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Ukraine

Financing of Charities (UA0032)

Overview

At-a-Glance

Action Plan: Ukraine Second Action Plan 2014-2015

Action Plan Cycle: 2014

Status: Inactive

Institutions

Lead Institution: Ministry of Finance

Support Institution(s): Ministry of Social Policy, Ministry of Culture, Ministry of Justice, NGO Ukrainian Independent Centre for Political Research, unspecified NGOs and international organisations

Policy Areas

Civic Space, Freedom of Association, Legislation & Regulation, Legislative, Public Participation

IRM Review

IRM Report: Ukraine End-of-Term Report 2014-2016, Ukraine IRM Report 2014 – 2015

Starred: No

Early Results: Did Not Change

Design i

Verifiable: Yes

Relevant to OGP Values: Civic Participation

Potential Impact:

Implementation i

Completion:

Description

Developing and submitting to the Cabinet of Ministers of Ukraine in due course the draft laws on amending the Law of Ukraine on Charitable Activities and Charities and the Budget Code of Ukraine in order to allow charitable organisations to receive financial support for performing state policy tasks and providing social services

IRM End of Term Status Summary

2. Financing of charities

Commitment Text: 2. Developing and submitting to the Cabinet of Ministers of Ukraine in due course of the draft laws on amending the Law of Ukraine on Charitable Activities and Charities and the Budget Code of Ukraine in order to allow charitable organisations to receive financial support for performing state policy tasks and providing social services.

Expected result: relevant draft law endorsed by the Cabinet of Ministers of Ukraine, submitted to the Verkhovna Rada of Ukraine, and followed up until adoption.

Start Date: Not specified End Date: 31 March 2015

3. Obtaining not-for-profit status for CSOs

Commitment Text: 3. Regulating the issue of granting civic associations the non-profit organisation status by means of entering a civic association in the Register of Non-profit Institutions and Organisations on the “one-stop shop” basis, with regulating document processing deadlines, defining grounds for denial of such a status, and envisaging free on-line access to the Register, in particular through the development and submission to the Cabinet of Ministers of Ukraine in due course of a draft Law of Ukraine on Amending the Law of Ukraine on Civic Associations and the Law on State Registration of Legal Entities and Individual Entrepreneurs, and other legislative acts as required.

Expected result: relevant draft laws endorsed by the Cabinet of Ministers of Ukraine, submitted to the Verkhovna Rada of Ukraine, and followed up until adoption.

Editorial Note: The IRM researcher grouped these two commitments together since they are both concerned with creating an enabling environment for civil society organisations.

Responsible institution(s): Ministry of Finance (commitment 2), State Registration Service (commitment 3)

Supporting institution(s): Ministry of Social Policy, Ministry of Culture, Ministry of Justice, NGO Ukrainian Independent Centre for Political Research, unspecified NGOs and international organisations (commitment 2); Ministry of Justice, Ministry of Finance, State Fiscal Service, NGO

"Ukrainian Independent Centre for Political Research", United Nations Development Programme (UNDP), non-specified NGOs and international organisations (commitment 3).

Start Date: Not specified End Date: 30 April 2015

Commitment aim

Both commitments were designed to create an enabling environment for civil society organisations. Commitment 2 focused on improving legislation to provide additional financial support to charities in Ukraine. Commitment 3 aimed to simplify the procedure for granting CSOs non-profit status. If implemented, this would be a step forward in improving conditions for the operation of charities and other non-profit organisations in Ukraine, as they would alleviate some of the administrative barriers faced by CSOs.

Status

2. Financing of charities

Midterm: Not started

After adoption of the OGP action plan, the Ministry of Finance objected to this measure and refused to implement it. The ministry was concerned that the measure, if implemented, would require additional budgetary allocations. In June 2015, the vice prime minister who chairs the OGP Coordination Council issued a formal instruction to the ministry to hold negotiations with civil society representatives, but the ministry did not do so. The issue remained unresolved, hence, the measure’s implementation had not yet started.[Note 6: Independent Reporting Mechanism (IRM) Progress Report 2014-15: Ukraine, 29.]

