Act on the Financial Affairs of Political Organisations and Candidates and Their Duty to Provide Information
Act on the Financial Affairs of Political Organisations and Candidates and Their Duty to Provide Information
No. 162, 21 December 2006
Effective as of 1 January 2007, with statutory provisions on primary elections effective as of 1 June 2007
Chapter I
General provisions
Article 1
Objectives
The intention of this Act is to regulate financial donations to political organisations and political activities, to reduce the risk of conflicting interests and to provide transparency in financial affairs. The objectives of the Act are to increase trust in political activities and to strengthen democracy.
Article 2
Definitions
In the context of this Act, the words and terms below shall have the following meanings:
1. Political organisation: A party or organisation that presents candidates for election to the Althing or municipal governments.
2. Primary election: An election held by a political organisation in order to select representatives for its list of candidates for the Althing or a municipal government.
3. Candidate: A participant in an individual-candidate election for a municipal government or a participant in the primary election of a political organisation.
4. Donation: A contribution towards the activities of a political organisation or candidate or election campaign, whether as a direct financial contribution or other advantage that can be measured in terms of money, irrespective of the contribution's source or nature. A contribution in this respect includes any discount from market price, favour or concession, including discounts from the market price of advertising, debt remissions, unusual loan terms, etc. If a discount has been given from the market price, the difference between the market price and actual price shall be specified as a donation on the invoice. Other contributions, such as the loan of employees, facilities or equipment without charge, shall be assessed at the going rate or market price at that time and specified on the invoice with that price.
5. Related entities: Legal entities where the same party or parties own a majority of the shares, initial capital or voting rights in both or all of these legal entities, provided that the ownings of each such party comprise at least 10% of the shares, initial capital or votes in the legal entities concerned. The same applies if individuals or legal entities owning the greater part of shares, initial capital or voting rights in a legal entity and each owning at least 10% of the shares, initial capital or voting rights in the legal entity also own along with the relevant legal entity the greater part of shares, initial capital or voting rights in another legal entity. Pursuant to this item, the ownership and voting rights of spouses and blood relatives are also considered to fall under an individual's ownership and voting rights in a legal entity.
6. Auditor: A chartered accountant according to provisions of the Act on Auditors.
7. Parliamentary party: An organisation of members of the Althing that meets the conditions of the Parliament Act for consideration as a parliamentary party.
Chapter II
State and municipal government contributions to political activities
Article 3
State Treasury contributions to political organisations
Funds shall be allocated annually from the State Treasury through the current national budget for the activities of political organisations that achieved at least one person elected to the Althing or at least 2.5% of the vote in the immediately preceding parliamentary election. Amounts shall be allocated in proportion to the number of votes.
Article 4
Contributions from the State Treasury to parliamentary groups
Funds shall be allocated annually from the State Treasury through the current national budget for the activities of parliamentary groups. An equal amount, called a unit, shall be paid for each member of parliament. One unit shall also be paid for each parliamentary group. In addition, an amount equalling twelve units shall be allocated to parliamentary groups of the political organisations that have no seats in the government, dividing these units among them on a proportional basis. The Althing Presidium may set further rules on payments pursuant to this Article.
Article 5
Contributions from municipalities to political organisations
Municipalities with over 500 inhabitants must, while other municipalities may, contribute funds for the activities of political organisations that had at least one person elected to the local council or that received at least 5% of votes in the immediately preceding municipal election. The municipal government decides on such contributions while approving the budget. The amount shall be allocated in proportion to the number of votes.
Chapter III
General donations to political activities
Article 6
Accepting donations
Political organisations and candidates may accept donations for their activities or electoral campaigns subject to the limitations entailed in the second to fifth paragraphs of this Article and the provisions of Article 7.
Donations may not be accepted from unknown donors.
Donations may not be accepted from enterprises owned or controlled for the greater part by the State or by municipalities.
Donations not falling under the provisions of Chapter II may not be accepted from public sector bodies.
Donations may not be accepted from foreign citizens, enterprises or other entities registered in countries other than Iceland. However, this ban does not include donations from foreign citizens who enjoy voting rights in Iceland, cf. the third paragraph of Article 2 of Act No. 5/1998, on municipal elections.
