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The International Journal
of Not-for-Profit Law

Volume 4, Issue 4, June 2002

A publication of the International Center for Not-for-Profit Law

Table of Contents


The Legal Framework for Civil Society in East and Southeast Asia
Barnett F. Baron

A Flaw in Comparative Studies of the Tax Benefits for NGOs in Latin America
Antonio Itriago M. and Miguel
Itriago M

The Principle of Subsidiarity in Italy: It's Meaning as a "Horizontal" Principle and It's Recent Constitutional Recognition
Andrea Maltoni

A Synopsis of Law Reform for Iranian NGOs
Zahra (Sahar) Maranlou

Tax Treatment of NPOs in Macedonia
Prof. Dr. Vesna Pendovska

Competition and Abuse of Association Membership
Assoc. Prof. Ivo Telec


Working with the Non-Profit Sector in South Africa
Working with the Non-Profit Sector in Nigeria

By the Charities Aid Foundation / Allavida
Reviewed by Karla Simon

Legal and Organizational Practices in Nonprofit Management
By Pacquale Ferraro
Reviewed by Karla Simon

Promoting Legal and Institutional Frameworks for Corporate Social Responsibility in Peru
By Javier de Belaúnde L. de R., Beatriz Parodi L., and Delia Muñoz M.
Reviewed by ICNL Staff

Social Responsibility: 12 Case Studies from Chile
by Soledad Teixido, Reinalina Chavarri, and Andrea Castro
Reviewed by ICNL Staff

Case Notes

Asia Pacific:
Hong Kong

Newly Independent States: Russia

North Africa:

North America:
Canada | United States

Sub-Saharan Africa:

Western Europe:
United Kingdom

Country Reports

FATF | World Bank

Asia Pacific:
Regional | Australia | Indonesia | Japan | New Zealand

Central and Eastern Europe: Bosnia and Herzegovina | Czech Republic | Hungary | Lithuania | Macedonia | Slovakia

Latin America & The Caribbean: Chile | Peru

Middle East and North Africa: Kuwait

Newly Independent States: Armenia | Azerbaijan | Kyrgyzstan

North America:
Canada | United States

South Asia:
India | Pakistan

Sub-Saharan Africa:
Nigeria | South Africa | Tanzania

Western Europe:
Regional | Belgium | Germany | Italy | United Kingdom

- - - - - - - - - -

Editorial Board

Country Reports: Newly Independent States


The New Law on Public Organizations, by ICNL Staff

On December 4, 2001 the National Assembly adopted a progressive Law on Public Organizations Law (the Law).  While the Law is still not perfect, it significantly improves the legal environment for NGOs in comparison with the previous Law on Public Associations.  The new Law allows the existence of non-registered public organizations, allows the establishment of organizations for a broad range of purposes, reduces the required minimum number of founders to two persons, shortens the timeframe for state registration of an organization, considers organizations to be registered by default if the government authority to respond to the applicant on whether an organization is registered within the defined timeframe, and contains other improvements in regulating NGOs in comparison with the previous law.

Under the auspices of the World Learning Strengthening Program in Armenia, World Learning and ICNL are proud to associate themselves with the successful NGO advocacy campaign which occurred in conjunction with the adoption of this Law.  It required over a year of work by the Armenian NGO community, ICNL, WL, and other international organizations.  Nevertheless, this was the first largely successful advocacy campaign for Armenian NGOs.  

The process of working on improving the draft Law demonstrated the effectiveness of the World Learning and ICNL partnership.  While ICNL contributed to the process its international expertise in NGO legislation and moderated the NGO-government participatory process of working on the draft law, World Learning was able to mobilize the Armenian NGO community to launch an effective advocacy campaign by providing Armenian NGOs with training and support, and increasing their advocacy skills.

Assisting with the draft Law, ICNL worked closely with the Ministry of Justice by providing it with comparative law materials and in-person consultations regarding the draft Law.  At the request of the Ministry of Justice, ICNL prepared comments to three versions of the draft Law with each subsequent draft being better than the previous draft.  ICNL continued working with parliamentarians after the government introduced the draft Law to the National Assembly.  In the end, about 95% of ICNL’s suggestions were incorporated into the final text of enacted Law.  However, ICNL legal expertise would not have been taken into consideration by the government if the Armenian NGO community had not placed significant pressure on the government to improve the draft Law.   

