Taxes in Belarus. Description

 

Turnovers on sale of goods (work, services), proprietary rights (including compensation-free transfers of goods (work, servi¬ces), ownership rights) and goods that are being imported to the customs territory of the Republic of Belarus are subject to taxation. Place of supply of goods (work, services), ownership rights is determined in accordance with the Articles 32 and 33 of the General part of the Tax Code of the Republic of Belarus and international agreements effective for the Republic of Belarus.

Taxation is subject to the following tax rates:
- The base VAT rate is 18%
- Lower rate is 10% for:
    sale of products of crops (except for flowers, ornamental plants) and livestock growing (except for fur farming), fish and bee farming, produced in the territory of the Republic of Belarus;
    import and (or) sale in the customs territory of the Republic of Belarus of food and goods for children as per the list established by the President of the Republic of Belarus;
- The rate is 0% for sale of:
    export goods;
    work (services) on tracking, shipment, overloading and similar works (services) that are directly related to sale of export;
   export transportation services, including transit carriage, export works (services) on production of goods from tolling raw material (materials).

The procedure of 0% rate application for sales of work (services) specified in lines 2 and 3 is determined by the President of the Republic of Belarus.

Additionally, the law specifies tax rates of:
- 9.09% (10:110x100) and 15.25% (18 :118 x 100) applicable in case of sales of the goods (work, services) at the regulated retail prices including tax;
- 0.5% rate is applied when braits or diamonds in any form or any other precious stones (codes per Foreign Economic Activity Commodity Nomenclature:7102, 7103) are being imported to the customs territory of the Republic of Belarus from Russian Federation;
- 24% rate is applied when refined white sugar (code per Foreign Economic Activity Commodity Nomenclature: 1701 99 100) is sold or being imported to the customs territory of the Republic of Belarus.

In case of sale of goods (work, services) or ownership rights in the territory of the Republic of Belarus by foreign entities which are not registered with the tax authorities of the Republic of Belarus, tax calculation, collection and transfer to the budget shall be performed by the organizations and individuals which purchase such goods (work, services), ownership rights and which are registered with the tax authorities of the Republic of Belarus.

Nomenclature of turnovers on sale of goods (work, services) in the territory of the Republic of Belarus as well as goods being imported to the customs territory of the Republic of Belarus which are tax exempt is specified by the applicable legislative acts.

 

Excise duty shall be paid on:
- Manufactured excisable goods;
- Excisable goods being imported to the customs territory of the Republic of Belarus and/or when selling the excisable goods imported to the customs territory of the Republic of Belarus.

The following goods (products) shall be subject to excise duty:
1.    Commercial wood-hydrolyses alcohol;
2.    Alcohol-containing solutions, except for solutions with denatured additives; alcohol-containing medicines, therapeutic, diagnostic agents and preparations allowed for production and/or use in the territory of the Republic of Belarus as established by law, which are produced by drug-stores under individual recipes including homeopathic preparations; alcohol-containing veterinary agents and preparations allowed for production and/or use in the territory of the Republic of Belarus as established by law; alcohol-containing cosmetics;
3.    Alcoholic products (except for cognac alcohol and wine materials);
4.    Beer;
5.    Tobacco products;
6.    Crude oil;
7.    Automobile fuel, diesel fuel, and other fuel used as motor fuel, oil for diesel and/or carburetor (injector) engines;
8.    Minibuses and motorcars including those converted into cargo carriers irrespective of engine capacity, except for invalid cars.
The rates of excises are specified by the President of the Republic of Belarus, either in the form of a fixed amount per physical unit of the excisable goods (fixed (specific) rates) or as percentage of the goods value (ad valorem rates).

The list of turnovers on sale of goods including goods being imported to the customs territory of the Republic of Belarus which are excise exempt is specified in the applicable legislative acts.

 

 

The contributions should be made in the amount of 2% of the proceeds from the sale of goods (work, services) by banks and non-banking credit and financial organizations, except for the National Bank of the Republic of Belarus - of the revenue net of interest payable, commissions and other banking expenses; by legal entities irrespective of their legal form engaged in trading, procurement or catering - of the gross margin; by insurance companies - of the balance sheet profit.