End of term: Not started

Since the midterm report, implementation of the commitment has still not begun. The Ministry of Finance continued to object to the commitment. According to the Government’s final self-assessment report, the ministry stated that Ukrainian law already extends sufficient support to charities in Ukraine. In particular, they can compete to obtain social services provision and public procurement contracts, and they enjoy certain tax exemptions (charity assistance and property transferred as international aid are exempt from the VAT; charities do not pay income tax).

3. Obtaining not-for-profit status for CSOs

Midterm: Not started

The procedure for obtaining non-profit tax status by NGOs and other civic associations was cumbersome and time-consuming. An NGO first had to register as a legal entity with the Ministry of Justice, then apply to the Fiscal Service for non-profit status. The Fiscal Service often rejected such applications due to problems with NGO statutory documents. These had to go back to the Ministry of Justice for amendment. The commitment aimed to streamline procedures and introduce a one-stop shop principle for obtaining the relevant status. That is, applicant NGOs would apply to the Ministry of Justice, which would then arrange registration with the tax authorities. In its midterm self-assessment report, the government informed about a draft law adopted in the first reading in July 2015, but failed to address the issue that the OGP measure targeted. It did not provide for the one-stop procedure for civic organisations to obtain their registration as legal entities or eligibility for non-profit tax status.[Note 7: Ibid, 29.]

End of term: Complete

The final wording of the new law on state registration of legal entities, private entrepreneurs, and civic formations, as adopted in November 2015 (enacted in December 2015), included provisions on the one-stop procedure for obtaining non-profit status by CSOs. An applicant entity was allowed to submit, at the same time, a request for registration as a legal entity and non-profit organisation. Later, in July 2016, the government approved regulations on the Procedure for maintaining a Register of Non-Profit Organisations to reflect the new changes in the law. According to the government’s self-assessment report, NGOs took part in the development of the final version of the law and government regulations. However, a CSO representative noted that the new provisions had not been implemented. State registrars refused to transfer applications to tax authorities, referring to the lack of electronic data exchange.[Note 8: Written interview with Maksym Latsyba, NGO Ukrainian Centre for Independent Political Research.] This indicates that the one-stop procedure is not yet fully functioning. However, as the commitment sought only to adopt new changes in the law, which has been done, the commitment is considered complete. In addition, other parts of the commitment carried out include regulating deadlines for processing applications for obtaining non-profit status, defining grounds for denial of such status, and envisaging free online access to the Register.[Note 9: Ibid.]

Did it open government?

2. Financing of charities

Civic participation: Did not change

The commitment aimed to improve the operational environment for charity organisations by broadening their funding sources. The commitment did not lead to any changes since it was not implemented, due to the position of the Ministry of Finance. It showed that the government did not really “own” and accept this OGP commitment, and was reluctant to implement it.

3. Obtaining not-for-profit status for CSOs

Access to information: Marginal

Civic participation: Marginal

The commitment sought to streamline the procedure for obtaining non-profit status by CSOs. The new law on state registration of legal entities introduced provisions for the one-stop method for registering new entities as non-profit organisations. The government adopted the necessary bylaws. However, the new legal provisions have not been fully enforced in practice. If implemented, it could have significantly simplified CSO registration, and limited their contacts with public authorities (by excluding direct interaction with tax authorities). This would have reduced the possibilities for corruption and red tape. The parts of the commitment that were implemented (regulating deadlines for processing applications for obtaining non-profit status, defining grounds for denial of such status, envisaging free online access to the Register) did improve the operational environment for CSOs, by streamlining relevant procedures and enabling better civic participation, but only marginally. They also improved access to information, as the Register of Non-profit Institutions and Organisations became available online.

Carried forward?