The campaign for improving the draft Law served as an excellent opportunity and test for World Learning’s advocacy-training component.  NGO advocacy trainings in the abstract have proven to be less effective than training centered on a specific problem the sector seeks to resolve.  Choosing a practical legislative issue, such as the Law on Public Organizations, as an objective for the lobbying campaign created cross-organizational and cross–sectoral collaboration among Armenian NGOs.  Ecological, human rights, and youth organizations were all interested and active in trying to improve the draft Law.

ICNL addressed draft Law provisions with NGOs and lawyers.  Armenian NGOs submitted more then ten sets of comments and recommendations to the draft Law which were sent to and considered by the Ministry of Justice.  These comments demonstrated the NGOs’ serious interest and good understanding of NGO legislation.  Their agreement with ICNL’s recommendations proved effective at the multiple roundtables and seminars on the draft Law held by ICNL for the NGOs. 

In spring 2000 the NGOs created an initiative group that started to actively lobby the government and the Parliament to amend the draft Law.  In its turn, the Ministry of Justice of Armenia, as the lead drafter of the Law, demonstrated exceptional openness and willingness to cooperate with NGOs to create a better Law.

However, the adopted Law is still not as good as it could be.  The single, but extremely important amendment proposed by NGOs and supported by ICNL—that NGOs have the right to carry out entrepreneurial activities directly without having to establish a separate legal entity—was dismissed by the government.  Advocating for the right to conduct entrepreneurial activities is on the top of the agenda of Armenian NGOs while they consider launching campaign to amend appropriate provision in the Civil Code of Armenia. 

Despite this success, Armenia remains a difficult place to work, and the legislative framework for NGOs cannot yet be considered to be excellent.   While some progress has been achieved, much more work still has to be done.  Many refinements are needed in the Civil Code, the Law on the Registration of Legal Persons, and the new laws are needed to fit the particular needs of civil society.  In addition, it is clear that adoption of good laws will improve the regulatory environment for NGOs only if they are  implemented properly.  ICNL currently is focusing on assistance with proper implementation of the new Law on Public Organizations.


Amendment to Law on Grants , by Natalia Bourjaily*

The Parliament of the Republic of Azerbaijan voted to amend the Law on Grants in April 2002 to add a requirement that all grant agreements must be registered in order for the funds to be available for use by the donee.   Not surprisingly, the amendment drew serious attention from both international and Azerbaijani organizations — donors as well as recipients of the grants.  It also attracted a substantial – and ultimately successful -- advocacy campaign aimed at convincing the President not to sign the legislation. 

It is common knowledge that foreign grants represent a considerable portion of the revenues of Azerbaijani non-commercial organizations, and that changes in the regulation of grants may affect the sustainability of the entire non-commercial sector in the Azerbaijan.   A question arises therefore whether the amendment makes sense in the legal, social, and economic situation present in Azerbaijan.  To help answer that question and to assist in the analysis of the issues more generally, ICNL has prepared extensive comments on the amendment.   The comments are accessible on the ICNL website.  This paper gives a brief description of the way in which the issues are addressed in the legislation of other countries of the region and then discusses the successful advocacy campaign and its outcomes. 

Analysis of the issues.  Georgia is the only country in the NIS or in Europe, with a special law on grants[1], analogous to the Law on Grants in the Republic of Azerbaijan.  It does not require registration of a grant prior to its use by the donee.  Looking specifically at the other countries of the NIS, a special provision on grants is found only in the tax code of Kazakhstan, where it is clearly defined.  The term “grant” can be found in legislation of Kyrgyzstan, Uzbekistan, Ukraine, Russia, but it is not defined there.  It is not used at all in legislation of Moldova, Turkmenistan, Belarus, and Tajikistan.

In other countries of the NIS, relationships analogous to those regulated by the Law on Grants of Azerbaijan are regulated within the framework of legislation on gratuitous (charitable, technical, humanitarian) assistance and charitable donations.    This is usually done without even using the term “grant” in the majority of the NIS countries, e.g., in Russia, Ukrain е, Armenia, and Tajikistan.   In addition, the normal civil laws rules regulating contracts would appear to apply to ordinary grant arrangements, even though the transfer is not supported by consideration as a contract would be. 