Types of activities as well as entities which are tax exempt are specified in applicable legislative acts.

 

 

The tax base is gross profits which are profits from sale of goods (work, services), other valuable items (including fixed assets, inventories, intangible assets, securities), property rights and non-operating income less the expenses related to such operations.

The base rate is 24%.

 

Types of activities which are subject to lower tax rates are determined by the applicable legislative acts.

 

The following amounts are deductible from the tax base:
- Capital investments in production and housing construction as well as profit amounts appropriated to repay bank loans received for the above purposes. The deduction can be made provided there is full utilization of accrued amortization amount as at the 1st day of the month in which the profits were used for such purposes;
- The amount of expenses paid out of available profits with respect to the keeping of on-balance health-improving organizations for children, public educational institutions, institutions for elderly care which are not engaged in the entrepreneurial activities, residential properties, health care facilities, preschool institutions, recreational and sport facilities, including such expenses in cases when the entity participate in keeping of listed above institutions in accordance with standard costs for the similar institutions which are kept at the state budget expense;
- Profits of the entity made as a result of production of orthopedic goods, treatment and servicing facilities for handicapped per sons.

 

Entities that employ handicapped people where the number of such people is more than 50% of average staffing number during the year are tax exempt.

Commercial organizations with foreign investment where foreign investor's share exceeds 30% (except for the organizations in the form of open joint stock company) are tax exempt for the period of three years commencing from their first declaration of profit made as the result of sale of goods (work, services) of own production, except for the trade and procurement activities. This exemption is applicable to commercial organizations with foreign investment where the share of foreign investor exceeded 30% as of 1 January 2005.

The profits made by entities as the result of sale of products of own crops except for flowers, ornamental plants) and livestock growing (except for fur farming), fish and bee farming are tax exempt.

The profits made by entities as the result of production of infant food products are tax exempt.

Organizations rendering domestic services in rural areas are income tax exempt for three years commencing on the date of their state registration, regardless of their ownership.

Profits made by insurance companies as the result of investing of funds pertaining to insurance reserves on voluntary life insurance agreements and used to increase funds accumulated on the personal accounts of the policyholders are tax exempt.

Withholding tax applicable to the foreign legal entities who are not engaged in the commercial activities in the Republic of Belarus through representative office.

Tax on income of foreign legal entities generated in the Republic of Belarus is withheld by the legal entities and (or) individual entrepreneurs, who accrue or pay out the income of the foreign legal entity, out of full amount of such income. In case of non-cash income the tax is calculated on the basis of the cash equivalent of such income.

Income of foreign legal entities who are not engaged in the commercial activities in the Republic of Belarus through representative office is subject to taxation at the following rates:
- 15% - dividends, royalties, licenses and other income in accordance with the list determined by the law;
- 10% - income derived from the debt commitments (obligations) of any type, except for those commitments that are in the form of securities, including loans (deposits, credit facilities, rights to employ temporary idle funds on the accounts placed with the banks of the Republic of Belarus);
- 24% - income derived from conversion (redemption) of securities;
- 6% - transportation, chartering fees (including demurrages and other payments arising in transit) for cross-border transportation.

Where an international treaty entered into by the Republic of Belarus stipulates otherwise, its provisions should be applied.

The income tax base for the organizations which carry out transactions with securities is the full amount of income generated as the result of conversion (redemption) of securities which is determined as the spread between the securities selling price during the taxable period and acquisition price inclusive of the investment and conversion costs.

The tax rate is 24%.

Income generated as the results of transactions with government securities, securities of the National Bank of the Republic of Belarus, securities issued by the local special-purpose bonded mortgages and bonds issued by the legal entities (tax residents of the Republic of Belarus) in the period from 1 April 2008 to 1 January 2013, is tax deductible.

 

A progressive 5-level taxation scale (9%, 15%, 20%, 25% and 30%) is in effect. The taxable base of personal income tax is the aggregate income of individuals received both in cash and in kind in a calendar year.

