Membership fee tax introduced from Jan 1, says law on NGO

Kyiv, December 25 (Interfax-Ukraine) – The new law on nongovernmental organizations (NGOs), which takes effect from January 1, 2013, introduces a tax on profit received from membership fees, President of All-Ukrainian medical union Oleh Musiy said at a press conference at Interfax-Ukraine on Monday.

"The state will additionally levy a membership fee tax. When organizations obtained the status of unprofitable organizations, one of the obligatory requirements was the availability of membership fees – this allowed obtaining the status," Musiy said.

Thus, from January 1, 2013 all of the organizations which collect membership fees automatically become commercial organizations. They will be considered commercial organizations until they re-register the status of unprofitable organizations in the tax body.

"Now we will have to re-register the status of unprofitable organizations in the State Tax Service and from January 1, 2013 we'll automatically become the commercial organization until we re-register the status," he said.

The head of the legal department at Ukrcement Association, Yevhen Miliavsky, said that at present, all the sector associations are unprofitable organizations and they do not pay value added tax.

He said that Article 19 of the said law establishes some criteria for the All-Ukrainian association status, and many existing organizations are not in line with them.

"One of the [criteria] is the number of branches. For example, our regulations and specifics of our operations do not foresee the availability of structural divisions. We don't have structural divisions. We have plant-members in the regions," Miliavsky said.

A managing partner at JSC Volkov and Partners Oleksiy Volkov said that the law has created many difficulties in understanding and using the institution of nongovernmental organizations in Ukraine, although its introduction from January 1, 2013 will be a first step of testing it in practice.

"The law is the required step, despite the fact that it should be revised. However, we should start from the implementation of the law. The next step will be its modification," Volkov said.

As reported, members of the forum of nongovernmental organizations of Ukraine called on the Ukrainian president to submit a draft law on the postponement of the taking effect of the law on NGOs for January 1, 2014.

Forum members said that the law brings a threat to operation of NGOs and Ukrainian society as a whole.