The Tax Foundations of Humanitarian Operations
The legal support of humanitarian operations rests primarily on tax issues: the taxation of grant-funded supplies, the refund of VAT, and the exemption of humanitarian imports. The law regulates this field with clear rules, and for those working with donors or operators, knowing these rules is not optimisation contrary to law — it is the condition of lawfulness itself.
A supply of goods or rendering of services whose purpose is not to receive profit, income or compensation is deemed gratuitous. Profit tax does not apply, for example, to: a donation to a charitable organisation not exceeding 10 per cent of its net profit received in the previous year; a gratuitous supply, service or transfer of funds to the state, a municipality or a public-law legal person; and the transfer of real estate to a charitable organisation working with persons with disabilities.
VAT Refund for a Grant Recipient
A taxable person acquires the right to a VAT refund where, in the reporting period, the deductible amount exceeds the assessed amount. A grant recipient who acquired goods or services under a grant agreement has the right to count or refund the VAT paid — on the basis of a tax invoice or a confirming document submitted to the tax authority.
The deadline is critical: the count or refund is effected if the recipient submitted the document to the tax authority within 3 months of the end of the month of the taxable transaction. A missed deadline means the loss of the right, so documentary discipline is an integral part of a humanitarian project's financial management.
Import Exemption
Exempt from import duty are: the import of goods for the elimination of natural disasters and catastrophes and for humanitarian assistance; the import of goods provided for by a grant agreement; and the import of goods financed by grants or a concessional credit containing a grant element of not less than 25 per cent — the grant element is calculated by the Ministry of Finance in accordance with a resolution of Parliament.
These exemptions are the basis for the rapid clearance of humanitarian cargo: a properly executed grant agreement and documentation mean savings of time and cost at the border. A compliance error, by contrast, means the full duty and a repricing of the project budget.