Deadline extended for re-registration of foreign NGOs

A government decree requiring all foreign NGOs operating in Uzbekistan to re-register by 1 March has been extended by one month, a government official told IRIN on Monday. "The deadline for re-registration [of foreign NGOs] has been extended for one month because some organisations simply couldn't technically prepare some documents," Ilkhom Zakirov, the foreign minister's press secretary, explained from the capital, Tashkent. According to a statement by the Foreign Ministry the same day, the decision to extend the term to 1 April had been made to provide the necessary conditions, given the presence of some technical problems of (foreign) NGOs related to their paperwork. Earlier this year, the authorities announced that all foreign NGOs operating in the country were supposed to register with the Justice Ministry by 1 March, according to an existing law on foreign NGOs. Previously they used to register with the Foreign Ministry. In 1999 the Uzbek parliament adopted a law which said that international non-governmental, non-commercial organisations, their representative offices and branches operating in the Republic of Uzbekistan should be registered with the Justice Ministry. The Foreign Ministry said that the Justice Ministry's relevant departments had been instructed to provide any assistance needed by NGOs undergoing the procedure of re-registration, and remove any bureaucratic obstacles, adding that the measure was not aimed at impeding any organisation's work. Meanwhile, some NGOs on the ground have expressed concern over possible tax implications, which in their view could arise after re-registration. "All Uzbek NGOs have to pay tax, income tax, pension contributions, etc, for every grant they receive. It amounts to 37.9 percent this year. Last year it was a little bit more - 40 percent. And this is thought to support employees. But every time you receive a grant, the tax is automatically deducted by the bank," Wolfgang Schreiber, an international coordinator for Zakovat, a local NGO working to help entrepreneurs with information support, told IRIN from Tashkent. The re-registration procedure assumed that foreign organisations were working under the same conditions as Uzbek organisations, effectively meaning that these taxes would also apply to them, Schreiber, a former head of the German Conrad Adenauer Foundation in Uzbekistan, maintained. "Article 55 of the Tax Code calls for grants to be subjected to this tax. Exceptions may be made by the State Committee for Science and Technology but they are very restrictive and they say only for scientific analysis and so on. But not for humanitarian purposes and this, I believe, is unjustified," Schreiber noted, adding that it would be a touchy question because any taxpayer (donor) would not be very happy to see that 40 percent of the money aimed at specific humanitarian purposes to help the recipient country to develop was being deducted. He said that the practice with the banks was that every time a local NGO received a grant, the bank would deduct 37.9 percent, adding that when an NGO received different grants from various donors in one month every grant would be subject to deduction. "The moment they [foreign NGOs] receive from their central offices in America, Germany or wherever through the bank this money, the bank will subtract this amount of money," he claimed. He suggested that the right way would be for such NGOs pay these taxes once a month or year. "If a foreign NGO has local Uzbek employees, of course they would have to pay the tax as well, but automatically deducting 37.9 percent is not correct because a bank shouldn't continue to be an instrument of government financial policy. A bank is a safe place for money as internationally recognised but here it's not a safe place for money," he said. Asked to comment on the issue, Zakirov denied such practices, saying: "As for these reports of 40 percent taxation, they are not true." He added that all foreign NGO should pay income taxes and social security payments for their local staff - which accounted for some 40 percent of their salary - a requirement by law. "It doesn't mean that all humanitarian assistance is taxed. And moreover, grants are not taxed in Uzbekistan," the government official countered. The Foreign Ministry said that bilateral agreements had been signed with 39 international NGOs, which envisaged their exemption from any taxes or customs duties. According to Zakirov, there was no mention of such taxation (40 percent) in the government decree on 4 February. "Moreover, it [decree] says that the two banks, which were identified to work with NGOs, are instructed not to charge any commission from those whom they serve [the NGOs]," he maintained.