Civil Society Platform: Cabinet’s Decision Did Not Eliminate Legal Restrictions for NGOs

Civil Society Platform (CSP) has distributed an evaluation document on the January 11 decision of the Cabinet to amend the Rules of Registration of Grant Agreements (Decisions).

CSP indicates the inconsistency of allegations that the innovations eliminate obstacles to the registration of grants.

In fact, as CSP notes, these changes do not eliminate the 18 different restrictive rules included in the law on grants in 2013-2014.

According to Article 147 of the Constitution of Azerbaijan, the Cabinet of Ministers decisions have a lower legal force than the laws and presidential decrees, and are aimed at regulating performance of the laws.

The Cabinet decisions do not have the power to change restrictive laws or regulations or to ease them in some form.

Then CSP notes that the amendments to the legislation adopted since 2013, which limit the normal activities of NGOs and their receiving funds in the form of grants and donations from any source, still remain in force.

Thus, the Cabinet of Ministers decision did not abolish the following restrictions:

1) Rules requiring the registration of grants and donations;

2) Requirement of the original, and not a copy, of grant agreements and additional ones;

3) Mandatory submission, in addition to the grant agreement, of the signed original of a grant project (sometimes it can be more than 100 pages) for registration;

4) Notification of the registration of grants and donations;

5) Notification for conducting banking operations with grants and donations;

6) Compulsory transfer of grants or donations of more than 200 manat through banks;

7) Separate registration of a sub-grant, if it is provided by the grant agreement;

8) Registration of donors in the country as residents (registration of offices);

9) Donors sign an agreement with the government on the registration in the country;

10) Donors, whose charters proclaim charity as the main purpose, or implementing programs, which may be the subject of grants, may only be registered as donors;

11) Donors are registered separately for the award of grants;

12) Donors are separately registered for each grant declaration;

13) To issue grants, donors each time receive approval from the Ministry of Finance on the feasibility of the project;

14) Registration of a grant by the grantee;

15) Re-registration of grant agreements, contracts and other sub-grants each time in case of change in the sum, the terms, or the objectives of the grants;

16) Legal responsibility for banking and other operations on unregistered grants;

17) Registration of contracts for services provided by the NGO due to funds obtained from foreign sources;

18) The Cabinet of Ministers Decision No. 216 of June 5, 2015 on the Rules of Registration of Grant Agreements (Decisions);

19) The Cabinet of Ministers Decision of 22 October 2015 on the Rules of Foreign Donors Receiving the Right to Issue Grants on the Territory of the Republic of Azerbaijan;

20) The decision of 21 October 2015 on the Regulations on the Submission of Information on the Persons Who Received Donations from NGOs, As Well As Branches and Representative Offices of Foreign NGOs that Issued the Donations;

21) The Cabinet of Ministers Decision of October 21, 2015 on the Rules of Registration of Contracts for Services Provided by NGOs, Branches and Representative Offices of Foreign NGOs Due to Foreign Funds;

22) Large Administrative Fines for Donors and Recipients (up to AZN 15,000).

CSP believes that, not removing so many restrictive regulations from the legislation, the legal environment for NGOs cannot be changed.

Moreover, the changes introduced by the Cabinet of Ministers to the grant registration rules have drawbacks.

In particular, Point 1.10 of the Rules provides: ‘If the object of a grant agreement (decision) puts the goal of providing services or performing work, the contract can then be registered as a contract of service.’

This provision allows the registering authority to arbitrarily interpret the norm and to qualify the grant agreement as a contract on services.

In this case, the means used will be subject not to simplified tax, but to VAT. Thus, a significant portion of the grant will be used not for its intended purpose, but sent to the state budget.

Annex No. 6 to the Rules approved by the Cabinet of Ministers on January 11 indicates that the notification in the registration of grants is canceled. In fact, canceled is not the very practice of issuing the notification, but only notifications on Annex No. 6.

In practice, the registration authority will inform the grantee that it has to give a notification. However, the Cabinet abolished the old form of notification, and the new one has not been approved. For this reason, the issuance of the notification will be delayed.

Such a case once took place. So, in July 2014 the procedure for registration of grants was canceled, but the new rules did not exist until June 2015, and the Ministry of Justice under the pretext of the absence of the rules did not register any grant agreement.

In addition, the grant registration process, given the requirement to receive the conclusion of the Ministry of Finance, may take up to two months.

Thus, innovation approved by the Cabinet will not lead to the improvement of the conditions of NGO activities.

CSP urges the authorities to seriously reform the legislation on NGOs and to eliminate the existing restrictions.   -06D—

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