SEs have not received a tax exemption even though Malaysia revised its regulations and accredited SEs.
Objective: Therefore, this article aims to expand the theory of public good to SEs in Malaysia.
Methods: In order to review and analyse legal theories for the development and application to social entrepreneurship, this research followed a legal doctrinal methodology. This study used primary and secondary legal sources to gather its data. Library research was used to find the aforementioned data using legal databases, websites, or textual sources.
Findings: Considering the SE sector’s contribution to social development in Malaysia, similar to charitable organisations, it is necessary for the Malaysian government to adopt a special tax treatment to support and promote the existence of SEs in the market.
Results: The Public Good Theory, which primarily states that income tax exemption is granted for non-profit charity organisations owing to their dedication to generating public benefits, is used to justify and derive the tax exemption treatment for charitable organisations. This paper suggests applying the public good theory to SE in order to grant it a certain tax benefit or tax exemption status.
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