RUSSIA RELIGION NEWS


Orthodox Church faces a tax question

DISTRIBUTION OF OBJECTS WITH A RELIGIOUS PURPOSE: DONATION OR COMMERCE?

Patriarkhiia.ru, 23 January 2018

 

An article by the director of the Legal Service of the Moscow patriarchate, Hegumina Ksenia, and an attorney for the synodal Department for Relations of Church with Society and News Media, A.A. Svetlichny, was published in the first edition of the magazine "Parish" for 2018.

 

This article was aimed at calling attention to a rather important topic that religious organizations face in daily life and which has been incorrectly covered by a number of writers, including O.M. Shakov, who either mistakenly or intentionally has mixed up concepts.

 

The issue is the distribution by religious organizations of items that have a religious purpose. By article 17 of the federal law "On freedom of conscience and religious associations," religious organizations have the right to distribute items that have a religious purpose. This activity should not be equated with entrepreneurial or other activity producing income, including commercial activity. Entrepreneurial activity, according to law, is intended to produce income, while the distribution of items with a religious purpose is conducted for the aims of joint confession and dissemination of the Orthodox faith and it does not pursue goals of systematic production of income. Proceeds from this activity are not subject to Value Added Tax and income tax.

 

According to the preamble to the law "On protection of consumers' rights," a seller is an organization, regardless of its legal organizational form, selling wares to consumers on the basis of a commercial agreement. In accordance with article 492 of the Civil Code of the RF, a seller who conducts commercial activity on the basis of an agreement for retail commerce undertakes to deliver to a buyer wares intended for personal, familial, domestic, or other use that is not associated with entrepreneurial activity.

 

We emphasize that proceeds from the distribution of objects with a religious purpose are entered into accounting documents as donations from citizens.  In the employment register of a religious organizations there is no position of salesman, although there is a position of collector of donations.

 

The aforesaid is confirmed by positive judicial practice. Thus, in 2012, the Society for the Protection of Consumers' Rights tried to show in a court proceeding that religious organizations that distribute objects with a religious purpose actually are engaged in the sale of goods. Such a conclusion was made by the society on the basis of a mistaken interpretation of the norms of the Tax Code of the RF, which preclude, in the opinion of the society, the possibility of distribution of goods gratis. However the court did not share the position of the plaintiff because neither the Tax Code of the RF nor any other normative acts forbid the free distribution of objects that have religious purpose. In addition, the Tax Code of the RF understands as a sale not only paid but also free of charge transactions, and in itself the terminology of the Tax Code of the RF cannot restrict the freedom of contract that presupposes the right of a religious organization to conclude both agreements for sale and agreements for donation of objects that have a religious purpose. The society also did not succeed in citing the "well known circumstances," to wit the commonly known fact of "trade" in the temple.

 

Thus, the position of O.M. Shakhov and other writers, according to which religious organizations are required to conclude a commercial agreement in the sale of objects that have a religious purpose and the distribution of objects with a religious purposes actually substitutes for commerce, is unsubstantiated. (tr. by PDS, posted 26 January 2018)


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