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Advocacy for Policy Changes

SIGN for Sustainability project primarily aims to contribute to a more enabling environment and improved legal framework for philanthropy development, CSR and local resource mobilization in the region. In order to achieve this, partners have conducted a baseline study on existing legal and fiscal framework for giving in the region; several consultations on legislative framework and needed policy changes; development of policy and legislative recommendations for each country and are currently advocating responsible governmental institutions for these changes.

i. Baseline study 

This Baseline Study  has been created by legal expert, Dr. Dragan Golubovic with input from partners and other stakeholders provided through semi-formal country-based consultations. Baseline Study provides the analysis of legal and fiscal framework for giving encompassing: corporate income tax, personal income tax, gifts tax, public benefit status, and use of donations. The Study covers national level analysis for six countries in the Western Balkan region (Bosnia and Herzegovina, Croatia, Kosovo, Macedonia, Montenegro and Serbia) and three additional countries (Germany, Poland and Slovenia), as well as comparative analysis with presentation of best practice models. Apart from expert desk research, partners invested efforts in bringing the input on the ground from stakeholders (foundations, CSOs, businesses), primarily on needs and obstacles from the practice. Consultations were done in an informal way and are included in the Study. 

Based on the Study, partners have created policy recommendations and advocacy strategy for policy improvements in five countries of the region. The Study also serves as a benchmark to assess the improvements in legal and fiscal regulation during the course of project implementation and in the future. 

 

ii. Policy and legislative recommendations 

Together with Dr. Dragan Golubovic, each partner developed policy and legislative recommendations for their respective country.
In Serbia, Trag created policy recommendations that aimed to change the Legal Entity Profit Tax Law, ensuring equal tax benefits for those supporting CSOs and institutions who provide social services and Property Income Tax Law, increasing the excess of revenues over expenses from 400,000 to 600,000 RSD and exemption of CSOs from property tax.

In Bosnia, Mozaik targeted changes in Profit Tax Law and Income Tax Law in both Federation of BiH and Republika Srpska. When it comes to Profit Tax Law, Mozaik made the following policy recommendations: extension of list of public benefit activities, setting out specific conditions that CSOs must fulfill in order to qualify as a recipient of tax exempt donations, regulating institutional grants to CSOs and carry-over donations. Additionally in Republika Srpska, it was necessary to shift the focus of the Law from the type of organizations towards the type of activities for which tax exemptions can be utilized. In regards to Income Tax Law, Mozaik also recommended introducing tax benefits for individuals (other than “entrepreneurs”) as they weren’t previously recognized by the said legislation.

In Montenegro, fAKT recommended to make the narrowly constructed and exhaustive list of activities deemed for public benefit in the Corporate Profit Tax Law and Personal Income Tax Law, consistent with the list of public benefit activities defined by the supra, NGO Law.

CIRa focused on Law on Donations and Sponsorship of Public Benefit Activities. It was recommended to simplify the overall procedures for the implementation of the law; further define the concept of public benefit that is not consistently defined and applied; exempt donors to public benefit organizations registered under the Law on Associations and Foundations from the duty to file a request with the Ministry of Justice thus reducing the high and disproportional transactional costs for executing and supervising the use donations incurred on all parties involved; incorporate mechanism for VAT deduction on SMS messages and develop mechanisms that will enable the use of tax incentives for individual giving for all employees. Currently, individuals who don’t have extra income besides their monthly salary are not subjected to tax exemptions.

FIQ has been strongly advocating on the Draft Law for Sponsorships and Donations (the law that should regulate gifts, in-kind donations, carry-over tax-exempt donations and be used as an adjustment to several Laws that already exist). FIQ managed to lead the public debate on this draft law by mobilizing businesses and chambers of commerce, along with key public institutions such as Ministry of Finance. FIQ has also pushed for changes to the existing Corporate and Personal Income Tax Law, to adjust it to other laws and also clarify several articles related to in-kind donations, institutional grants, carry-over donations and overhead expenses. Moreover, their continuous advocacy efforts led to an official invitation by the Ministry of Labor and Social Welfare, to join the working group for the Law on Social Enterprises, which will enable FIQ to have a direct input on the drafting of the law. In addition, FIQ has been invited from the Legal Office of the Prime Minister to contribute to the new legislative pack for 2015, where the main focus will be the envisaged Law on Philanthropy.  

 

iii. Policy consultations 

Once the Baseline study and the draft of policy recommendations were created, each partner organized policy consultations where they presented the Study, the policy recommendations and held a discussion intended to finalize the recommendations, identify the priorities, set the base of the advocacy strategy and create the network of support. All meetings were attended by Dragan Golubovic, expert who created the Baseline study and the policy recommendations for each country. The consultations gathered more than 250 representatives of CSOs, businesses and governmental institutions across the region.

As a result, Trag and Mozaik published a guide identifying the existing modalities of tax benefits and answering concrete questions regarding the best modalities of their use. The guide regarding existing tax benefits in Serbia can be found on Trag website and the guide regarding existing tax benefits in Bosnia and Herzegovina can be found on Mozaik’s website.

 

iv. Advocacy process 

Trag Foundation, with the support of Office for Cooperation with Civil Society and Social Inclusion and Poverty Reduction Unit of the Government of Republic of Serbia created the proposal that was submitted to the Ministry of Finance in November 2014. Trag invited civil society organizations to support the policy proposals and 115 CSOs from 36 municipalities submitted their signatures. The proposal was included in the Strategy for Civil Society Development and, if adopted in full, these provisions will become mandatory for the Tax Authorities to use. The decision of the Government regarding the Strategy is expected in the first half of 2015.

After contributing to the creation of the national Strategy for NGO Development, fAKT applied for membership on the Council for NGO Development in May 2014 and got elected in July 2014. Council’s establishment is one of the measures foreseen by the Strategy, and it serves as an advisory body to the Government of Montenegro, in charge of: a) monitoring implementation of the Strategy and its action plan for 2014-2016, b) providing opinion on regulations, by-laws, i.e. strategic and other documents relevant for creating more enabling environment for NGO work and development, c) initiating new regulations/or changes of existing regulations, relevant for NGO work, d) proposing priority funding areas which are of public interest, to the Government of Montenegro.

In Kosovo, FIQ submitted comprehensive policy recommendations on the draft Law for Sponsorships and Donations to the Ministry of Finance, and the Ministry of Culture, Youth, and Sports. After the elections held in Kosovo, FIQ was asked to contribute to the legislative package for 2015 and will be included in the Working groups dealing with its area of expertise. FIQ will be involved in the creation of the following legislative proposals: the draft Law on Sponsorships and Donations, Corporate and Personal Income Tax Laws, the draft Law on Philanthropy, and the draft Law on Social Enterprises.

Together with other CSOs relevant in the field, Mozaik launched its advocacy campaign at the beginning of 2015. They developed a good collaboration with the main advisor for profit tax at Federal Ministry of Finance and the director of Federal Tax office, and both have supported their advocacy efforts.

v. Monitoring report

During four years of implementation of SIGN for Sustainability,  project partners from Bosnia and Herzegovina, Macedonia, Montenegro, Kosovo and Serbia undertook various advocacy actions to contribute to a more enabling environment for philanthropy development. At the beginning of the project, SIGN partners produced a Baseline study that analyzed existing legal frameworks and lead to policy recommendations for each country. At the end of four years, SIGN is publishing a Monitoring report covering relevant legislative changes that occurred during the project implementation period. Some of these changes came as a direct result of SIGN for Sustainability advocacy efforts. Click here for full report.