18.06.09

If funds received from foreign sponsors are used for authorized purposes, Russian NGOs will not have to pay taxes on the donations. This decision was reached by the 18th Arbitration Court of Appeal after hearing a claim filed by an NGO from the from the town of Ozersk in the Chelyabinsk Region.

In October 2008, the local Federal Tax Service office demanded that the NGO pay nearly 1.3 million rubles in additional taxes and fines. The service claimed that the NGO had not paid profit tax on 3.7 million rubles received in grants from 2005-2006.
The Arbitration Court had supported the Federal Tax Service of Chelyabinsk, but the Court of Appeals overturned the case in favor of the NGO: arguing that the listed funds are not grants but charitable donations. The difference is that the requirements are less stringent on donations—organizations only need to spend them for authorized purposes. As of Thursday, the FNS was unavailable for comment on the matter.

This is a very important precedent. This year the list of organizations, for which grants are not taxable, has been significantly reduced—from more than 100 to just 12. According to experts, foreign funds used to finance human rights groups amount to nearly fifteen million dollars a year.

Translated by Alinga Consulting Group.

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Source: "Vedomosti"