Doing Business in Belarus - Tax and Law January 2022 - EY
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Doing Business in Belarus Tax and Law January 2022
This report is based on data collected as of 1 January 2022. 2 Doing Business in Belarus | Tax and Law
Contents
Foreword. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1. Special taxation regimes. . . . . . . . . . . . . . . . . . . . . . . . .4
The Great Stone
China-Belarus Industrial Park. . . . . . . . . . . . . . . . . . . . . . . . . 5
The Hi-Tech Park. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Free economic zones. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Businesses in medium and small-sized cities
and rural areas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Legal forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Licensing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Mergers and acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Shareholders’ agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tax overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Corporate income tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Value-added tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Real estate tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Other taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Special taxation regimes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Customs regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3. Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Migration legislation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Personal income tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Payroll taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
4. Appendices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Appendix 1. Withholding tax rates
under double tax treaties. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Key contacts in Belarus . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Doing Business in Belarus | Tax and Law 1
Foreword 2 Doing Business in Belarus | Tax and Law
We are pleased to present “Doing Business in Belarus. Tax and Law 2022”
report. This report, prepared by EY professionals, provides brief up-to-date
information on the Belarusian tax system, special tax regimes, customs
regulations, corporate forms, the Hi-Tech Park and the Great Stone Industrial
Park as well as Belarusian migration and labor laws.
Today EY is the leading global audit and consulting firm in Belarus offering
a wide range of professional services and employing over 600 people.
We continually invest in our workforce to enhance their skills and knowledge
and improve overall service quality, and offer efficient and innovative
business solutions worldwide.
Doing Business in Belarus | Tax and Law 3
1 Special taxation
regimes
4 Doing Business in Belarus | Tax and Law
The Great Stone • Declared investment in the project distributed. CBIP residents are also
must be not less than USD 5 million, exempt from the offshore levy on
China-Belarus or not less than USD 500,000 if the dividends paid to persons in offshore
Industrial Park entire sum is invested within three jurisdictions
The Great Stone China-Belarus years or in the case of an R&D project
• Exemption from RET on property
Industrial Park (CBIP) was established Belarusian legal entities based in the located in the park, and from land tax
in 2012 with support from China as park and registered as innovative on land parcels within its boundaries
a hub for firms at the cutting edge of companies of the CBIP may take
innovation and technology. The CBIP • Exemption from VAT and import duty
advantage of some benefits and
is located 25 kilometres from Minsk, on goods (equipment, components
preferences available to CBIP residents.
occupying a total area of 112.47 and spare parts, raw materials and
Such registration may be granted for a
square kilometres. other materials) brought into Belarus
period of up to two years on condition
solely for use in investment projects
The territory of the CBIP is designated that the applicant, a legal entity, plans
involving the construction and fitting-
as a special economic zone which has to engage in innovation in line with the
out of CBIP facilities
its own tax regime and rules on the use park’s pritority areas of activity.
