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WHEN WILL THE CONTROVERSIAL PROPOSAL TO AMEND THE NON-PROFIT LEGAL ENTITIES ACT BE WITHDRAWN?

17 November 2020

In response to the concerns of Bulgarian NGOs in regard to the Bill to amend the Non-Profit Legal Entities Act proposed in the National Assembly in July this year by the MPs of the “United Patriots” Group, the Vice President of the European Commission Věra Jourová assured that European Commission will remain firmly committed to fostering an environment where civil society can continue to thrive.

 

Mere two weeks after the ECJ announced that the Hungarian Transparency Act is discriminatory, in july 2020 in the Bulgarian National Assembly a Bill to amend the Non-Profit Legal Entities Act (the Bill) was filed, which proposes a similar to the Hungarian measures:

  • Obligation to report all income from foreign sources (foreign states, individuals or companies) above 1000 BGN (500 EUR) – This obligation applies to public benefit CSOs (art. 40a) who have to submit a declaration with proof for the funding received up to 7 days after the receipt of the funds. The only exception provided is for funds from the European Union. In case this obligation is violated, there will be financial sanctions.
  • Creation of a register of nonprofit legal entities financed from abroad – the Minister of Finance will issue a decree on how this register will be established. It is unclear from the draft proposals if the Register would be public or not.
  • The Agency for State Financial Inspection will be able to conduct financial audit of CSOs – currently their mandate is limited to expenditure of state, municipal or EU funds or in companies controlled by the State or CSOs but only in the case when the state or municipalities participate directly or indirectly in their property.[1] There is no specific circumstance or reason that may trigger such inspections other than the decision of the Minister or a person authorized by the Minister and the fact that a CSO has received more than 500 EUR from a foreign person or state.
  • Possibility to terminate the CSOs or temporarily take away its public benefit status - for one violation of the obligation to declare, in addition to the financial sanction, the Minister of Finance may ask the Registration Agency to add “temporarily taken away public benefit status”. A second violation may lead to termination of the CSO.
  • Obligation for reporting to the Commission for Combatting Corruption and Confiscation of Illegally Acquired Property - The Chairpersons and members of Management Boards of CSOs that have received foreign funding are obliged to declare their assets and interests to this Commission. There is no limitation in the amount of the foreign funding received that may subject CSOs to this obligation - so even the receipt of 1 EUR would be sufficient. Currently, such requirement is applicable for people having high government positions e.g. Ministers, MPs and some other related individuals (mayors, managers of state-owned enterprises, etc.). The declarations of these people are public and if the Commission finds a difference between the declared property and the actual assets, this may trigger a procedure against the individuals that may lead to confiscation of property.
  • Similar measures are not proposed for NGOs receiving private or public funding originating from Bulgaria.

The Bill, naturally, instigated negative reactions as over 300 NGOs sign a joined statement in which they describe the propositions of the Bill as “discriminatory, stigmatizing, unfounded and disproportionate.” On international level the Bill was critiqued in the 2020 Rule of Law Report of the EC, the European Parliament’s Resolution on rule of law and fundamental rights in Bulgaria as was as in a joint letter by Mandates of the Special Rapporteur on the rights to freedom of peaceful assembly and of association, the Special Rapporteur on the situation of human rights defenders and others.

In response to the concerns of Bulgarian NGOs in regard to the Bill to amend the Non-Profit Legal Entities Act proposed in the National Assembly in July this year by the MPs of the “United Patriots” Group, the Vice President of the European Commission Věra Jourová assured that European Commission will remain firmly committed to fostering an environment where civil society can continue to thrive.

In her letter Mrs. Věra Jourová also notes that after the publication of the 2020 Rule of Law Report of the EC on the 30th of September 2020, the European commission has received information from “the leader of the ruling majority in the Bulgarian National Assembly” that the Bill has been discussed at a coalition council and will be withdrawn.

Despite the assurances given by the Bulgarian authorities before the European Commission, the Bill is still pending in the National Assembly where the last “movement” in connection to it is a published on the 22.10.2020 Position of the Ministry of Justice which does not support the proposals in the Bill.       

The question when the Bill will be withdrawn or will be put to a vote and rejected by parliamentary committees remains. Until that happens the pending Bill will continue to create uncertainty in the public and will be in support of the anti – NGO narratives. We would like to remain that the Bill is motivated with the false statement that “in the current Bulgarian legislation, unlike other European countries, there is no legal framework on the basis of which to achieve transparency regarding the source of funds of non-profit legal entities and their purpose.” In fact the NGOs in Bulgaria account themselves before number of public institutions and there are existing mechanisms for ensuring transparency, which, unlike the proposals in the Bill, are not clearly discriminatory against certain categories of legal entities.

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