In the area of State duty to protect
Burdensome law adopted related to the Ultimate Beneficial Owners (UBOs) of legal entities
Draft Law No. 6003 on Streamlined Mechanisms for the Validation of Information on Ultimate Beneficial Owners and Ownership Structure of Legal Entities was adopted in the first reading with shortened term for processing on July 8.
With the Law, the Unified State Register shall now identify if a legal entity has allegedly submitted inaccurate information on its UBO or ownership structure and carry out subsequent verification of the reliability of such information. Legal entities are liable for knowingly entering false information about the UBOs or their absence in the Unified State Register. This means that CSOs may face additional obstacles in their legal relations with banks, insurance companies, notaries, lawyers, etc. There is no established procedure for a legal entity to provide explanations and documents to corroborate this information, nor a procedure for considering them or verifying the information provided by a legal entity. The Law does not consider the specific CSOs’ organisational and legal form without founders, and it is often difficult to establish the absence or existence of UBOs of CSOs.
In the area of State support
Tax exemption for donations to CSOs to be used on humanitarian and defense needs
Draft Law No. 7528 on Stimulating the Involvement of Charitable and Other Non-Profit Organisations in Providing for the Defense Needs of the State During the Military Aggression of the Russian Federation against Ukraine was registered in the Parliament on July 6.
According to the Draft Law, value-added tax (VAT) transfers of goods by businesses/payers of VAT to charitable organisations and CSOs for the needs of ensuring the country’s defense are exempted. It also removes the threshold of 4% of the taxable profit of the previous reporting year for businesses transferring funds to charitable and other CSOs for the needs of ensuring the defense of the state and providing humanitarian aid.
However, this removal of the threshold only applies for funds spent on special personal protective equipment (helmets and body armor which are manufactured following military standards), technical equipment for observation; medicines and medical products, personal hygiene products, food products, items of physical support, as well as other goods, performed works, provided services according to the list determined by the Cabinet of Ministers of Ukraine.
The Draft Law will have a positive effect on the taxation of business, while the abolished restrictions will allow an increase in donations to CSOs. At the same time, the Draft Law provides for preferences only if the funds received by CSOs are spent on humanitarian aid and defense needs.
Modified procedure for CSOs applying for state support during martial law
Cabinet Decree No. 849 Amending the Cabinet Decree No. 1049 on the Competition Procedure for the Election of Projects Developed by Civil Society Institutions Receiving Financial Support from the State was adopted on July 29. It establishes a modified procedure for organising and conducting tenders for state-supported projects for the period of martial law operation in Ukraine or its individual localities and within nine months after its termination.
The main changes include the following: the funding tender shall be announced within 30 calendar days after the approval of the state (local) budget, and the deadline for project proposals should not be less than 20 days from the date of the announcement; priority tasks should be aimed at solving problems that are critical during the war. The organiser of the contest may define a limited number of priority tasks; the project description shall specify the information on the project implementation and expected results in case of changes in a military situation and the security of project participants under martial law.
CSO meter report resented: The stability of Ukrainian Civil Society and the Challenges It Faced During the War
UCIPR held an online discussion “The stability of Ukrainian civil society and the challenges it faced during the war” on July 27. The main objective of the online discussion to share findings, scores and priorities from the Ukraine country report for 2021. 33 representatives of various sectors attended the meeting coming from state authorities, CSOs, think tanks, charity foundations, international projects and organizations, universities and institutes and EU Delegation to Ukraine. During the event, UCIPR presented key developments in Ukraine in 2021 and after the beginning of the full-scale invasion in 2022, while ECNL shared comparative findings, trends and scores for the CSO environment in the Eastern Partnership region. The EU Delegation addressed the participants and shared the EU support, as well from other donors, provided to Ukrainian CSOs. Other speakers covered different relevant topics including: the role of CSOs during the war; ensuring the stability of civil society in times of uncertainty; threats and challenges faced by the civil society of Ukraine; cooperation between volunteers and the state; the problem of CSO security and persecution of activists in the occupied territories.