As yet another one in the series of restrictive bills introduced to the Ukrainian Parliament, the Draft Law 3936 imposes additional reporting and disclosure requirements for CSOs that receive more than 50% of their funds from foreign sources.
In the first half of 2020, several bills on the Parliament’s agenda already sought to impose limitations to the work of foreign-funded CSOs through, for example, subjecting them to a special regime of registration and reporting. See our initial analysis of the package of three draft laws here, one of them being Draft Law 3564.
Why is Draft Law 3936 problematic?
The current bill, Draft Law 3936 is intended to implement the provisions of Draft Law 3564 by an amendment to the Tax Code and proposes additional reporting measures, which appear to be intrusive. The Explanatory Note does not provide solid evidence as to why public associations should submit such detailed information.
Neither the Draft Law, nor its Explanatory Note provide clear evidence of specific problems and damage to public interest posed by foreign-funded associations. However, in the absence of such evidence, the additional reporting requirements would fail to display a legitimate public interest, or qualify as being “necessary in a democratic society”, “proportionate to their legitimate aim” and “the least intrusive option”.
What is most concerning is the proposed consequences of failing to meet reporting requirements. They appear not only drastic, but disproportional. A failure to report in a single month, according to Draft Law 3936, results in effective de-registration and payment as an ordinary income tax-payer from the subsequent month onwards.
The additional reporting requirements for foreign-funded CSOs as proposed by Draft Law 3936 therefore raise concerns with regard to:
- their interference with the freedom of association and the right to seek, receive and use funds;
- possible discrimination against CSOs receiving foreign funding; and
- stigmatization of foreign-funded CSOs.