On July 10, 2017, the President of Ukraine submitted to the Parliament Draft Laws No. 6674 “On Amendments to the Tax Code of Ukraine to ensure openness to the public information on the financing of the activities of public associations and the use of international technical assistance” and No. 6675 “On Amendments to Some Legislative Acts on ensuring openness to society providing of information on financing of the activities of public associations and the use of international technical assistance”.
According to the draft laws, public associations with annual income exceeding 300 living wage of able-bodied persons are obliged to submit additional annual financial reports to the State Fiscal Service, which will publish these reports on their official web-site. Reports should include information not only on the NGO but also on all individual entrepreneurs, with which the NGO has a contractual relationship if the annual income of the entrepreneur exceeds 50 living wage for able-bodied persons.
These requirements impose an additional burden on NGOs and individual entrepreneurs and are clearly discriminatory: these requirements are not applied to other legal entities of public and private law. In addition, the disclosure of information about individuals that is not identified by the draft laws (they only indicate that the form of the report and the submission for publication is approved by the government) and the purpose of processing these personal data violate the Law of Ukraine “On Protection of Personal Data.”
At the same time, all data that need to be included in the annual report have already been submitted to the State Fiscal Service by the NGO and individual entrepreneurs earlier in accordance with the Tax Code. Instead, the lack of submission of this overlapping information to NGOs and individual entrepreneurs results in the application of appropriate sanctions against them.
According to the draft laws, these severe sanctions applied to NGOs are exclusion from the Register of non-profit institutions and organizations and charging of the tax from profit tax of enterprises, fines and penalties in accordance with the rules of the Tax Code – entail a significant financial burden for NGOs on tax payments.
Particularly impressive is the fact that sanctions are imposed according to the decision of the interested body – the State Fiscal Service – without a court decision, without drawing up a protocol on an administrative offense. This contradicts Clause 9 of “Fundamental Principles on the Status of Non-Governmental Organizations in Europe”, according to which any act or omission by the public authority in relation to non-governmental organizations should be considered administratively, as well as in an independent, impartial and endowed court with full jurisdiction.
In our opinion, the requirements introduced by these draft laws violate international standards of freedom of association and are discriminatory in comparison with other economic entities. We welcome the voluntary disclosure of NGOs’ annual reports on their activities and their financial results as a good means of informing society and ensuring transparency. Because only society has the right to determine the effectiveness of the activities of civic organizations, and the state should only promote the freedom of association.
Valeria Lutkovska, Ukrainian Parliament Commissioner for Human Rights
Arkadiy Buschenko, Executive Director of the Ukrainian Helsinki Human Rights Union
Yevhen Zakharov, Director of the Kharkiv Human Rights Protection Group