The law introducing the definition of an NGO that functions as a foreign agent came into force

PricewaterhouseCoopers (PwC) LLC
Kyiv, Ukraine, Thursday, January 23, 2014

Law No. 721* introduced the term"non-governmental organisation performing functions of a foreign agent”(hereinafter – “foreign agent-NGO”) in the legislation of Ukraine. This mayhave far-reaching and unintended repercussions for all NGOs operating in Ukraine. 

NGO qualifies as a foreign agent-NGO if it is financed by foreign sources andparticipates in political activity in Ukraine for the interests of foreignsources.
The term “political activity” is far-reaching and includes “considered asparticipation in organising and performing political actions aimed atinfluencing the decision-making process of state bodies, changes in statepolicy and formation of public opinion for these purposes”.
Since the concept of “foreign agent-NGO” is quite broad, there is a high riskthat all non-governmental organisations, that receive financing from abroad,will be reclassified as such.

If an organisation qualifies as a foreign agent-NGO, it will be required to:
 - notify the authorised registration body regarding its activity
 - keep separate statutory accounting records regarding foreign financing
 - submit monthly reports regarding revenues it received from foreignsources and usage of such funds, and
 - publish quarterly reports regarding its activity via governmental massmedia and the Internet.
All revenues of foreign agents-NGO are subject to Corporate Profit Tax.
Already existing foreign agent-NGOs should submit application on recognition by21 April 2014.
We will continue monitoring this issue and keep you updated on furtherdevelopments in this area.

*Law ofUkraine No. 721-VII of 16 January 2014 “On introduction of amendments to Law ofUkraine ‘On the Judicial system and the Status of judges’ and to otherprocedural laws related to additional measures for citizens' securityprotection”

 
Contacts:

Ron Barden,Partner & TLS Leader, ron.j.barden@ua.pwc.com
Rob Shantz, Legal Partner, rob.shantz@ua.pwc.com
Slava Vlasov, Partner, Tax and Legal Services, slava.vlasov@ua.pwc.com
AndreyPronchenko,Director, Tax and Legal Services, andrey.pronchenko@ua.pwc.com

75 ZhylyanskaStreet | Kyiv | Tel:  +380 44 490 6777 | Fax: +380 44 490 6738 | pwc.ukraine@ua.pwc.com  |  www.pwc.com/ua 

 This flash report isproduced by PricewaterhouseCoopers’ tax and legal services department. Thematerial contained in this alert is provided for general information purposesonly and does not contain a comprehensive analysis of each item described.Before taking (or not taking) any action, readers should seek professionaladvice specific to their situation. No liability is accepted for acts oromissions taken in reliance upon the contents of this alert.
©2014 Limitedliability company «PricewaterhouseCoopers». All rights reserved. PwC refers tothe Ukrainian member firm, and may sometimes refer to the PwC network. Eachmember firm is a separate legal entity. Please see www.pwc.com/structure for furtherdetails.

 Wewill be sending additional Flash reports as issues arise.  If you do notwish to receive these Reports, please advise by return e-mail (myroslava.suprunyuk@ua.pwc.com). Alternatively, if there is someone else in your company to whom we should sendour Alerts, please let us know.

Weare pleased to inform that this Flash report is also available both inUkrainian and Russian and can be sent to you upon request.
Мираді повідомити, що цей  Flash report також доступний українською іросійською мовами і може бути наданий Вам за запитом.
Мырады сообщить, что этот Flash report также доступен на украинском и русскомязыках и может быть предоставлен Вам по запросу.