Critics have decried the shifted tax burden as a way of limiting the growth and independence of the nongovernmental sector and controlling financial flows into civil society as presidential elections, scheduled for October, approach.
Ali Hasanov, head of the political department of the president's office, told the media that "the NGO proposals regarding the new taxes will be considered."
At the end of December, the Azeri parliament changed the country's law on grants to require that all local NGOs pay a 27 percent tax to the Social Insurance Fund. In addition, NGOs would be obliged to pay 2 percent of incoming grants to the Social Security Fund and to register their grants with the local authorities.
According to Azeri authorities, the changes are necessary and are not intended to suppress the sector.
"NGOs in other countries also pay taxes toward their social insurance," Hasanov told the private station ANS-TV on 31 January. "All we want to do is ensure that people who work for NGOs have pensions when they retire," he added.
But the NGO sector immediately labeled the changes an unnecessary burden on an already cash-strapped sector.
"This change will substantially increase the cost of projects and will eventually lead to the outflow of investments and grants into the third sector from Azerbaijan to other countries," Azay Guliyev, president of the NGO Forum, an umbrella association of over 250 local NGOs, said on ANS-TV on 31 January.
"Instead, we are proposing either to postpone the implementation of these amendments for two to three years or to decrease the taxes to 4 percent," he said.
On 22 January, representatives of several dozen NGOs gathered in Baku's Sabir Square to demand the cancellation of the amendments and protest the introduction of the compulsory system of grant contract registration at the Justice Ministry.
The representatives also met with Vahid Ahundov, the state adviser on economic policy, and asked him to relay the concerns of the NGO sector to Azeri President Heidar Aliev. Following consultations with several international organizations and donors, the NGO Forum has also submitted a final proposal to the government in regard to the tax changes.
Several international organizations, including the Eurasia Foundation, have also expressed displeasure at the changes to the grant law.
The tax issue highlights the uneasy relationship between the government and the NGO sector, which is nothing new. According to the Justice Ministry, there are currently 1,500 NGOs registered in the country, but only 450 of those are active and conducting regular projects. The majority of NGOs are concentrated in Baku and experience numerous financial and legal difficulties, according to NGO activists.
The small number of NGOs in Azerbaijan as compared with neighboring Georgia, NGO representatives say, reveals the difficult environment in which the third sector operates in the country.
Azeri NGOs have traditionally complained about the registration procedures at the Justice Ministry, which some call a bureaucratic nightmare. The number of organizations seeking registration fell in 2002.
But independent analysts indicate that the government of Azerbaijan is concerned about the growing number of independent think tanks and public organizations and wants to control their influence on the policy-making process in the run-up to the presidential election.
Several international organizations, most notably the Council of Europe (CoE), have frequently criticized Azerbaijan for exerting pressure on independent media and the NGO sector. Azerbaijan was admitted to the CoE in January 2001.
Following Azerbaijan's entry into the CoE, several human rights NGOs became actively involved in a dialogue with the council over the issue of political prisoners in the country, a move that upset the Azeri authorities.
The upcoming weeks will be decisive for the NGO tax issue, but as elections near and the NGO sector strives for independence, tensions between the authorities and civil society are unlikely to decrease.
--by Fariz Ismailzade
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Copyright =A9 2003Transitions Online. All rights reserved.
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