2. Financing of charities

The commitment was not carried over to the new action plan. It appears that, as worded, it goes against the policy priorities of the government, hence, will no longer be pursued. The government should evaluate the operational environment for CSOs regarding taxation and sources of funding in a comprehensive way, and include clear commitments on improving the environment in future action plans.

3. Obtaining not-for-profit status for CSOs

The commitment was not included in the new action plan. The government has to ensure that the adopted legal framework be enforced by taking all necessary organisational and technical measures.

Commitments

  1. Infrastructure Data Portal

    UA0070, 2018, Anti-Corruption

  2. Open Standard for e-System

    UA0071, 2018, E-Government

  3. Ensuring Openness and Transparency of Selling Public Assets and Property

    UA0072, 2018, E-Government

  4. Transparency in Public Procurement (Prozorro)

    UA0073, 2018, Access to Information

  5. Awarenss Raising About Social and Economic Development

    UA0074, 2018, Aid

  6. e-Calls for Proposals to Support CSOs

    UA0075, 2018, Civic Space

  7. Beneficial Ownership Registry

    UA0076, 2018, Anti-Corruption

  8. Anti-Corruption Training

    UA0077, 2018, Anti-Corruption

  9. Publishing Environmental Information

    UA0078, 2018, E-Government

  10. Database of Natural Resources

    UA0079, 2018, Access to Information

  11. Interactive Map of Mines

    UA0080, 2018, E-Government

  12. Priority Electronic Services

    UA0081, 2018, Citizenship & Immigration

  13. Online Platform for Executive Bodies and CSOs

    UA0082, 2018, Civic Space

  14. EITI Online Data

    UA0083, 2018, Access to Information

  15. Electronic Resources for Education

    UA0084, 2018, Access to Information

  16. Online Verification of Education Certificates

    UA0085, 2018, E-Government

  17. Free Access to National Repository for Academic Texts

    UA0086, 2018, E-Government

  18. Administrative Service Decentrilisation and Improvement

    UA0057, 2016, Capacity Building

  19. United State Portal Extension; Electronic Government Information Services Unification; Modern Tools for Electronic Identification