Payers of personal income tax are individuals. Legal entities and individual entrepreneurs are acting as a tax agent (calculate, withhold and transfer personal income tax due from individuals).

The list of types of income that are tax exempt is specified by the applicable legislative acts.

The payroll in cash or in kind, charged in favor of the employees on all bases irrespective of the sources except for the kinds of payment provided by the list which are not charged with the obligatory social fund contributions, stipulated by the Government of the Republic of Belarus is the base for social fund contribution charge.

The rates applicable to calculation of the mandatory social insurance for the cases of reaching the retirement age, disability and loss of breadwinner (pension insurance) are the following:
- For the employers - 29%;
- For the employers engaged in agricultural production provided that agricultural products constitute more than 50% of output -24%;
- For the employers, individual entrepreneurs, individuals engaged in specified by legislative acts handicraft activities but not registered as individual entrepreneurs, private notary officers, people of art, individuals who perform works for other individuals on the basis of civil law contracts and members of farm households the amount of mandatory insurance contributions with respect to insurance for the cases of temporary disability, texis, birth of a child, three years maternity leave, provision of one non-working day in each month to the mother who brings up handicapped child under 18, death of the insured or a member of his/her family (social insurance contribution) is calculated at the rate of 6%.

The kinds of payments not subject to social contributions are specified in the applicable legislative acts.

The payroll in cash or in kind, charged in favor of the employees on all bases irrespective of the sources including rewards in accordance with the civil law contracts except for the kinds of payment provided by the list which are not charged with the obligatory insurance contributions, stipulated by applicable legislative acts is the base for social fund contribution charge.

The amount of contribution is determined by the insurer on the basis of the insurance tariffs which are approved annually by the Government of the Republic of Belarus; reductions or surcharges to the tariffs are determined by the insurance company in order established by the Government of the Republic of Belarus.

Land fees are charged annually in the form of either land tax or rent for the land plots which belong to the state and lessors of which are rural, town or district executive and administrative bodies.

Land tax is established in the form of annual fixed payments per hectare of land area which are determined on the basis of rates specified in applicable legislative acts; rent payments are made in accordance with the rental contracts.

Subject to taxation is a land plot in possession, usage or ownership.

 

The tax rates for the use of mineral recourses, except for payments for oil and oil products procession by entities engaged in oil processing are determined by the President of the Republic of Belarus.

Procession of one ton of oil or oil product by entities engaged in oil processing is subject to taxation at the rate of BUR 2,800 per ton.

 

Step-up coefficients for tax rates are specified in applicable legislative acts.

The tax base:
- Is the volume of the used (recovered, extracted) mineral resources;
- Is the volume of the oil and oil products processed by the entities engaged in processing of oil and oil products;
- Volumes of pollutant emissions (discharges);
- Oil and oil products relocated in the territory of the Republic of Belarus;
- Residual products placed at the waste disposal objects; goods placed under customs regime of destruction which lost their consumer properties, as well as wastes originated as a result of destruction of goods placed under this regime;
- Volumes of produced and (or) imported plastic and glass container, paper and carton package and other goods which originate wastes as a result of loss of their consumer properties of harmful environmental impact and that require system organization on their collection, deactivation and (or) use; volumes of import goods packed in plastic or glass containers, paper or carton package.

 

The list of other produced and (or) imported goods which originate wastes as a result of loss of their consumer properties of harmful environmental impact and that require system organization on their collection, deactivation and (or) use is determined by the President of the Republic of Belarus.

Ecological tax concessions are established by the President of the Republic of Belarus.

 

The following organizations are to make contributions to the innovation fund of the Ministry of Trade:
- Those organizations that are engaged in wholesale and retail of goods within the territory of the Republic of Belarus - in the amount of 0.25% of the cost of the products, goods (work, services) sold excluding the goods specified in the list approved by the Council of Ministers of the Republic of Belarus;
- Payers who are engaged in public catering in the public catering facilities of category "luxury" or "superior" - in the amount of 1.25%;
- Payers who are engaged in wholesale trade in oil products (auto petrol, diesel fuel, jet fuel, lamp oil, heating oil) - in the amount of 1.5%.

