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(Berlin) – Kazakhstan’s authorities have been abusing tax issues to harass human rights groups, Human Rights Watch said today. Two prominent human rights organizations, the International Legal Initiative Foundation and Liberty, have had tax audits, and the tax authorities appear to be targeting both because of their work protecting human rights. A tax audit of another organization, Kadyr Kasiyet, was suspended but is set to resume.

“Kazakhstan’s authorities shouldn’t be using bogus tax audits to prevent rights groups from operating normally in the country”, said Hugh Williamson, Europe and Central Asia director at Human Rights Watch. “Targeting nongovernmental groups because of their work on human rights is unacceptable”.

On August 1, 2016, the State Revenue Committee of the Ministry of Finance of Kazakhstan ordered tax audits of the three prominent groups upon the request of an unidentified person, who accused the groups in a local media outlet of involvement in terrorism and of providing no information about how they spend international grant money.

A public meeting organized by rights groups in Kazakhstan on January 27, 2017.  © 2017 Халықаралық Құқықтық Бастама Facebook

A representative of Liberty, which is based in Almaty and works on freedom of speech and peaceful assembly, told Human Rights Watch that tax inspectors had gone beyond inspecting the group’s finances. The representative said the auditors had gathered information on people involved in the group’s activities and asked questions about the content of the group’s research and training.

Tax inspections of the International Legal Initiative Foundation and Liberty ended on December 30. Liberty was notified about the results on January 5, 2017, and the International Legal Initiative Foundation on January 9.

The tax authorities charged both organizations with not declaring their full taxable income and other obligatory payments. Liberty was ordered to pay 3 million tenge (US$9,000) in commercial income tax and fines. The International Legal Initiative Foundation was ordered to pay 1 million 300 tenge (US$4,000). Tax authorities deemed financial contributions from several donors as profit in the form of “assets received free of charge” because these donors are not included in a 2009 government list covering “international and national organizations, foreign and Kazakhstani non-governmental organizations and funds that provide grants.”  

The tax authorities’ decisions appear to contradict Art. 134 (2) of the Tax Code of Kazakhstan, which exempts non-profit organizations from taxes. The law stipulates that “income of a non-for-profit organization under an agreement for the performance of the governmental social order, in the form of interests on deposits, grants, admission and membership fees, contributions of participants of a condominium, charity and sponsorship assistance, assets received free of charge, donations and charity on a charge-free basis shall not be subject to taxation.”

In the case of the International Legal Initiative Foundation, which is based in Almaty and works on rule of law issues, tax authorities determined that grants from several international bodies, such as the National Endowment for Democracy (NED), Freedom House, Norwegian Helsinki Committee, and the US and Canadian embassies were “assets received free of charge” and subsequently categorized these as taxable incomes. Authorities came to the same conclusion about Liberty and did not recognize grants provided by the European Commission and Norwegian Helsinki Committee.

All these international bodies, apart from the European Commission, are not in the 2009 list. However, the government has signed official agreements with these bodies allowing them to provide grants to local groups. The outdated list is being used to restrict the work of organizations, said Galym Ageleuov, the Liberty president.

The International Legal Initiative Foundation challenged the decision of the tax authorities in a local economic court on February 14, and Liberty submitted a complaint to the head of State Revenue Committee on January 30. The tax audit of Kadyr Kasiyet, an Astana-based group that monitors the security of human rights activists, has been suspended but will continue later in February, said the head of the organisation.

On January 27, a nongovernmental group organized a public meeting for donors, representatives of foreign embassies, and local authorities. Afterward, 76 local and international groups issued a joint statement of concern about the pressure on the three groups.

Aina Shormanbaeva, head of the International Legal Initiative Foundation, told Human Rights Watch that, “The tax audit is a deliberate instrument to pressure and retaliate against our work on land rallies that took place on May 21, 2016. We did not allow authorities to intimidate protesters left without help in police stations [after the rallies] and defended their rights to peaceful assembly and freedom from arbitrary detention.”

Human Rights Watch documented that authorities in several cities aggressively detained and harassed hundreds of people involved in the peaceful land rights protests on that day. The International Legal Initiative Foundation and Liberty were among the groups that actively monitored the events and provided free legal aid to those who were detained in Almaty.

Kazakhstan has, since 2015, introduced various laws restricting the activities of nongovernmental groups, including imposing burdensome reporting obligations and state regulation of funding through a government-appointed body. In 2016, parliament adopted amendments with new financial reporting obligations for individuals and legal entities, such as nongovernmental groups, for foreign funds receipt and expenditure.

“The actions of authorities send a worrying signal to Kazakhstan’s international partners,” Williamson said. “A free civil society is vital for Kazakhstan’s advancement and its work should be encouraged, not hindered”.

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