Tax Status Unclear For Foreign NGOs

The government will clarify later this year the tax status of grants from dozens of international organizations excluded from tax exemptions in a recent decree signed by Prime Minister Vladimir Putin, a government spokesman said Thursday.

The decree, signed Saturday by Putin, reduced the number of international organizations allowed to issue tax-free grants from 101 to just 12, a move that could raise new fears about a crackdown on foreign nongovernmental organizations.

Government spokesman Alexander Smirnov said Thursday, however, that the tax status of grants from international NGOs left off the list would be established in a decree by the end of the year. He did not give a precise date.

Until that decree is issued, grants from foreign NGOs excluded in the Saturday decree will maintain their current tax status, Smirnov said.

"This is a completely democratic and transparent measure," he said.

Saturday's decree, published on the government's web site, allows for taxfree grants from 12 intergovernmental organizations, including the Council of the Baltic Sea States, the Nordic Council of Ministers, the International Atomic Energy Agency, and the Black Sea Economic Cooperation.

The decree is set to come into force Jan. 1.

Left off the list were organizations such as the International Federation of the Red Cross and Red Crescent Societies (Switzerland), the Global Fund to Fight AIDS (Switzerland), the Ford Foundation (U.S.), the Eurasia Foundation (U.S.) and the Royal Society (Britain).

Grant money that is not tax-exempt is now taxed at 24 percent for recipients that are legal entities and 13 percent for private individuals.

The issue of tax-free grants has vexed foreign NGOs that issue grants because some funds are available only on the condition that the money is tax-free.

German government regulations, for instance, stipulate that public grants can only be given if they are treated as tax-free, said Jens Siegert of the BЪll Foundation, an NGO linked to Germany's Green party.

"Taxation essentially contradicts every principle for giving aid worldwide," Siegert said.

Sergei Markov, a pro-Kremlin spin doctor and State Duma deputy with United Russia, said the government was interested in further minimizing foreign influence i Russian domestic politics.

Many of the organizations left off the list in Saturday's decree had been pursuing political goals in Russia, Markov said.