Article 7
Maximum donations, guidelines and primary elections
Political organisations and candidates may not accept higher donations from a legal entity than ISK 300,000 annually. Donations in the form of discounts are exempt from this maximum, provided that they are general discounts from the market price, are given publicly and are itemised in invoices. Legal entities that make donations to political organisations or candidates shall itemise the total amount of such donations in their annual financial statements. Donations from related entities shall be accounted for jointly.
No political organisation or candidate may accept donations from any legally competent individual that are higher than ISK 300,000 annually. In this context, donations do not include general membership fees for a political organisation that are collected regularly and do not exceed ISK 100,000 annually.
In order to ensure consistency with provisions of the first and second paragraphs, the Icelandic National Audit Office shall set guidelines for arrangements by political organisations to sell services.
The total campaign cost of a candidate in a primary election may not exceed ISK 1 million, added to a supplement as indicated below:
In an electoral district with more than 50,000 inhabitants aged 18 and above, ISK 75 per person
In an electoral district with 40,000 to 49,999 inhabitants aged 18 and above, ISK 100 per person
In an electoral district with 20,000 to 39,999 inhabitants aged 18 and above, ISK 125 per person
In an electoral district with 10,000 to 19,999 inhabitants aged 18 and above, ISK 150 per person
In an electoral district with fewer than 10,000 inhabitants aged 18 and above, ISK 175 per person.
Chapter IV
Presentation of financial statements by political organisations and their duty of disclosing information
Article 8
Financial statements of political organisations
A political organisation shall keep consolidated financial accounts for all of the units that it includes, such as separate associations, constituency councils, holding companies and related non-profit institutions. An individual party unit may be excluded from the consolidated accounts if its income does not exceed ISK 300,000 annually. Annual financial statements shall be drawn up according to subject rules of the Annual Accounts Act, as applicable. The Icelandic National Audit Office shall issue further instructions on the bookkeeping of political organisations.
A political organisation shall submit its accounts to chartered accountants for auditing. The auditors shall operate according to guidelines from the Icelandic National Audit Office and verify that the consolidated statement was prepared in accordance with provisions of this Act and general accounting principles, confirming that opinion by signing the statement. The Icelandic National Audit Office may at any time call for all documents in order to verify that donations by individuals and legal entities have remained within the limitations stated in Chapter III.
Article 9
The duty of providing information on the financial statements of political organisations
Each year, a political organisation shall send the Icelandic National Audit Office its financial statement, in accordance with Article 8, signed by auditors. Subsequently, the National Audit Office shall coordinate and publish a summary of the financial statement of each political organisation. The summary of a financial statement shall as a minimum include total revenues and total costs. Income shall also be itemised according to source, distinguishing among State contributions, municipal contributions, donations from legal entities, membership fees and donations from individuals and indicating the principal amounts on the political organisation's balance sheet. Any discount received from market price shall be indicated specifically. The name shall be published of every legal entity that donates to political activities.
Chapter V
Presentation of financial statements and the duty of providing information relating to individual-candidate elections
Article 10
Financial statements of candidates in individual-candidate elections
A candidate shall prepare a financial statement for her/his election campaign in accordance with general accounting principles and have it audited by chartered accountants. The Icelandic National Audit Office shall issue guidelines for preparing a financial statement for an election campaign and on the duty to provide information on the statement.
A candidate in an individual-candidate election is exempt from the duty to provide a financial statement if the cost of her/his election campaign does not exceed ISK 300,000.
Article 11
The duty of providing information through a financial statement for an election campaign
A candidate shall provide the Icelandic National Audit Office with her/his financial statement, signed by auditors, no later than six months after the election took place. Subsequently, the National Audit Office shall publish a summary of the statement, indicating total revenues and total costs. Income shall also be itemised by source, distinguishing among donations from legal entities, donations from individuals and the candidate's own contribution. Any discount received from market price shall be indicated specifically. . The name shall be published of every legal entity that donates to the candidate's election campaign.
Chapter VI
Penalties, entry into force and repealed statutory provisions
Article 12
Penalties
Anyone who on purpose or through gross negligence violates the provisions of this Act shall be subject to fines, and serious violations shall be punishable by imprisonment for up to six years.
Article 13
Entry into force and repealed statutory provisions
This Act shall enter into force on 1 January 2007. The Act's provisions on primary elections, however, shall not take effect until 1 June 2007.Chapter VII ...Temporary provision
The Prime Minister shall, no later than 30 June 2010, appoint a committee of representatives of all of the political parties at the Althing to review this Act and its implementation.