The bill on limitation of use of the so-called “church treasury is being considered at Polish Sejm. This document stipulates for introduction of 0.5 percent taxes from donations for maintenance of religious organizations. According to the estimates of experts, the turnover of “donations market” in the neighboring state reaches 8-12 percent of GDP.
Meanwhile, Ukraine is only learning how to raise money without paying taxes. So, the participants of the international conference of the Ukrainian Forum of Philanthropists “Charity: Accountable, Transparent, Public” tried to find answers to the questions, whether the state will support the reforms in this direction, and what can be done today for the raised money to be used first and foremost for people’s needs, rather than to pay the taxes.
1,610 HRYVNIAS IS THE MAXIMUM AMOUNT OF NONTAXABLE CHARITY DONATION
It is common knowledge that in early February the new Law “On charitable activity and charities” came into force. However, philanthropists say, the question of favorable tax environment remains unsolved. They emphasize that Ukraine is still one of the few European countries, where financial aid to natural persons is being taxed on general grounds. In many EU countries (such as Belgium, Bulgaria, the Czech Republic, Estonia, France, Greece, Hungary, Portugal, Slovakia, Slovenia, Sweden, etc.) the tax system is, conversely, stimulating the charitable activity. In Ukraine, the participants of the roundtable stressed, philanthropists could have helped many other people for the money saved from deductions. The participants of the debate underlined that the maximum sum of nontaxable charity donation (1,610 hryvnias in 2013) is too small and discourages the benefactors.
Apart from that, until recently the registration of charity organizations has been a paid service. So, last year one had to pay 170 hryvnias for registration of a civic organization or a charity. This is a regular fee for registration of any legal entity. There have also been some extra fees for registration of international civic/charity organization. The state practically demanded more money for registration of a civic organization or a charity than for registration of a company. “It took us two months to register the international charity foundation; we also had to pay 170 hryvnias and 200 dollars. According to the new law, the registration of a charity organization will take three working days and the fee makes 51 hryvnias. The registration of statute amendments is free,” head of the programs of Ukrainian International Center of Political Research Maksym LATSYBA in an interview to Hromadsky Prostir (Civil Space) portal. The new law on civic associations cancelled the fees for registration and expertise of the statute, but kept the fee for registration of amendments as of 170 hryvnias.
PHILANTHROPISTS DEMAND THE TAX CODE TO BE AMENDED
Experts on philanthropy complain about the problem of ignorance of those people who require financial aid, first and foremost in the questions of their relations with tax authorities. Experts assert that a person who comes to a banking institution to open a fundraising account is, as a rule, aware that all the incomings to the current account are imposed to tax. The same law stipulates that if the sum on the account does not exceed 10 minimum salaries, the tax will be 15 percent, and 17 percent if it does. Moreover, if you don’t pay the tax before the deadline, you will be imposed to penalties.
Interestingly, an attempt to help in this situation, deplorable first and foremost for the recipient of the financial assistance, has been undertaken by the Ukrhazbank. Namely this state-run bank has launched the project “Bank of Good Deeds.” The project includes an information-enlightenment campaign, discussion and looking for ways of resolving the problem on the national level. As long as the problem remains unregulated on the legislative basis, the employees of the branch banks explain to people, who appeal for help, how to open accounts correctly and with which foundations to deal.
Social responsibility of the banking business should be wider than simply lending money for some concrete problems, the Ukrhazbank management is convinced. It hopes that other banks will join their initiative. “Banks cannot be standing aside of this problem, because they open pseudo-charity accounts for Ukrainians. We aim at setting a standard of a correct and responsible attitude of the banks to this question. Hopefully, in the long run a different mechanism will be found to resolve this problem,” deputy CEO of the Ukrhazbank Nina Shpakovska noted in her speech at the roundtable.
A resolution has been approved, based on the results of the roundtable. It goes about the fact that the philanthropists welcome the approving of the new bill, but at the same time set a goal of improving the tax legislation. The participants of the roundtable have appealed to the Verkhovna Rada of Ukraine, Presidential Administration, Cabinet of Ministers, and other governmental bodies with the proposal to create a working group for consideration of the question of charity taxation and include this question in the agenda of the presidential Coordination Council on Development of Civil Society and enhance the list of target charity donations on a legislative basis. The civic work is supposed to result in a project of amendments to the Tax Code of Ukraine.
WHY DO UKRAINIANS DISTRUST THE CHARITY FOUNDATIONS?
In 2011 Ukraine was listed 105th among 153 countries of the world in the World Giving Index, which has been held for the second consecutive year by British Charities Aid Foundation. The list was topped by Australia and New Zealand. Only Burundi and Madagascar are on a lower position than we. According to this rating, only eight percent of Ukrainian population donate to charity foundations, and 28 percent find it better to directly help the unprivileged people. The population does not trust the charity foundations, as it considers that they are involved in money laundering.
“We know a story of fake volunteers in Dnipropetrovsk. People in the street are raising money, showing the photos of sick children, whose parents are unaware of this and do not get any money. Every person must be careful to ensure that his/her money were used for real, not fake charity,” Latsyba says. He also notes that in such cases namely the donators should show vigilance. Latsyba says that in particular one must ask the volunteer about the organization s/he represents, check his warrant which should confirm the purpose, place, and term of raising money or any other kind of property, the order of their target use, accounting and report, responsibility of the volunteer before the recipient of costs and the donators. “When a volunteer raises money for a charity foundation, he must have a notarized agreement with him. Be careful, there are many swindlers these days. It is better to transfer the money via a bank, so that you had a receipt. You can also call the people for whom the money is raised, or even better, visit them if you are going to donate a big sum of money,” the expert advises.