of land and other natural resources • Exemption from VAT on the purchase
and in which the free customs zone of services/work and property rights
Tax benefits
customs procedure is applied. from foreign companies where the
The CBIP tax regime remains in effect location of the buyer is taken as the
for 50 years. The main tax benefits place of supply for VAT purposes
CBIP residents granted to CBIP residents are as
follows: • Full deduction of VAT charged on
To obtain CBIP resident status a purchases of goods, services/work
Belarusian company must establish its • Exemption from CIT on profits from and property rights in Belarus (or
operations in the park and submit a the sale of goods or services/work paid upon importation into Belarus)
plan for implementing an investment produced by the resident in the for use in constructing and fitting out
project that meets the following CBIP, for 10 years after the first CBIP facilities, regardless of amounts
criteria: recognition of gross profit of VAT charged on sales
• The company plans to engage in • A zero tax rate on dividends paid by • 5% withholding tax until 1 January
economic activities in the park in CBIP residents to their founders or 2027 on remuneration received
priority areas, including establishing shareholders/participants, for five by foreign companies from CBIP
and expanding manufacturing years starting from the first year in residents for rights to information
facilities in the areas such as which dividends are paid. If a CBIP relating to industrial, commercial or
electronics, telecommunications, resident is committed to invest at scientific experience, including know-
pharmaceuticals, medical devices, least USD 50 million within five how, licences, patents, drawings,
fine chemistry, biotechnology, years in its investment project in the utility models, schemes, formulas,
machine building, new materials, park, the 0% tax rate on dividends industrial prototypes or processes
integrated logistics, electronic applies for 10 years counted from
commerce, big data storage and the first year in which dividends are
processing and R&D
Doing Business in Belarus | Tax and Law 5
• Compulsory social security placed under the release for domestic participants of CBIP residents and
contributions may be calculated consumption customs procedure if their employees
based on the average wage in they were manufactured by CBIP
• Exemption from the requirement to
Belarus rather than employees’ residents using foreign goods
obtain permits to employ foreigners
actual salaries. Foreign employees placed under the free customs zone
and special work permits for foreign
are exempted from mandatory procedure
executives and high-skilled workers
social security contributions on their
• Exemption from the requirements
income
and restrictions of Belarusian
In addition, a grandfather clause laws governing foreign currency The Hi-Tech Park
has been adopted for the period transactions The Hi-Tech Park (HTP) was established
until 1 January 2027 to guarantee in Minsk in 2005 to promote IT in
• The right to conduct foreign trade
CBIP residents that they will Belarus. It offers a special legal
transactions free of the restrictions
continue with activities under the regime for IT firms until 2049. The
imposed by Belarusian laws
CBIP regime effective at the time of HTP Supervisory Board is in charge
governing foreign trade
their registration as a CBIP resident of general coordination, management
regardless of any unfavorable changes • Visa-free travel to and from Belarus
and control of the HTP, while the
in Belarusian tax legislation. for persons hired by CBIP residents
HTP Administration, a government
for investment projects in the park
institution, oversees the day-to-day
and for founders and shareholders/
Other benefits and incentives running of the park.
In addition to tax benefits, CBIP
residents are eligible for other benefits
and incentives regarding land use,
construction, employment, migration
rules, and currency and customs
regulation, including:
• The right to enter into convertible
loan agreements, option contracts
and agreements granting an option
to contract
• The right to store and use goods in
the CBIP under the free customs
zone procedure pursuant to customs
regulations, i.e. exempt from customs
duties, taxes and special, anti-
dumping and countervailing duties
• Exemption from VAT imposed by
the customs authorities on goods
6 Doing Business in Belarus | Tax and Law
HTP residents deployment of Internet of Things Compulsory social security
Belarusian companies based either technologies contributions are calculated and paid
within or outside the park may apply based not on an employee’s actual
• Educational programs in ICT and
for HTP resident status if they carry on salary, but on the national average
cybersports
certain types of activity, namely: wage, which is several times less than
• Other activities listed in the law the pay level in the Belarusian IT
• Analysis, design and software industry.
support of IT systems, including To join the HTP, applicants must submit
development and deployment of IT a package of documents. The key HTP residents are also exempt from the
systems or software, provision of document is the business project that offshore levy on dividends paid to their
related implementation and support the applicant intends to implement founders/participants registered in
services, and database creation as an HTP resident. The decision on offshore jurisdictions. Tax on dividends
whether to register an applicant as paid by HTP residents is charged at
• Data processing using software an HTP resident is made by the HTP 9% on individuals and at 5% on foreign
• Technical and/or cryptographic data Supervisory Board based on the companies, unless they are entitled
protection potential significance of the proposed to more favourable treatment under a
business project for the development of double taxation treaty.
