II.  

SECTOR SPECIFIC SUPPORT:  THE INTERNATIONAL CENTER FOR NOT FOR 

PROFIT LAW 

A. PROJECT PURPOSE 

The purpose of the ICNL project component is: 

1.  To nourish a continuing NGO state relationship; 

2.  In coordination, cooperation, and collaboration with USAID, its contractors and 

grantees, to assist in the construction of a comprehensive legal and fiscal framework 

that will enable the NGO sector to thrive in the region and contribute in a 

meaningful way to the development of civil society. 

B. PROJECT IMPACTS 

Kyrgyzstan 

Negative Provisions Eliminated from the Draft Amendments to the Civil Code 

In April 2003 a special working group appointed by the President started working on reforming the 

Civil Code. Unfortunately, from what they proposed certain provisions could have been interpreted to: 

(i) prohibit NGOs from conducting economic activities directly, allowing these activities only by 

establishing a subsidiary; and, (ii) prohibit NGOs and political parties from receiving outside financial 

assistance (grants, donations etc.).  The working group eliminated the confusing provisions from the 

draft after convincing arguments made by ICNL's expert who participated in the working group. 

Tajikistan  

Law on State Registration of the Legal Entities was Signed by the President and Entered into Force   

On April 22 the law  On state registration of the legal entities  was signed by the President, allowing 

for a simplified single registration procedure for both commercial and some non commercial entities. 

In addition to improvements in the registration procedure, the law reduces non commercial 

organization (NCO) registration fees and the period for application review. During 2002 to 2003, 

ICNL worked closely with the drafters, providing them with technical assistance to make the drafting 

process transparent and participatory.  Broad dissemination of the draft law and an educational 

campaign conducted by ICNL resulted in dozens of NGOs contributing by presenting their comments 

and participating in discussions of the draft law with the drafters.  The NGOs' advocacy campaign led 

to substantial improvements in the draft law.   For example, provisions requiring yearly re registration 

with a state fee payment and a burdensome registration procedure different from the procedure for 

commercial entities were eliminated under pressure from the campaign.  

Law on Charitable Activity was Signed by the President and Entered into Force 

In April 2002, the Law on Charitable Activity was signed by the President and came into force.  The 

new law helps to improve implementation of the tax code provisions related to tax treatment of 

charities. Prior to adoption of this law the tax code provisions on tax benefits for charities were 

implemented inconsistently, as the tax code did not provide for a clear definition and a mechanism to 

distinguish between charities and other NGOs. For example, based on the interpretation of a 

 charitable organization , an NGO could have been taxed in one region, and exempt from tax in 

another region.  Or, previously given tax benefits to NGOs could have been withdrawn with penalties 

levied, depending on the interpretation of the law by each particular tax inspector. From 2000 to 2002, 

ICNL worked to educate the NGO community and its legal experts on the issues of taxation and 

charitable status of NGOs, resulting in a grass roots initiative to draft a law providing a favorable 

regime for charities. Throughout the drafting process ICNL worked closely with the NGO 

government working group providing it with recommendations on the draft law and helping to 

organize public discussions and public hearings. The new law is another result of the joint drafting 

effort by NGOs and the government, assisted by ICNL.

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