Nowhere in the NIS is registration of a grant (e.g., a gratuitous transfer, including foreign assistance) required, in order for the recipient to be entitled to use the money received.  The value of the funds or goods received by grantees under a grant usually[2] is not subject to the profits tax even in absence of having special rules applicable to grants anywhere in the tax laws.  Grants are treated as gifts, and are thus not income. 

On the other hand, special rules apply generally to foreign grants, in order for them to receive special tax and customs status.  To obtain such privileges “registration” is required in a number of NIS countries.  The procedures for registration of such grants (including gratuitous foreign assistance), the regime applicable to registered grants, as well as to the state bodies authorized to effect registration, varies from country to country.

Given this background, it seems unnecessary to amend the Law on Grants of the Republic of Azerbaijan to require registration of all grants fro all purposes.  Such a provision is inconsistent with the normal way in which grants are treated in the region.  Further discussion of the substantive issues is found in the comments referred to above

Advocacy Campaign against the Amendment to the Law on Grants.   In response to the adoption of the amendment, a cross-sector NGO advocacy campaign was launched. Previously competing NGO umbrella groups united in their effort, and ICNL is proud to have contributed to this campaign. As soon as the law was released ICNL prepared an analysis of the amendments and an overview of legislation in NIS, CEE, and Western Europe that demonstrates that the amendments would make Azerbaijani legislation regulating foreign aid the worst in all these regions (referred to above).   In June the Presidential administration released the information that the Azerbaijani President rejected signing the law.  

Chronicle of the Advocacy Campaign:

At every meeting and press conference, ICNL’s comments and analysis of legislation on grants in different countries was distributed and provided a solid base to demonstrate that new amendments to the Law on Grants will contradict most international practice.  ICNL representative Anar Kazimov contributed to most events by sharing his expertise on the legislative climate in other countries.  We also believe that the trainings conducted by the Slovak trainer Dusan Ondrusek for the NGO Forum, the Congress of NGOs, and other groups paved the way for a unification of efforts of formerly competitive umbrella groups.    

* Natalia Bourjaily is Vice President of ICNL and Director of its programs for the NIS.  For further information on this matter, please contact her at nbourj@icnl.org .  

[1] Law of Georgia on grants dated June 28, 1996.

[2] The only exception is Belarus, where, pursuant to the Presidential Decree dated March 12,  2001 № 8 “On certain measures to improve procedure for procurement and utilization of foreign gratuitous “assistance”, if foreign gratuitous assistance is  provided outside the framework of program and projects, approved   by the President or Government of the  Republic of Belarus or international agreements, then such need be registered with the Department for humanitarian activities at the Presidential Administration, and in absence of such  registration it will fall within the scope of the profits tax as so called “income from sources unrelated to production”.

Seminars on Legal Issues Affecting NGOs in Azerbaijan , by ICNL Staff

Taxation.  On May 4, 2002 a seminar on the taxation of NGOs took place at the Grand Hotel Europe.  It was held by ICNL, the Ministry of Taxation, the Human Rights Commission of the Parliament and the Human Rights Protection Foundation.  In attendance were 63 government and NGO representatives, including 15 ministry officials and 16 parliamentarians.  As officials from the Ministry of Taxes admitted, this was the first occasion in the history of Azerbaijan that so many government officials convened to discuss the issue of taxation of NGOs.  From the perspective of the participants, it was a constructive discussion, as government officials addressed and discussed their concerns among themselves and with international experts and NGOs.  The number of issues raised and questions asked clearly demonstrated the hunger for information in Azerbaijan.  ICNL hopes that distributing materials on good international practices of taxation of NGOs will lead to positive results – particularly if there is adequate follow up. 

Articles on the event were published in the newspaper “ Azerbaijan” (the official newspaper of the Parliament) and “Taxes” (the official newspaper of the Ministry of Taxation).  Information about the seminar and the necessity of improving legislation affecting the taxation of NGOs were the main issues raised in these articles.  Evening and morning televised news programs on May 4 and May 5, respectively, provided coverage of the seminar. 