• Development and deployment new and advanced technologies.
of software technologies for the In addition, HTP residents are exempt
financial sector and financial IT from Belarusian VAT on licences
Tax benefits and certain services that play an
• Software publishing and promotion important role in the IT business, such
HTP residents are required to
• Online advertising and intermediary contribute 1% of their revenue to the as advertising, marketing, consulting
services using software developed HTP Administration. Accordingly, they and database creation services, when
with the involvement of the HTP are mostly exempt from CIT and from acquired from foreign providers. A zero
resident VAT on sales of goods, services/work WHT rate applies to income earned
and property rights in Belarus, except by foreign companies from rendering
• Development, maintenance and sale
for 9% CIT on certain interest income, services to HTP residents, such as data
of software and/or hardware based
income from the sale of equity interests protection, web hosting, advertising
on or using blockchain technology
and securities and dividends from and intermediary services, as well as to
• Operation of crypto trading platforms sources outside Belarus. interest and royalty income.
and cryptocurrency exchanges,
mining, creation and offering of own HTP residents are exempt from import
duties and VAT on certain kinds of Other benefits and incentives
digital tokens, and other activities
involving digital tokens equipment imported into Belarus for HTP residents are entitled to enter
use in investment projects involving into convertible loan agreements and
• Data centre services permitted types of activity. They may option agreements, issue irrevocable
• Development and deployment of also qualify for real estate tax and land powers of attorney and take advantage
unmanned vehicle systems tax benefits in relation to buildings and of certain legal mechanisms, such
land parcels within the boundaries of as warranties and indemnities. For
• Development, implementation and the HTP. the purpose of regulating corporate
Doing Business in Belarus | Tax and Law 7
relationships, shareholders/participants Belarus has six FEZs, established for three-year period regardless of
of HTP residents are entitled to the period until 31 December 2049: whether it engages in any activity
enter into shareholders’/participants’ Brest FEZ, Minsk FEZ, Gomel-Raton covered by the FEZ tax regime in this
agreements governed by foreign law FEZ, Vitebsk FEZ, Mogilev FEZ and period
and refer disputes arising under such Grodnoinvest FEZ.
• Exemption from land tax and rent on
agreements to foreign courts and
government-owned land plots located
arbitration tribunals.
FEZ residents within the boundaries of the FEZ,
HTP residents are also entitled to enter which are granted for construction
To benefit from the FEZ regime, a
into non-competition agreements with purposes, for the period until the last
Belarusian company must establish its
their employees and non-solicitation asset under construction has been
operations in a FEZ and make a pledge
agreements with third parties. Foreign commissioned, but for no longer than
to invest at least EUR 1 million in the
nationals who are hired by HTP five years after registration as a FEZ
project, or at least EUR 500,000 over a
residents under employment contracts resident
three-year period.
or who are founders of HTP residents
or are employed by such founders are • Exemption from land tax and from
eligible for visa-free entry into Belarus rent on government-owned land plots
Tax benefits
for stays of up to 180 days in the located within the boundaries of the
FEZs are designed to encourage FEZ regardless of their designated
course of a year. Foreigners entering
investors to produce export-oriented or use, provided that the resident is
into employment contracts with HTP
import-substituting goods or services in engaged in an activity covered by the
residents do not require a permit to
Belarus. FEZ tax regime.
work in Belarus and may apply for a
temporary residence permit for the FEZs offer their residents a number of
duration of the contract. tax incentives with respect to the sale
Customs benefits
of such goods or services for export
HTP residents are entitled to conduct A free economic zone is also a free
and to other FEZ residents.
foreign trade transactions free of the customs zone, where FEZ residents
restrictions imposed by Belarusian laws The special tax regime provides for the can keep and use goods (including
governing foreign trade. HTP residents following tax benefits: goods produced by foreign and EAEU
are entitled to apply simplified manufacturers) without paying customs
• Exemption from tax on income
documentation procedures to account duties, taxes or special, anti-dumping
for transactions with non-residents. from the sale of goods and services
produced by the FEZ resident and countervailing duties.