    UA0058, 2016, Capacity Building

  20. System for Entities Performing Government Functions

    UA0059, 2016, Anti-Corruption

  21. Free Urban Planning Documentation

    UA0060, 2016, E-Government

  22. Beneficial Ownership Verification System

    UA0061, 2016, Anti-Corruption

  23. CoST Beneficial Ownership Standards

    UA0062, 2016, Anti-Corruption

  24. Transpartent Budget System

    UA0063, 2016,

  25. Starred commitment Open Public Procurement

    UA0064, 2016, Access to Information

  26. Starred commitment Extractive Industries Transparency Initiative

    UA0065, 2016, Anti-Corruption

  27. Environmental Public Monitoring

    UA0066, 2016, Access to Information

  28. Community Policing System

    UA0067, 2016, Education

  29. Draft Law on Public Consultations

    UA0068, 2016, Legislation & Regulation

  30. Development of E-Democracy.

    UA0069, 2016, E-petitions

  31. Improve Government Rules on CSO Involvement

    UA0031, 2014, E-Government

  32. Financing of Charities

    UA0032, 2014, Civic Space

  33. Not-For-Profit Status for CSOs

    UA0033, 2014, Civic Space

  34. Public Participation Law

    UA0034, 2014, E-Government

  35. Establishing Rules on Processing Official Information

    UA0035, 2014, Access to Information

  36. Access to Urban Planning Documents

    UA0036, 2014, E-Government

  37. Starred commitment Access to Communist-Era Archives

    UA0037, 2014, Legislation & Regulation

  38. Starred commitment Draft Law on Open Data

    UA0038, 2014, Access to Information

  39. Starred commitment Supervisory Mechanism for the Right to Information

    UA0039, 2014, Access to Information

  40. Compliance with EITI

    UA0040, 2014, Anti-Corruption

  41. Monitoring of Infrastructure Projects

    UA0041, 2014, Anti-Corruption

  42. Adopt Regional Anti-Corruption Programmes

    UA0042, 2014, Anti-Corruption

  43. Corruption Risk Assessment Methodology

    UA0043, 2014, Anti-Corruption

  44. Starred commitment Asset Disclosure on a Single Web Portal

    UA0044, 2014, Anti-Corruption

  45. Law on Administrative Procedure

    UA0045, 2014, Legislation & Regulation

  46. Law on Streamlining Payment of Administrative Fees

    UA0046, 2014, E-Government

  47. Administrative Services Portal

    UA0047, 2014, Access to Information

  48. Draft Law on Decentralisation of Administrative Services

    UA0048, 2014, Legislation & Regulation

  49. Draft Law on Social Services

    UA0049, 2014, E-Government

  50. e-Government Laws

    UA0050, 2014, E-Government

  51. Electronic Readiness Assessment

    UA0051, 2014, E-Government

  52. Government Regulations on Open Data

    UA0052, 2014, Access to Information

  53. Electronic Democracy Development Roadmap

    UA0053, 2014, E-Government

  54. Open Budget Initiatives

    UA0054, 2014, Access to Information

  55. e-Petitions

    UA0055, 2014, Dispute Resolution & Legal Assistance

  56. e-Governance Training for Local Government

    UA0056, 2014, Capacity Building

  57. Laws on Public Participation

    UA0001, 2012, Civic Space

  58. Amendments to the Law on Community Associations

    UA0002, 2012, Civic Space

  59. Amendments to Resolutions on Collaboration with Civil Society

    UA0003, 2012, E-Government

  60. Training for Public Servants on Consultations

    UA0004, 2012, Capacity Building

  61. Harmonisation of Access to Information Laws

    UA0005, 2012, Access to Information

  62. By-Laws on Access to Information

    UA0006, 2012, Access to Information

  63. Guidelines for Classifying Data

    UA0007, 2012, Public Participation

  64. Public Information Recording Systems

    UA0008, 2012,

  65. Law on Public Broadcasting

    UA0009, 2012, Civic Space

  66. Public Access to Information in State Registers

    UA0010, 2012, E-Government

  67. Starred commitment Extractive Industries Transparency Initiative

    UA0011, 2012, Anti-Corruption

  68. Law for Controlling Declarations of Public Servants

    UA0012, 2012, Anti-Corruption

  69. Public Declarations of Officials’ Assets

    UA0013, 2012, Anti-Corruption

  70. Guidelines on Conflicts of Interest

    UA0014, 2012, Anti-Corruption

  71. Updated Anti-Corruption Laws

    UA0015, 2012, E-Government

  72. Regional Anti-Corruption Programmes

    UA0016, 2012, E-Government

  73. Law on Competitive e-Government Procurement

    UA0017, 2012, Anti-Corruption

  74. Starred commitment Administrative Services Reforms

    UA0018, 2012, E-Government

  75. Electronic Access to Administrative Services

    UA0019, 2012, E-Government

  76. Governmental Web Portal of Administrative Services

    UA0020, 2012, E-Government

  77. Administrative Services in a Digital Format

    UA0021, 2012,

  78. Starred commitment Regional Administrative Service Centres

    UA0022, 2012,

  79. Programme for Promotion of e-Government

    UA0023, 2012, E-Government

  80. Electronic Collaboration Between Executive Agencies

    UA0024, 2012,

  81. Web-Based Petitions System

    UA0025, 2012, E-petitions

  82. One Stop Shop for e-Reporting

    UA0026, 2012, E-Government

  83. e-Region Pilot Project

    UA0027, 2012, E-Government

  84. Network of e-Government Practitioners

    UA0028, 2012, Public Participation

  85. Public Libraries as Bridges Towards e-Governance

    UA0029, 2012, E-Government

  86. e-Government Knowledge Management Portal

    UA0030, 2012,

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