Details of official Russian support for NGOs
Ministry of economic development explained how to use support measures for NGOs
Earlier the Ministry of Economic Development has created and published a register of NGOs that will receive support from the state.
On 8 June NGOs were made exempt from some taxes and insurance premiums for the second quarter of 2020, a tax rebate was introduced on donations from businesses as well as other measures to combat the “crisis”. In conjunction with these legal changes, a register has been published by the Ministry of Economic Development, listing NGOs that are eligible for state support. A second register of the worst affected NGOs is also being formed.
The Ministry of Economic Development explains how these support measures can be used.
NGOs on the register will be eligible to receive loans with an interest rate of less that 2%. According to the Ministry of Economic Development, the total value of state loans should amount to more than 248 billion roubles for legal entities and NGOs. Soft loans have been available since 1 June 2020.
In addition to the reduced rate, special conditions for the repayment of loans have been introduced for non-profit organisations. If the organisation has maintained more than 90% of its work force, the state will repay the entire loan amount with interest. If 80%, then the state will only repay half of the loan with interest.
You can take out a loan to cover the running costs of the organisation’s activities (this must be supported by proper documentation). In particular, the loans are designed for the payment of salaries, repaying previous loans under the preferential loan programme and interest free loans taken out to support and maintain employment. You cannot take out soft loans to pay dividends, buy back your own shares and shares of other companies, nor for spending on charitable purposes.
Loans can be taken out from 1 June until 1 November 2020. The Ministry of Economic Development has noted that organisations who have already applied for loans, can remain confident of receiving large loans. The term of the loan is for no longer than a year.
The maximum possible loan can be calculated according to the following formula:
Estimated salary payment – the minimum wage, taking into account regional factors, interest rates and insurance premiums at a rate of 30% – multiplied by the number of employees at the organisation during the stated period (from the date the loan is taken until 1 December 2020).
The distribution of funds after the agreement has been made will be limited. The limit can be calculated using the following formula:
The estimated amount of remuneration is multiplied by two and multiplied by the number of employees at the organisation.
The remainder of the loan when the limit is not exceeded will be transferred once a month in individual payments.
The rules for loan repayment and writing off preferential loans depend on the period during which the agreement is valid:
- Mandatory baseline period runs until 1 December 2020;
- Optional follow up period runs from 1 December 2020 until 1 April 2021. The borrower is eligible for this extension if they have kept their staff within the stated limits and does not cease carrying out their activities;
- Optional three-month repayment period. This can come into force either after the baseline period or after the observation period. It does not apply if the organisation has met the conditions for repayment.
Conditions during the base period: no payments are made until 1 December 2020, the interest rate is no higher than 2% per annum and the interest accrued for this period is added to the principal debt at the end of the base period.
After the base period, organisations must either repay the loan or write it off (in full or in half).
If by the end of just one month of the base period, the work force of the borrowing organisation has decreased by 20% in comparison with 1 June 2020, the organisation must pay back the loan in three equal payments on 28 December 2020, 28 January and 1 March 2021. The Ministry of Economic Development notes that the standard interest rate of 2%, as determined by the bank when signing the contract, will not be reduced.
You are eligible for writing off the loan in full if you meet the following conditions:
- During the period from initially receiving the loan until 1 March 2021 no less than 90% of employees are still employed at the end of each month;
- The organisation has not ceased operating or entered bankruptcy proceedings;
- The average salary for employees does not fall below the minimum wage during the observation period.
If the number of employees at the end of each month during the monitoring period does not fall below 80% of the total staff, the loan will be written off by half.
The number of staff will be monitored through a specialist blockchain system run by the Federal tax service, which collects data on insurance premiums that organisations transfer to the pension fund on a monthly basis.
The list of banks providing soft loans is being updated. This is the current list:
Sberbank, Energotransbank, RNKB Bank, Promsvyazbank, VTB, Kuban credit, Bank Kuznetsky, JSC Yenisei United Bank, AK bars Bank, Chelyabinsk Bank, Chelindbank, Altaykapitalbank, Energobank, Sibsotsbank, Koshelev-Bank, Almazergienbank, NBD-Bank, SME Bank, Center-invest, Databank.
Exemption from lease payments
Non-profit organisations included on the register can expect to be exempt from paying lease payments under Federal property lease agreements and to defer payment of lease payments for other Federal real estate during the period of restrictive measures.
To use this support measure, you need to complete and submit an application on the Rosimushestvo website. It contains appropriate templates, as well as the instructions for deciding the type of support.
If the application is approved, the organisation will receive an additional agreement to the original lease agreement within 7 days. If you have any queries Rosimushestvo recommends contacting the appropriate regional office. You can view the list of contacts here.
According to the Ministry of Economic Development, it is not the responsibility of individual organisations to turn to the Federal Tax service to discover the tax benefits available to them. All the requisite information will be published on the Federal Tax Service’s official website. As a reminder, NGOs are exempt from paying taxes, advance payment on taxes and corporate income tax – in part of monthly advance payments due in the second quarter of 2020.
This information is available in the attached files here.