• Exemption of properties that are Any subsequent customs clearance
Free economic located in the FEZ from real estate procedures, duties and taxes are
conditional on the status of goods
zones tax on condition that the company
placed under the free customs zone
is engaged in activity covered by the
A free economic zone (hereinafter, a FEZ tax regime; in the first three procedure and their destination
“FEZ”) is a bounded territory in Belarus years after registration as a FEZ country.
with a special regime comprising a set resident, the company is exempt For instance, goods manufactured
of incentives and benefits to encourage from real estate tax on properties in a FEZ solely from EAEU-made
business activity. acquired or created during this
8 Doing Business in Belarus | Tax and Lawgoods are deemed EAEU-made goods registration of their local properties, territory, are entitled to a number of
that are placed under the re-import provided that they produce goods benefits until 31 December 2023.
procedure when moved outside of the or deliver services, which must be
In particular, they may apply a reduced
FEZ elsewhere in the customs territory certified by the Belarusian Chamber of
rate of 24% to pay compulsory pension
of the EAEU and are not subject to Industry and Trade.
insurance contributions and bigger
customs duty or tax in this case.
Apart from these tax exemptions, investment deductions to reduce
If goods manufactured in a FEZ are local businesses are eligible for other taxable income (30% for buildings and
deemed foreign goods, they are placed benefits as well. structures and 50% for machinery and
under the re-export procedure when equipment).
They include exemption from import
moved outside of the FEZ and are not
duty on certain types of equipment They are also entitled to VAT exemption
subject to customs duty or tax as well.
not older than five years which is for the import of technological
If goods manufactured in the FEZ and brought into Belarus as a non-monetary equipment and components subject
recognized as goods of foreign origin contribution to the equity of a newly to import duty at a zero rate in
are taken out of the FEZ elsewhere established entity. accordance with national legislation.
to the EAEU customs territory, they
Local retailers, restaurants and
become subject to import duties but
cafeterias and providers of personal
are exempted from VAT under the
services are entitled to additional
customs procedure of goods release
incentives as determined by the
into internal circulation.
regional councils for the period until
31 December 2022.
Businesses in medium In particular, local retailers selling
goods through shops and at markets
and small-sized cities and
and fairs, providers of personal services
rural areas and restaurants and cafeterias are
Businesses set up in medium and small- eligible for:
sized cities and rural areas are eligible • Exemption from VAT on the sale of
for many benefits. goods or services (work) in rural
Medium and small-sized cities and rural areas as well as for corporate income
areas in Belarus are settlements of a tax at a rate of 6%
size smaller than the regional capital • Exemption from real estate tax on
cities (Brest, Gomel, Grodno, Minsk, properties in rural areas and land tax
Mogilev and Vitebsk) and several other and rent on government-owned land
big cities such as Bobruisk, Zhlobin and on which they are located.
Lida.
Legal entities, registered in the Orsha
Businesses in such areas are exempt district and engaged in the production
from corporate income tax and real of goods or services (work) in its
estate tax for seven years after
Doing Business in Belarus | Tax and Law 92 Companies 10 Doing Business in Belarus | Tax and Law
Legal forms including in the case of an LLC with a founder came into force, the number of
sole participant. When a participant unitary enterprises being registered has
A foreign company may operate in withdraws, its interest passes to the fallen significantly.
Belarus through: LLC, while the withdrawing participant
The assets of a unitary enterprise
• A separate legal entity in Belarus, or is paid the actual value of its equity
are indivisible and cannot be divided
interest in the LLC plus a proportional
• A representative office of a foreign into contributions (equity interests or
amount of the profits earned by the
company units). Assets of a unitary enterprise
LLC between the withdrawal date
may be privately owned either by an
The most common forms of legal and the settlement date. A sole LLC
individual (or spouses jointly) or a legal
entities in Belarus are limited liability participant is not allowed to sell its
entity and are possessed by the unitary
companies, closed joint-stock interest in the charter capital to the
enterprise under a right of economic
companies and unitary enterprises. LLC itself.
management. Shared ownership of a
The governing bodies of an LLC are unitary enterprise’s assets is prohibited.