The adoption of the restrictive amendment to the Law on Grants (discussed elsewhere in this issue) again demonstrated that politicians make the principal decisions regarding NGO legislation.  Much more work is required before the Government’s image of NGOs improves and the ground for improving legislative environment becomes solid.  However, educating the middle range of officials will help with implementation and will create a basis for eventually affecting the current difficult regulatory environment for NGOs.     

Following the seminar, the Ministry of Economic Development and the Ministry of Taxation requested ICNL’s assistance in developing regulations on grants (accreditation procedures), which they will start working on if/when the amendments to the Law on Grants are adopted.  

Registration of Legal Persons.   On May 6, 2002 a seminar entitled International Practices of Taxation of NGOs and Registration of NGOs in Azerbaijan took place at the Grand Hotel Europe.  It was conducted by ICNL, the Ministry of Justice, the Human Rights Commission of the Parliament and the Human Rights Protection Foundation.  Over 50 participants were present, including 10 representatives from the Ministry of Justice, 20 parliamentarians, and 20 representatives from local and international NGOs.  They engaged in a constructive discussion of issues on registration procedures for NGOs. 

Toward the end of the seminar, the discussion unfortunately degenerated into the usual NGO vs. Government accusations.  However, at the very end of the seminar, Latif Husseynov, the Head of the Legislative Department, invited participants to discuss the Draft Law on Registration of Legal Persons in the Parliament.  (In fact, such discussion took place on May 11.)  In addition, Mr. Husseynov officially announced the opening of the Parliament’s first official website (through the Commission on Human Rights of the Parliament), which will be posting Parliament’s draft laws related to human rights for public discussion. 


The Advocacy Campaign Against Government Resolution No. 20, by ICNL Staff

On May 25, 2002 President Akaev terminated Resolution No. 20 (“Resolution”) of the Government of Kyrgyzstan “On Some Issues of Publishing Activities”. Several provisions in the Resolution directly contradicted the Kyrgyz Constitution and provisions of international law protecting freedom of speech.  The Resolution seriously threatened freedom of speech and the right to disseminate information. For example, the Resolution required the registration of all fax machines, copiers, scanners and other equipment that could be used for publishing activities and required prior certification for any publishing activity. The Resolution could have had a very detrimental effect on the ability of civil society organizations to disseminate their views.

Immediately after this Resolution came into effect the Parliament’s Committee for Public Associations and Information Policies warned the public and the international community about the danger of the Resolution and protested against it. Upon the special request of the Committee for Public Associations and Information Policies ICNL provided its commentary on the said Resolution, which was delivered to the Government. ICNL’s commentary was placed on the list serve CANGO.NET.KG and was thus provided to 2,000 of subscribers representing the mass media and NGO representatives. 

Many Kyrgyz and international mass media organizations and NGOs protested against this restrictive Resolution. Civil Society Resource Centers, and the Counterpart Consortium together with several Kyrgyz organizations took the lead and launched an effective advocacy campaign. 42 roundtables discussing the Resolution and its affect on civil society took place throughout Kyrgyzstan. Over 800 representatives from the mass media, NGOs, and government officials of all levels participated in these roundtables and signed declarations against the Resolution. These Declarations were delivered to Bishkek and addressed to the President, the Prime Minister, and the Parliament. Prominent representatives from the public unanimously protested against the Resolution at the national press conference on April 25 th, which was broadcasted nationwide. The advice and commentary provided by ICNL’s local expert helped NGOs and mass media representatives effectively address their concerns with the government. ICNL is proud to associate itself with the most effective and successful advocacy campaign in Kyrgyzstan in the recent years.

While the Resolution has been terminated, it is important for the NGO community to stay on alert. The President’s Decree of May 25, 2002, did not simply terminate the Resolution but authorized the Government of Kyrgyzstan to take “effective actions to regulate publishing activities in the Kyrgyz Republic based on the constitution and current legislation.” This may result in new attempts by the Government to restrict publishing activities by civil society organizations.


The Civil Code of the Republic of Turkmenistan: Problems with Implementation of Provisions on Non-Commercial Legal Entities, by ICNL staff* 

Despite the passage of the new Civil Code in 1999, the Turkmen legislation regarding public (non-governmental) organizations can be considered the least developed among NIS countries.  The activity of non-governmental organizations in Turkmenistan continues to be regulated by the Law of Turkmenistan on Public Associations, which dates back to 1991.  In practice, the provisions of the new Civil Code that regulate non-commercial legal entities, including public organizations, do not operate.

