14.05.2008 Switzerland. An employee of the Swiss Red Cross, SRC, transports aid supplies for Myanmar in the center for logistics of the SRC, in Bern. The Swiss Red Cross delivers blankets, kitchen sets, and material to purify water to cyclone stricken Myanmar. (AP Photo/Keystone, Peter Klaunzer)
Photo: AP
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Grant Expectations
// Vladimir Putin deprives private IOs of tax remissions
Yesterday Prime Minister Vladimir Putin signed a decree that drastically reduces the range of international organizations whose grants fall under tax remissions. Only 12 intergovernmental associations are now on the list that earlier included 101 organizations: All large private foundations have been excluded. Their representatives fear that the decision of the government will cut the volume of grants in the social sphere and mark a new stage of attacks against NGOs.
The new list of IOs whose grants are exempted from the 24% profits tax includes the Commission of the European Communities, the Council of the Baltic Sea States, the Nordic Council of Ministers, the IAEA, the Organization of the Black Sea Economic Cooperation, the European Support Fund (EURIMAGES) established for the joint production and distribution of Cinematographic Audiovisual Works of Art, the Joint Institute for Nuclear Research, and several UN programs. The list now includes only intergovernmental organizations, and it doesn’t comprise private foundations, which are famous in Russia for their grant activity, such as the Ford Foundation, the MacArthur Foundation, the Charity Aid Foundation (ÑAF), the Eurasia foundation (USA), the World Wild Fund (Switzerland), the International Federation of Red Cross and Red Crescent Societies (IFRC) (Switzerland), the Global Fund to Fight AIDS (Switzerland), the Royal Society of London (Great Britain) and some others.
Representatives of the western private foundations were surprised to learn that their organizations are not on the list any longer. In the CAF they told Kommersant that they didn’t receive any request to rewrite or submit documents, which could be a permit to the new list. “They have recently suggested that we submit documents for a list of organizations that claim to be exempted from the tax for natural persons in case the money is allocated for individual grants. These are the only novelties we know about,” says Yuliya Chekmareva, Head of the CAF Legal Department, “That is it’s not clear how to get on the list and what are the reasons for a possible expulsion.”
In the view of experts, the money of western private foundations can be directed to Russia in the form of donations. For instance, President of the New Eurasia foundation Andrey Kortunov confirmed it to Kommersant that the money his organization receives from the USA “are donations, rather than grants, and here a different tax scheme is applied.”
According to Ms Chekmareva, the abolition of the tax remission is the annihilation of the very concept of “grant.” “The list used to comprise organizations with solid grant programs in Russia. I presume that under present circumstances they will cease their activity in Russia, because the majority of the funds won’t accept the new state of affairs where a quarter of the money goes to the state’s coffers,” means Pyotr Gorbunenko, CEO of the WWF Russia.
Experts have different versions of the reasons for the government’s decree. For example, in the CAF they make no secret of the fact that some funds use grants to camouflage R&D and agreements about providing services and contracts, thus the money is given for a service presented as a grant, rather than for a social project. The outcome of the work on such project is often given to the customer in a not that legal way.
In the WWF they assume that the decree is a political matter. “The government has left pure governmental organizations on the list excluding those private from it, which is characteristic of a policy where authorities seek to find evidence that foreign states interfere with Russia’s policy using the system of grants. The struggle to avert “yellow, red and rose revolutions” virtually blocks the minor help rendered to society by western donors,” says Pyotr Gorbunenko.
It need be reminded that as he spoke at the National Anti-terrorist Committee session, former Chief of Russia’s Federal Security Service and NAC Nikolay Patrushev accused “certain NGOs” that work in Russia of providing information help to terrorists’ emissaries. Mr Patrushev, however, didn’t specify the list of such organizations. Deputy Speaker of the Federation Council Alexander Torshin stated at the same session that there are 59 NGOs abroad that “support Chechen terrorists and separatists.” Interestingly, Dmitry Medvedev had publicly doubted the expediency of financing NGOs from foreign sources and complained that the work of Russian organizations in the West is also very much restricted.
For all that, the Prime Minister’s press-secretary Dmitry Peskov assured Kommersant that the government hasn’t launched any attacks against western NGOs. “In this case the government intends to regulate the list of IOs whose grants are exempted from taxes. That is so far the list has featured intergovernmental organizations only. The document has the following provision: To submit by October 1 proposals concerning the list of other organizations that do not have the governmental status, but can be exempted from taxes. So, after October 1 this list will be altered.” At the same time Mr Peskov said that the decree comes into force on January 1, 2009, and there will be no changes till this date, and “a timely overhaul of the list will allow organizations to take account of the novelties when planning their further work.”
Yuliya Taratuta, Alexander Voronov
All the Article in Russian as of July 03, 2008
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