Foreign gratuitous aid: a new procedure for obtaining, records and use
The Decree of the President of the Republic of Belarus №5 “On foreign gratuitous aid” (hereinafter - the Decree), which newly regulates the procedure for obtaining, records, registration and use of foreign gratuitous aid, was signed on August 31, 2015.
The adopted Decree will substitute for the current Decree of the President of the Republic of Belarus dated 28.11.2003 № 24 “On obtaining and use of foreign gratuitous aid”. The new procedure will come into force on March 4, 2016. In this regard, Revera has prepared for you an information statement related to crucial changes in this scope.
1. The new Decree defines in more detail the notion of foreign gratuitous aid (hereinafter - FGA). Thus, immovable property located outside the Republic of Belarus, and property rights are not applied to FGA. While interest-free loans, monetary funds allocated by foreign founders for financing of their institutions established in the Republic of Belarus, as well as contributions of foreign founders of Belarusian noncommercial organizations are FGA.
2. The list of entities that are considered to be FGA providers is extended. In addition to foreign entities, the citizens of the Republic of Belarus permanently residing outside the Republic of Belarus are also included in the list. So, for example, granting of interest-free loans by a citizen of the Republic of Belarus permanently residing outside the country to a citizen of the Republic of Belarus or a legal entity is FGA. The result of such transaction is the necessity to comply with FGA legislation.
3. The detailed list of purposes for which it is acceptable to use FGA is extended. The new purposes of the aid use include:
• promotion of various types of arts, cultural activities, as well as promotion and support of folk art (crafts);
• enforcement of punishments, crime prevention and promotion of a law-abiding way of living;
• upgrading of the material-technical base of government institutions, construction, repair (reconstruction) of facilities intended for social needs;
• physical training and sports promotion, as well as sports for children and young people, including of physical training and recreation sports public events.
It is significant that FGA can be used for other purposes determined by the Presidential Property Management Directorate of the Republic of Belarus with the consent of the President with regard to the aid in the amount exceeding 500 basic units, and without such consent - with regard to the aid in a smaller amount. Currently the Presidential Property Management Directorate of the Republic of Belarus refers personal needs of individual persons to such other purposes.
4. The confirmed list of goods, the provision of which as an aid is not allowed, includes:
• food products, the shelf life of which is less than 4 months;
• medical devices, the remaining service life of which is less than 1 year, and medical equipment - less than 5 years;
• prohibited imports;
• limited imports without the import permit;
• vehicles, from the manufacture year of which more than 15 years have passed.
5. The most important novelty of the Decree relating to individual persons is the fact that FGA received by individual persons does not require registration.
Individual persons according to the new Decree also shall not contribute monetary funds to special charity accounts in banks. Aid provided to individual persons in the form of monetary funds may be granted to them in cash or transferred to their bank account.
The exception is FGA in the amount which is more than 200 basic units received by financially disadvantaged citizens, disabled persons, pensioners, children, multiple children, single-parent, guardian, foster families and citizens in difficulties, in case if these individual persons apply to exempt the aid from income tax. It is necessary to register such FGA in the Humanitarian Activities Department, as well as to transfer to a special charity account.
6. Legal entities and individual entrepreneurs, as before, are obliged to register the aid provided to them in the Humanitarian Activities Department not later than 3 months after its receipt.
According to cl. 18 of the new Decree the aid which is not subject to registration includes:
• goods (property) the value of which is not more than 500 basic units and which are received for the use associated with production and economic activities;
• promotional products, samples of goods intended for testing (certification), examination of their technical specifications and consumer properties.
Legal entities and individual entrepreneurs who receive aid in the form of monetary funds are obliged to open a charity account. In case if they receive cash monetary funds, the funds shall be transferred to these accounts within 3 bank days from the date of the receipt (according to the current procedure - within 5 bank days).
7. The Decree also concretizes the following practical aspects, in particular it clarifies that:
• property acquired when using funds of such aid, as well as deposit percentages received from the transfer of FGA to a bank, is not aid.
• amounts of exchange differences when using FGA for a specified purpose are not included in non-operating expenses or income which is taken into account due to taxation.
8. The new procedure establishes peculiarities of the use of immovable property provided as an aid and located in the Republic of Belarus. Thus, the recipient of FGA in the form of immovable property located in the Republic of Belarus is not entitled to undertake transactions with immovable property without the consent of the Humanitarian Activities Department at any time thereafter as well as to reconstruct it.
Thus, if a citizen of the Republic of Belarus permanently residing outside the country gave a present of immovable property to a citizen of the Republic of Belarus, the latter is not entitled to undertake transactions with such property or reconstruct it without the consent of the Humanitarian Activities Department.
9. According to the novelties, reporting on the use of aid by legal entities and individual entrepreneurs is submitted to the Humanitarian Activities Department not only by recipients of such aid, but also by persons who received it due to the distribution implemented by such recipients.
Thus, the Decree №5 “On foreign gratuitous aid” concretizes issues related to obtaining, records and use of foreign gratuitous aid. It reflects a lot of controversial and technical issues that have arisen earlier in practice and were not resolved by the current procedure. The Decree simplifies granting of aid to individual persons, as they are exempt from the obligation to register such aid and to transfer it to charity accounts. Legal entities and individual entrepreneurs, as before, are obliged to register the received aid according to the new procedure.
How we can assist
Revera experts are prepared to consult on issues related to amendments to the legislation regarding granting, registration and use of foreign gratuitous aid, as well as to render legal assistance when receiving and registering it.