 

Payers who render systematic sponsor aid to hockey clubs, payers who acquired enterprises as property complexes of loss making agricultural organizations, as well as payers who employ invalids and those persons constitute not less than 50% of employees are subject to reduced rates of contributions to the innovation fund of the Ministry of Trade.

 

The organizations that are subordinate to the Ministry of Architecture and Construction including private legal entities except for the organizations registered as residents of free economic zones are charged with contributions to the innovations fund of the Ministry of Architecture and Construction in the amount not exceeding 1.35% of cost of goods (work, services) obtained (rendered) as the result of activities in the sphere of construction or building materials producing industry.

 

The contribution to the innovations funds is not charged against the cost of products, goods (work, services) in the following cases: construction of residential buildings, activities in the sphere of construction or building materials production in rural localities and in cases specified by the President of the Republic of Belarus.

 

Other ministries and governmental bodies are also entitled to form innovation funds.

 

 

Annual rate of tax on immovable property is 1% of residual value of fixed assets that are owned or possessed by the taxpayer.

Annual rate of tax on immovable property of organizations that own, possess or operate construction in progress for which normative construction period established by project documen-tation has been exceeded and that realize construction of new buildings is 2% of the cost of construction in progress for which normative construction period has been exceeded, except for those constructions which are being financed out of state budget or are represented by residential buildings.

Step-up coefficient for tax rates as well as concessions are established by the applicable legislative acts.

 

Tax rate is 5% of purchase price net of VAT.

The tax base is the value of cars acquired by purchasing, swapping, donation or gratuitous transfer as a contribution to the statutory fund, as well as under financial lease (leasing) agreements.

The list of transactions which are tax exempt is specified by the applicable legislative acts.

 

Local taxes and dues are established by local administrations and municipalities. In 2008 the Law on Budget enabled local authorities to adopt six new local taxes and dues.

1.    Retail sales tax.
Tax base is the revenue earned by the payers and determined on the basis of retail prices exclusive of sales tax. Tax rates are established in the amount not exceeding 15% of tax base on realization of goods imported to the customs territory of the Republic of Belarus or 5% of tax base for other goods.
2.    Tax on services.
Rendering of services by organizations and individual entrepre¬neurs including markets, trade fairs, selling exhibitions, hotels (camping, motels), restaurants (bars, cafes), discotheques, billiard and bowling clubs, solariums, services involving immovable property, cell communication services rendered to sub¬scribers, cable TV and car maintenance services for individuals, tourist and cosmetic services. Tax base is the revenue earned by the payers and determined on the basis of price of services excluding tax on services.
Tax rates are established in the amount not exceeding 10% of tax base.
3.    Special purpose contributions (transportation and infrastructure development and maintenance).
The base out of which contribution is charged for legal entities is determined as the amount of profit after taxation; for individual entrepreneurs - as the amount of income after taxation, dues and other obligatory payments.
The rates are established in the amount not exceeding (in aggregate) 3% of the tax base.
4.    Charges from parking users or dog owners.
5.    Contributions made by procurement entities.
Cropping (purchasing) of wild-growing plants (parts of plants), mushrooms, technical and medical raw materials of botanical origin, agricultural produce with the view of further processing and realization is subject to taxation.
6.    Resort tax.
Tax base is determined as the price of the sanatorium voucher.
Tax rate is established in relation to the type of the institution and may not exceed 3% of the tax base.

Concessions for the above stated taxes are established by the respective decisions of local municipalities.

 

 

Subject to taxation are:
- Funds transferred by a resident of the Republic of Belarus to a non-resident of the Republic of Belarus registered in the offshore zone or

- Settlement of non-cash obligations to a non-resident of the Republic of Belarus registered in the offshore zone;
- Transfer of property rights and/or obligations due to replacement of persons in the commitments where the parties are resident of the Republic of Belarus and non-resident of the Republic of Belarus registered in the offshore zone.

A 15% rate is applicable.

Funds transferred by legal entities and individual entrepreneurs with a view to repay loans or interest on loans granted by non-residents or other funds obtained from non-residents in accordance with legislation or agreement are not levied.