Limited liability companies the general meeting of participants,
A unitary enterprise may sell any assets
the supervisory board (optional) and
A limited liability company (LLC or held by it under economic management
the executive body. The supervisory
“OOO” in Russian) is the most common except for immovable property
board is established by decision of, and
corporate form in Belarus. In practice, (unless the founder establishes
is accountable to, the general meeting
the majority of foreign companies other restrictions in the charter).
of participants and deals with matters
starting activities in Belarus prefer to Any disposal of immovable property
relating to the general administration
establish an LLC. (including sale, lease, mortgage,
of the LLC’s activities. The individual
etc.) is subject to the founder’s prior
The charter capital of an LLC is formed executive body (director) or collective
approval.
from its participants’ contributions. executive body (managing board) is
There is no minimum charter capital responsible for the day-to-day running There is currently no minimum charter
requirement for an LLC. Contributions of the LLC. The participants in an LLC capital requirement for a unitary
may be made in cash and/or in kind (in are not liable for the LLC’s obligations enterprise. Contributions to the charter
the form of shares in other companies, and bear the risk of losses associated capital may be both in cash and in kind
etc.). with its activities only within the limits (shares in other companies, equipment,
of their capital contributions. etc.).
An LLC may have up to 50 participants.
An LLC may be founded by one person The governing body of a unitary
or have one participant. Unitary enterprise enterprise is the director, who must
A unitary enterprise («УП» in Russian) be appointed by the owner of the
The charter of an LLC may contain
is another common corporate form in enterprise’s assets.
restrictions on the transfer of
participants’ rights, including, for Belarus, the main difference from an A unitary enterprise is liable for its
example, a prohibition on the full or LLC being that a unitary enterprise’s obligations to the extent of all the
partial sale of equity interest to third founder remains the direct owner assets that it holds under economic
parties. A participant in an LLC may of its assets. However, since 26 management. It is not liable for the
not withdraw from the LLC if this would January 2016, when rules allowing obligations of the owner of its assets.
leave the LLC with no participants, the registration of an LLC with a single
Doing Business in Belarus | Tax and Law 11Comparison of a limited liability company, a unitary enterprise and a closed joint-stock company
Limited liability company Limited liability company Limited liability company
Standard registration procedures Standard registration procedures Standard registration procedures
Profit may be distributed either proportionately Profit may be distributed either proportionately Profit may be distributed either
or disproportionately to equity interest, if directly or disproportionately to equity interest, if directly proportionately or disproportionately
permitted by the charter permitted by the charter to equity interest, if directly permitted by
the charter
Transfer of equity interest to a third party may be Transfer of equity interest to a third party may be Transfer of equity interest to a third party
restricted/prohibited by the charter restricted/prohibited by the charter may be restricted/prohibited by
the charter
The registration procedure is not very The registration procedure is not very complicated The registration procedure is not very
complicated and usually takes about and usually takes about two weeks complicated and usually takes about
two weeks two weeks
Joint-stock company number of shareholders, whereas A representative office is regarded as
A joint-stock company (JSC or “AO” closed JSCs may limit the number an autonomous subdivision of a foreign
in Russian) may appear to be a more of shareholders by the Charter. company that represents its interests
complicated business structure. JSCs Joint-stock companies can issue two in Belarus, and not as a separate legal
generally fall into two categories: types of shares: ordinary (voting) entity.
closed and open. The difference and preference shares. The owner
Representative offices of foreign
between them is that in an open JSC, of a preference share is entitled to
companies are not permitted to engage
shares may be freely sold to third fixed dividends and a portion of the
in business activity. A foreign company
parties, while in a closed JSC, share company’s assets upon its liquidation
may open a representative office in
transfers are subject to the pre-emptive but may not vote on management
Belarus only to carry out preparatory
rights of other shareholders. The matters. The nominal value of
and auxiliary activities on behalf of
minimum charter capital requirement preference shares must not exceed 25%
the foreign company, including the
for incorporation is currently: of the company’s charter capital.
following activities:
• 100 base units (approximately A JSC is obliged to comply with various
• Researching Belarusian markets
USD 1,256) for a closed JSC disclosure requirements.
