Registered a charity in the new not-for-profit register
Our Client has previously heard about Resolution of the Cabinet of Ministers of Ukraine number 440 in accordance with which it is necessary to include a charitable organization in the new register of non-profit organizations and establishments. So he turned to us for clarifications and legal support in this regard.
The Client was worried that more than a month has passed since the day when this decision entered into force, but he never received a letter from the tax office requesting the necessary documents to confirm the compliance of his charter with the new requirements.
Therefore, it was likely that the letter had been lost in the sending process or the tax office officers forgot about it. Keeping in mind the previous experience of bringing documents in line with changes in legislation within the established time frame, such as: switching to a new KVED (Ukrainian Industry Classification System) before the end of 2012, disclosing the ultimate beneficial owners by May 25, 2015, the Client suggested that closer to 31 December 2016 the corresponding state bodies would have a big workload, as in previous years, so he made a decision that time to prepare in advance and comply with the requirements of the law.
Our lawyers have extensive experience working with non-profit organizations and are well-versed in the issues of this area, so they immediately got down to business. After analyzing the charter, it turned out that, in general, its provisions were consistent with the new legislation, but still required some refinement.
In the charter of the Client’s organization, certain inaccuracies and wordings were found that were different from similar phrases specified in the Tax Code, which, unfortunately, could become the basis, albeit formal, for refusal to include non-profit institutions and organizations in the register.
For example, one of the requirements of subparagraph 133.4.1. Clause 133.4 of Article 133 of the Tax Code of Ukraine is as follows: - constituent documents [of the organization - auth.] contain a prohibition on the distribution of income (profit) or part thereof among founders (participants), members of an organization, employees (except for payment of their labor, accrual of a social security tax), members of governing bodies and other persons associated with them.
If the charter of the organization indicates “social surcharges” instead of “a social security tax”, there is a possibility that the inspector may consider this to be a mistake and conclude that this a charter does not correspond to the “letter of the law” - in the truest sense. In practice, we quite often came across the fact that inspectors require direct copying of the wording from the code.
Therefore, in order to avoid misunderstandings with the tax office and loss of time, we recommended that the Client amend the charter of the organization. In fact, the organization was registered in 2013 and a scan copy of its charter was not posted on the electronic services portal.
The lawyers of our company conducted a thorough check and profound revision of the charter, registered its new revision and submitted a copy to the tax office.
In anticipation of a tax decision, we constantly monitored and controlled the process and time limits for the consideration of the case, since we understood that the inspectors were very busy with such cases and might not adhere to the time limits set by the Law. As a result, our company received a new Decision for the Client on inclusion in the register of non-profit institutions and organizations within the time limits established by law.
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