As strange as it may seem, the provisions of the Civil Code (CC) of Turkmenistan are almost the most progressive among the civil codes of NIS countries and are similar to provisions of the German civil code. The CC, in effect since March 1, 1999, provides for the creation of membership-based public organizations and foundations, which do not have members.  However, in practice only public organizations exist.

Article 5 of the Law of Turkmenistan on Passage and Implementation of the CC stipulates that “prior to bringing normative legal acts of Turkmenistan into accord with the CC, normative legal acts of Turkmenistan are to be applied only to the extent they do not contradict the CC.  Normative legal acts concerning issues, which, according to the CC, may be regulated only by legislation, remain in effect until passage and implementation of the relevant laws.”

The Law of Turkmenistan on Normative Legal Acts stipulates that when deliberating on the registration of a public organization, the registering body should be guided by the provisions of the Civil Code.  Article 14 of this law states that “[i]n the event of contradictions among normative legal acts, courts, government agencies and officials should be guided by the normative legal act that has prevailing legal force.”

In the CC, non-commercial legal entities are defined as legal entities the purpose of which is not entrepreneurial (commercial) activity with the objective of receiving profit.  Non-commercial legal entities can be created in the form of public organizations and foundations.  Based on the definition of the CC, it is obvious that all forms of public organizations listed in the Law on Public Associations fall under the articles of the CC regulating non-commercial legal entities.

The procedure for registering non-commercial legal entities in the CC is simpler than the registration procedure for public associations as provided in the Law on Public Associations.  For example, under the CC registration of public organizations and foundations is effected by the registering agency (the Ministry of Justice), which is required to make a decision within one month after application, as opposed to the two months provided for in the Law on Public Associations.  The CC of Turkmenistan also provides for automatic registration, which is not allowed under the Law on Public Associations (the “Law”);  if in the course of one month the registering agency does not make a decision, registration is then deemed to have been issued. 

Since in the CC the term “person” (litso) is understood to be both natural and legal persons, one can interpret Article 51 of the CC such that both natural and legal persons may be founders of a public organization can also be founders of a public organization.  Unlike the Law on Public Associations, the CC does not limit creation of a public organization only to citizens of Turkmenistan, which means that foreign citizens, individuals without citizenship, and legal entities can also serve as founders.  In accordance with the CC, the following documents must be submitted for registration:  the charter, authenticated by a notary (art. 58, para. 5), and a registration form.  Moreover, the list of required is not open-ended.  In addition, the CC does not contain the requirement of presentation of all documents for registration within one month of the approval of the charter.

The Law on Public Associations, but not the CC, requires that the charter indicate the territory on which the public association will conduct its activities and the source of its funding.  In accordance with the CC, territory-based registration is no longer used:  any public association needs to register only one time and has the right to conduct its activities anywhere in the Republic of Turkmenistan, similar to commercial entities.  It is illegal to require for registration that the sources of funding for its creation and other property of the public association be indicated, since the CC establishes the exhaustive list of documents required for registration. 

The CC, unlike the Law on Public Associations, does not provide for written warnings.  According to the CC, there are only two cases in which the Ministry of Justice can annul registration:  (1) if the organization has begun to engage primarily in commercial activities, and (2) if it becomes impossible to further undertake the purposes as set forth in the charter.  The list of reasons for liquidation is deemed to be exhaustive, and an organization cannot be forced to liquidate for any other reason.  A decision of the Ministry of Justice to revoke registration may be appealed in court pursuant to Article 10 of the CC.  The CC regulates the manner for distributing property of a public association in the event of both voluntary and involuntary liquidations.  The Law on Public Associations regulates the distribution of property only in the event of involuntary liquidations. 

In addition, specific provisions of the Civil Code can have a negative effect on non-commercial entities.  The main ones of these are:

  1. The Ministry of Justice has the right to revoke the registration of a non-commercial entity without an order of a court (Article 61).
  2. Non-commercial legal persons, unlike commercial ones, may not engage in all forms of activities, but only those that correspond to the purposes and are set forth in their charter.  Commercial activities are to have only an auxiliary nature.  There exists the risk of broad interpretation of “correspond to the purposes of” and “auxiliary nature” on the part of government organs in a manner disadvantageous to non-commercial entities.