• Studying investment opportunities in
• 400 base units (approximately Belarus
USD 5,023) for an open JSC Representative offices
Foreign companies may also operate in • Establishing business entities in
A JSC’s shares may be held by one Belarus in partnership with foreign
Belarus without creating a legal entity
person. JSCs may have an unlimited investors
by establishing a representative office.
12 Doing Business in Belarus | Tax and LawRegistration of companies in Belarus industry, the manufacture and law. The same is true for investments
Companies must be registered with wholesale of alcoholic beverages and in activities prohibited by Belarusian
the state registration authority, which tobacco products, retail of alcoholic legislation.
arranges subsequent registration with beverages and tobacco products,
Investments may also be legislatively
the tax authorities, the Social Security wholesale and retail of petroleum
restricted in the interests of national
Fund, statistical agencies, Belgosstrakh products, and health care services.
security (including protection of the
(the Belarusian National Unitary Licensing authorities issue licenses environment and heritage assets),
Insurance Enterprise), etc. During the within 15 working days of receiving public order, morality, public health and
registration process, the state authority all the required documents. the rights and liberties of individuals.
may also send information to a bank
to enable the opening of a current
(settlement) account. Mergers and acquisitions Shareholders’ agreements
Representative offices must register Anti-monopoly control Under Belarusian legislation,
themselves with the tax authorities, shareholders of a company may
Under competition law, certain
the Social Security Fund, statistical conclude shareholders’ agreements
transactions (including M&A, the
agencies and Belgosstrakh after or, if it is a limited liability company,
creation of new entities and the
receiving the requisite permit from participants’ agreements.
purchase and sale of shares and/or
the relevant regional (or Minsk city)
assets) are subject to anti-monopoly Through such agreements,
executive committee.
scrutiny. In this case the approval of shareholders/participants may agree
If any documents submitted for the anti-monopoly authorities must to exercise their rights in a certain
registration purposes do not meet the be obtained before a transaction is manner and/or refrain from exercising
official requirements, they may have to concluded or a new entity is registered. their rights, including by voting in
be re-submitted. A newly established a certain manner at the general
company or representative office must meeting of shareholders/participants,
Restrictions applicable to strategic
take additional steps to become fully coordinating voting choices or
companies
operational, such as opening bank coordinating other actions relating
accounts, making a corporate seal Investments in legal entities holding
to the management of the company
(optional) or registering a share issue a dominant position on Belarusian
or the establishment, business, re-
with the securities authorities (only goods markets require the approval
organization or liquidation of the
applies to JSCs). of the anti-monopoly authorities in
company.
cases stipulated by anti-monopoly
Licensing
Legal entity Representative office of a foreign company
A special permit (licence) is required
for certain business activities. Registration time Around 2-3 weeks Around 1-2 months
Currently, there are 33 such activities (actual)
(comprising around 200 types of State duty 1 base unit (approx. 195 base units (approx. USD 2,440) for every
services/work). The most important USD 12.5) three years of activity for which the permit to
are banking operations, the gambling open the representative office is issued
Doing Business in Belarus | Tax and Law 13Tax overview National taxes and levies/duties Local taxes and levies
Tax policy include: include:
The Ministry of Finance develops
the fiscal and tax policy in Belarus. Corporate income tax Tax on dog owners
The Ministry of Taxes and Levies and
its local offices are responsible for Withholding tax Resort levy
monitoring tax compliance, including
for verifying tax returns and enforcing Personal income tax Levy on harvesters of wild-growing
the full and timely payment of taxes food
and levies. Value added tax
State border crossing levy on vehicle
owners
Types of taxes and levies/duties Excise tax
Belarus has a two-tier tax system
comprising national taxes and levies/ Real estate tax
duties and local taxes and levies as Special tax regimes
set forth in its Tax Code. The payment Land tax include:
of national taxes and levies/duties is
mandatory across the country, while Environmental tax Tax under the simplified taxation
local taxes and levies are established system
by local self-government bodies (local
Mineral extraction tax
councils of deputies) and are payable Unified tax on entrepreneurs and
only in the territories concerned. other individuals
Offshore levy
Special tax regimes apply to some
categories of taxpayers engaged in Unified tax for producers of
Stamp duty agricultural products
particular activities. This means that
their taxes are calculated and paid
Consular fee Gaming tax
according to different rules from those
normally applicable and they pay a
State duty Tax on income from lottery activities
special tax payment.
