Pursuant to the Law on Profit Tax, membership fees are not recognized revenues, since they are considered as gratuitous assets. President of the Armenian Lawyers’ Association Mr. Karen Zadoyan, “Commitment to Constructive Dialogue” Project Manager said at the training organized for the representatives of Kotayk marz NGOs today. The training took place in Charentsavan City Library. “This means that services provided to third parties, which may be our beneficiaries as well, may be considered as non-gratuitous assets by the tax authority, and naturally should be taxed as profit tax, no matter whether it is a grant or not. That is, the grant itself is not exempt from the profit tax. If it contains gratuitous expenses, for example, for its members or for the organization, they are exempt, but costs incurred for the third parties are not exempted,” Mr. Zadoyan said and recommended he following solution: “From this point of view, if you provide the scope of the beneficiaries in the organization’s charter, then in analogically, both in the case of members, as well as in case of beneficiaries there will be no problems and these services will be provided for beneficiary groups rather than for the third parties.”
Every non-governmental organization in Armenia has different sources of property. According to Karen Zadoyan, the law imposes a duty on NGOs to regulate, which authorities of the organization shall manage that property. “The Supreme Body of the organization, the Assembly, an executive of collegial body may manage that property. You should understand to which authority in your organization you will reserve that authority. Because if you authorize only the head of the Executive Body, and if in the future, that body had alienated your property, his actions will be legitimate in that respect. But whether it is lawful or not, that is to say, whether it is purposeful to use that means, this is already the second issue.”
Apart from alienation of property, it is also necessary to clearly define in the Charter the body, which will regulate the institute of membership fees, otherwise, it will be considered that the organization has not provided the institute of membership fees
The law leaves to the organization’s discretion the issue of creation of a supervisory body. “Organizations may have supervisory bodies or may not have such. The law does not oblige to do so,” Mr. Zadoyan said.
Within the scope of the project Mr. Karen Zadoyan provides free legal advice to the NGO representatives. In addition, the lawyers of the EU funded “Commitment to Constructive Dialogue” Project will provide free legal assistance to the organizations to harmonies their statutes with the requirements of the new Law.
The event in Charentsavan City was organized with the support of the “Association of Social Enterprises of Armenia,” the partner of Armenian Lawyers’ Association in the scope of “Commitment to Constructive Dialogue” Project.
The “Commitment to Constructive Dialogue” Project is implemented with the financial support of the European Union by the “Armenian Lawyers’ Association” NGO in cooperation with its partners; Agora Central Europe o.p.s (an NGO from the Czech Republic), Armenian Center for Democratic Education-CIVITAS, “International Center for Human Development” Public Organization, SME Cooperation Association and Union of Communities of Armenia.
Gevorg Tosunyan
Aleksander Sargsyan