Although there presently are many discussions about the need for passing a new law for public associations, it should be noted that the provisions of the CC are quite sufficient for the creation and conduct of non-commercial organizations, and passage of additional legislation is not necessary for implementation of these provisions of the CC.

The Civil Code was prepared by a working group of government experts working with the support of foreign specialists.  As far as we currently know, no work is being conducted regarding the practical implementation of the Civil Code’s provisions or the reconciling of differences between the legislation governing public organizations and the Civil Code.  Unfortunately, the non-commercial sector in Turkmenistan still does not have much influence in the legislative activities of the government in order to initiate this work.  All that remains is to support public organizations and help develop initiatives in the law-making process, hoping that someday the provisions of the Civil Code  will begin to be applied in practice.

* For more information, please, contact Elena Vasilieva, ICNL Advisor in Ashkabad, at elena@cpart.org , or Natalia Bourjaily, ICNL Vice President-NIS, at nbourj@icnl.org


Overview of Legislation on Non-Governmental Non-Commercial Organizations in the Republic of Uzbekistan , by ICNL Staff*

1. At present, the normative-legal acts of the Republic of Uzbekistan that regulate the establishment and activity of non-commercial non-governmental organizations (hereinafter NGOs):

In 2002, Oliy Mazlis of the Republic of Uzbekistan plans to adopt the following legislative acts: The Law on Foundations, The Law on Charity Organizations, The Law on Guarantee of Activity and Support of Non-Governmental Non-Commercial Organizations.

According to the data of June 1, 2002 of the Ministry of Justice, there are 3294 public associations[2] registered in the Republic of Uzbekistan.  73 of these are international, 265 are republican, and 2956 are local public associations.  

2. Provisions of Main Laws

The Constitution of the Republic of Uzbekistan, adopted in 1992, proclaims the right of the citizens of the Republic of Uzbekistan to associate in professional unions, political parties and other public associations, registered in an established lawful manner (Chapter 13, Articles 56-62).

The State assures compliance with the rules and legal interests of public associations, it also creates equal legal opportunities for public associations to participate in social life. Interference of government bodies and officials in NGO activities, as well as interference of NGOs in activities of government bodies and officials, is not allowed[3]. The Constitution bans the establishment and activities of the following types of public associations: those aimed at violent change of the constitutional regime; those that oppose the sovereignty, integrity and security of the republic, constitutional rights, and freedoms of citizens; those that promulgate war, social, racial and religious antagonism, and invade health and morals of the people. The establishment of paramilitary associations and political parties based on national and religious features, private societies, and associations is also prohibited.

According to the Criminal Code of the Republic of Uzbekistan (Art. 216), non-legal organizations or renewal of activities by non-legal public associations or religious organizations, as well as active participation in their activities, will be penalized with a fine from 50 to 100 times the minimum wage or detention up to six months or imprisonment up to five years. 

The Civil Code[4] of the Republic of Uzbekistan (Art. 73-76) determines that NGOs can be established in different organizational legal forms such as foundations, consumers’ cooperatives, public associations, citizens’ self governance bodies, associations of legal entities (associations and unions), and institutions.  The Civil Code (CC) designates public associations and foundations as public benefit organizations, while consumers’ cooperatives as mutually beneficial, and united to satisfy material (property) needs of participants.

The Law on NGOs of 1999, in its turn, does not regulate all forms of non-commercial organizations provided for in the Civil Code.  The Civil Code envisages and regulates consumers’ cooperatives and citizens’ self-governance bodies as a form of NGOs by separate special laws.  The Law on Public Associations, currently in effect, contradicts the Law on NGOs, making it harder to register, which prevents the development of the non-commercial sector in Uzbekistan. In the Regulation of Oliy Mazhlis on Enactment of Law on NGOs, the law on public associations should be brought into conformity.

