Ministry of Finance: Donations to religious organizations are not taxable

The proceeds which were received by religious organizations as donations and financial aid and which were not distributed during the year are not taxable.

This was the official response of the Ministry of Finance of Ukraine to numerous addresses of churches regarding the alterations to the Tax Code of Ukraine with regard to non-profit organizations, the Institute of Religious Freedom reports.

The fears of the representatives of the confessions and experts were due to the provisions of the Tax Code of Ukraine, which envisage imposition of the income tax for the excess of incomes of non-profit organizations, which were not distributed during the year. However, the Ministry of Finance assured that the appropriate norm of the code applies to other kinds of non-profit organizations and therefore does not apply to the activity of religious organizations.

"The obligations regarding the payment of the income tax according to Paragraph 1 of Item 157.11 of Article 157 apply only to the non-profit institutions and organizations defined by sub-item Г' of Item 157.1 of Article 157 and do not apply to religious organizations," reads the explanation of the Ministry of Finance.  

According to Item 157.7 of the Tax Code of Ukraine, no tax is imposed on the incomes of registered religious organizations received in the form of funds or property received freely or as irreversible financial aid or voluntary donations or of any other incomes from rendering religious services and also passive incomes.

The official explanation was given on  February 9, 2011, and was signed by the First Deputy Minister of Finance of Ukrain, A.I. Miarkovskyi in response to the address to Ukraine's president of the heads of several churches and the chair of the Council of Evangelical Protestant Churches of Ukraine.