Regulations on activities of non-profits in Ukraine in 2016

Regulation of non-profitable organizations’ activity

Development of constitutional state is possible only if a civil society exists. Public associations occupies a special place there. For protecting its own rights and interests and rights of its members public associations need some law consultations and help sometimes. First of all, it related to changes on public associations’ activity in laws.

The main law of this sphere is the Law of Ukraine “On public associations” (hereinafter – the Law). The Law came into force on the 1^st of January 2013. Clauses of previous Law of Ukraine “On association of citizens” , dated 1992, which had regulated activity of public associations until 2013, were recognized undemocratic by European Court of Human Rights in 2008.

Previously our lawyers have written a detail description about main novelties on activity and procedure of registration which are introduced by the Law.

It’s important to admit that new requirements are not used for public associations or unions which had been registered before, until the moment of taking decisions about name change or about registration of legal entity. It means that old name may not be changed if it is required to type of public association until public association will take a decision on its name change by itself. In general, this article will related to hundreds of public associations which names have words such as a “committee”, “agency” or have parts of companies’, institutions’, organizations’ or individuals’ names which were used without their permission.  Considering hundreds of associations which have identical or similar names with state bodies in Unified State Register, these clauses of restrictions are reasonable. It’s unlikely that citizens can distinguish this public association from state body of Ukraine.

We can add some comments to the principles of public associations’ activity. The principle of equality and principle of equal rights of members were disappeared. The Law defines such principles as  a principle of voluntary, a principle of self-government, a principle of exterritoriality, a principle of equality before law, a principle of lack of members’ property interest, a principle of transparency, a principle of openness, a principle of publicity. There are also legal explanations for every of them and this matter is important for legal practice.

In general public associations are non-profitable. This matter is regulated by the Tax Code of Ukraine (hereinafter- the Code). The procedure of non-profitable organizations’ taxation has been changed since the 1^st of January 2015 according to the Law of Ukraine “On putting changes to Tax Code of Ukraine and other laws according to the tax reform” dated the 28^th of December 2014.  We had explained this previously. But those changes can be considered as unsuccessful. Because 133 article of the Code was changed again according to the Law of Ukraine no. 652 - VIII dated the 17^th of July 2015 in the middle of 2015. There was defined a new edition of term “a non-profitable organization”.

The Law of Ukraine no. 652 – VIII has a new article no. 133.4 which is regulated criteria of getting non-profit status. According to this article organization must have such requirements:

• to be established and registered according to the laws which regulate non-profitable organizations’ activity;
• organization’s incorporate documents must have prohibition of distribution of profits or their parts among establishers, members, members of management, workers (except their salaries and Single Social Contributions) and other persons;
• organization’s incorporate documents must have clauses about transferring NGO’s property to one or more similar non-profitable organizations  or transferring property to a state budget in a case of liquidation (merger of organizations, division of organizations, affiliation or reformation of organizations);
• organization must be included on the Register of non-profitable organizations.

• action algorithm of non-profitable organizations and control bodies during inclusion and exclusion from the Register;
• characteristics of being in the Register, organization’s inclusion and exclusion from the Register;
• a structure of non-profitable codes was changed.

Comparison of a new structure and an old structure according to the Order no. 37

• According to the new Decree you mustn’t go to the State Fiscal Service of Ukraine by person. You can submit an applicant form for getting non-profitable status online.
• There is a term of getting a decision – 14 days. The content of an application form reducing four times (it’s one page now).
• The amount of information is increased and access to the Register is opened. The Register is consisted of identification and registration information of non-profitable organizations. Unlike previous Order there is no obligation to display information about organization’s location, chiefs, chief accountants, founders, economical information which are characterized financial indicators of non-profitable organization’s activity. The Register of non-profitable organizations is open and available for everyone via web-site of the State Fiscal Service of Ukraine.

As follows this Decree provides execution of 133.4 article of the Code and support regulation of disputes between the State Fiscal Service of Ukraine and tax payers during using clauses of the Tax Code of Ukraine on taxation of non-profitable organizations.