It is important to note that many normative legal acts require additional clarification and comments. Moreover, contradictory provisions that exist in the legislation, the absence of a clear explanation for their terms, and often their lack of conformity with the norms of international law create certain difficulties for stable development of the non-commercial sector in the republic. The Law on Public Associations inherited the structure of the corresponding All-Union law of 1990, and the rules for registration of public associations’ bylaws do not correspond to the requirements of the law on NGOs.  The Law on Public Associations also concerns political parties and professional unions, which are regulated by separate laws. However, some key legislative acts -- for example, the law on registration of legal entities and the law on charity activity -- do not yet exist.  Because of these overlaps and gaps, the current legal climate cannot provide a firm base for the development of modern society in the area of the activities of non-commercial organizations.


There is also considerable confusion and overlap with regard to the registration provisions of the Law on NGOs and the Law on Public Associations.  For example, Article 15 of the Law on NGOs establishes a minimum number of participating associations for the formation of unions; it requires the participation of no less than two NGOs.  However, it does not establish a minimum number of participants to set up a foundation, an institution, or a public association. Only the Law on Public Associations establishes that public associations can be organized on the initiative of no less than ten citizens. It should be mentioned that such a requirement to the number of participants creates certain difficulties in registration, which significantly affects the process of development of non-commercial sector. Natural and legal entities, as well as foreign citizens and persons without citizenship can establish an NGO.

The registration of bylaws (governing documents) of international, republican, and interregional public associations, acting in the Republic of Uzbekistan, as well as parties, mass public movements, and professional unions, is done by the Ministry of Justice of the Republic of Uzbekistan.  According to Article 23 of the Law on NGOs, an application for registration of a public association is considered during a 2-month period from the date of submission of all necessary documents. However, in the Rules for Registration of the Bylaws of Public Associations, the period of consideration may be extended for another month.

Overall, this procedure provides a certain consistency of actions in making decisions about registration. But in order to prevent delays, it is necessary to guarantee regulation of automatic decision-making if, after the normative period of consideration, the decision is not made or the applicant was not informed about it.

Currently, the set fees for registration of bylaws are as follows:

The law on NGOs gives the right to make one of two decisions to the Justice authorities that consider applications for registration of non-governmental non-commercial organizations:

For this reason, sub-clause 3 of part 3 of clause 3 of the Rules for Registration of the Bylaws of Public Associations, which envisages the possibility for the registering authority to make the decision on “leaving an application without consideration,” contradicts the law on NGOs. This, in its turn, creates a collision of legal norms and does not give an applicant the right to appeal in court.

In the case of rejection of the registration or re-registration of public associations’ bylaws and leaving this application without consideration, the registration fee is not reimbursed[5]. In the case of rejection of the registration of public associations’ bylaws, the registering authority must give a justified decision[6]. Registration can be refused if the content of NGOs’ bylaws contains information that contradicts the requirements of legislation on NGOs, which determines the goals and principles of establishing an NGO, its activities and the content of NGOs’ bylaws.  Rejection of the registration of the bylaws can be appealed by the management in a corresponding court and is considered in the manner prescribed by the civil-procedural legislation of the Republic of Uzbekistan.

An application for registration of public associations’ bylaws will not be considered if it was submitted without the specified documents or if it violated the requirement on the content of the submitted documents and information. The decision to leave an application without consideration is forwarded to applicants in a written form.

According to the Regulation of the Cabinet of Ministers N 132 of March 12, 1993, the Ministry of Justice of the Republic of Uzbekistan and its administration keep a register of public associations with registered bylaws. This register can be publicized in mass media. Article 11 of the law on public associations, as well as articles 216 - 216-2 prohibits public associations with unregistered bylaws to conduct activities. However, in many countries, including Russia, the activity of unregistered NGOs is permitted. In this case, an organization receives neither the status nor the rights of a legal entity. This, in its turn, means that an organization does not have the corresponding benefits or privileges of legal entities.

NGO Activities

The activities of NGOs are regulated in the legislation by the Law on NGOs and the Law on Public Associations.  NGOs’ rights are assigned in their bylaws. NGOs can show initiative in different areas of public life, make suggestions to authorities of state power and administration, participate in the decision-making process by the authorities of state power and administration, distribute information on their activities, establish mass media and conduct publishing activity in an established manner, and create entrepreneurial structures to fulfill bylaws’ goals.

The state may provide support to some public benefit programs of NGOs.  Given that the law contains provisions on state financing and political activities of NGOs, it does not answer the questions of the form and procedure of NGO participation in forming authorities of state power and making decisions.  NGOs and their authorities are prohibited from using anti-democratic power pressure on authorities of power and administrations and bearers of full powers formed legally and democratically.  NGO activity that infringes on the health and morals of the population, or on citizens’ rights and interests that are protected by law is subject to criminal sanctions.  NGOs may engage in entrepreneurial activity related to their purposes.         

Public associations are created and operate on the grounds of volunteerism, equality of members, self-governance, legality, and publicity (Article 4 of the law on public associations). The rights and duties of members are determined by an NGO’s bylaws.

Management and oversight

The management, rights, and duties of an NGO are determined by its bylaws.  Oversight of NGO activity is exercised by the registration authority. Non -governmental, non-commercial organizations must keep records of the results of their activity and report in a regulated manner to the statistical and tax authorities.  Supervision over the implementation of NGO laws is performed by the office of the state prosecutor.   Control over financial activity is exercised by the finance authority.


The termination of an NGO’s activity can be done by reorganization (merger, inclusion, separation) or liquidation. Reorganization of NGOs is carried out based on either the decision of their conventions (conferences) or their general meetings.  NGOs can be liquidated according to the decision of their founders, participants (members), management, or the court.

Property that remains after the liquidation of an NGO and after satisfaction of creditors’ claims, is directed to the objectives specified by the bylaws or to the goals determined by the decision of its higher management authority (convention, conference, joint gathering, Board of Directors, etc.) upon liquidation of organization. In case of disputes about the proper disposition of assets,  the decision is to be made by the court.


According to the Tax Code of the Republic of Uzbekistan and the Instruction on the procedure of calculation and payment of profit tax from legal entities[7] to the budget, non-commercial organizations are exempt from profit tax.  Non-governmental non-commercial organizations do not pay profit tax on objective deliveries in both monetary and natural form1

In general this tax exemption applies to: membership fees, grants from both legal and natural entities, contributions to the NGO’s endowment fund of shares or other objective financial investments.  However, non-commercial organizations that have income (profits) from entrepreneurial activity pay the tax in a widespread manner .  Specifically excluded from gross income are grants received from international and foreign organizations and foundations, as well as international stipends in the field of scientific technical cooperation (see the conclusions of the State Committee of the Republic of Uzbekistan of Science and Technology (Regulation of  Cabinet of Ministers RU № 31of January 19, 1998))

According to the Tax Code of the Republic of Uzbekistan,[8] non-commercial organizations are exempt from property tax and tax on land, except for those used for entrepreneurial activity.

For the purposes of taxation, “non-commercial” means charity organizations, associations, foundations, international organizations, religious associations, and other organizations[9]:

For the purposes of taxation, the notion of non-commerciality established by the Article 31 of the Tax Code of the Republic of Uzbekistan is used.  However, because the notions of “non-commercial organization” and “non-commercial non-governmental organization” in tax and other fields of legislation are not adequate, and there are no normatively set definitions that explain terms that are used in the Tax Code, such as charity, charity activity, undefined public benefit goals, objects and subjects of charity activity, etc, all of which leads in practice to arbitrary interpretation and disputes, and realization of benefits granted to non-commercial organizations’ is hampered.

In the tax legislation lowering the taxed profits[10] for 30% of expenditures on nature protection actions is guaranteed:

* For more information on the legal status of NGOs in Uzbekistan, please contact Natalia Bourjaily, ICNL’s Vice President for the NIS at nbourj@icnl.org .

[1] The Law on Cooperation regulates activities of consumers’ cooperatives

[2] This information was received from an Accredited Oliy Mazlis (Ombudsman) on Human Rights.

[3] Article 58 of the Constitution of the Republic of Uzbekistan.

[4] Enacted on March 1, 1997.

[5] Under the repeated application during three months after submitting the application without examination of the collection of fees for registration to general foundations.

[6] This means that the decision is given in a written form.

[7] The Ministry of Finance N 35, the Tax Code № 97-91 of November 10, 1997, the Ministry of Justice № 382 of December 29, 1997

[8] Also Article 92 and 102

[9] Article 31of the Tax Code of RU.

[10] Article 32 of the Tax Code of RU


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