Apart from taxes and levies/duties, Patent fees Tax on income from the organization
other mandatory payments in
of online interactive games
Belarus include state social security
Customs duties and levies
contributions payable by employers
to the Social Security Fund of the Levy on craft businesses
Republic of Belarus, rent for plots of Recycling levy
land owned by the state and some Levy on agritourism/ecotourism
other payments. Transport tax businesses
14 Doing Business in Belarus | Tax and LawTax registration Rates of main taxes
The tax registration of a legal entity Tax Rate
takes place at the same time as its
Corporate income tax (CIT) 18%
state registration and covers all taxes
payable in Belarus. Value added tax (VAT) 20%
Withholding tax (WHT)
Tax audits
Dividend income 12%
Belarusian law prohibits tax audits on
newly established companies for two Interest income 10%
years after their state registration. Royalty income 15%
After that, companies may face
selective field audits scheduled by the Personal income tax (PIT) 13%
tax authorities according to a risk- Real estate tax (RET) 1%
based approach. This means that audits
Compulsory social security contributions 35%
are specifically targeted at taxpayers
deemed to have a high probability Pension insurance contributions (retirement, disability and survivor benefits) 29%**
of committing tax violations, which
ocial insurance contributions (temporarily disability, maternity, childcare and
S 6%
is determined by the tax authorities other benefits)
using the established criteria. There
are also certain grounds for conducting ** This includes 1% payable by the employee but withheld and remitted by the employer.
unscheduled field audits.
Information on selective field audits
is published every six months on
the website of the State Control
Committee* no later than
15 December/15 June. A company
may be audited by one and the same
authority only once every three years.
As a rule, the period covered by a field
audit may not exceed five calendar
years. Tax audits may last for up to
30 working days.
Regular remote desk audits are
performed where tax authorities review
tax returns, other documents and
information on taxpayers.
* http://www.kgk.gov.by/ru/pvproverok-ru/
Doing Business in Belarus | Tax and Law 15Statute of limitations for tax Taxpayers Object of taxation
collection
As a general rule, taxes and duties/ Belarusian companies • Gross profit of a Belarusian company
levies cannot be collected from legal •D
ividends and similar income payable by Belarusian
entities if no payment demand was companies
presented within five years after the
Foreign companies operating in • Gross profit earned by a foreign company through a
due date.
Belarus through a permanent permanent establishment in Belarus
establishment
General anti-evasion rule
The tax authorities have the right Profit from sales of
GROSS Non-operating Non-operating
when conducting an audit to adjust = goods, services/work + –
PROFIT income expenses
and property rights
the amount payable by the taxpayer if
the main purpose of a transaction was
to avoid paying tax or to secure a tax Profit from sales Revenue from sales
refund from the budget. In this case, of goods, services/work = of goods, services/work – Deductible expenses
and property rights and property rights
the tax owed is determined based on
actual information on taxable activities
and items. If a branch has its own balance sheet and bank account and has control over the
use of funds in that account, the branch is responsible for assessing and paying
the company’s taxes.
Corporate income tax
Revenue from sales of goods, services/work and property rights is recognised on
Taxpayers. Object of taxation an accrual basis (i.e. according to the date on which a supply is recorded rather
and tax base than the date on which payment is made), subject to special considerations laid
The payers of CIT are: down in the law.
• Belarusian companies
Permanent establishment of a foreign company
• Foreign companies operating in
Belarus through a permanent The following forms of presence in Belarus constitute a permanent establishment
establishment of a foreign company.
Belarusian companies pay tax on profit
Fixed place of The carrying on of entrepreneurial and other activities in Belarus (other
earned both in Belarus and abroad, business than activities of a preparatory and auxiliary nature)
while foreign companies only pay it
on profit earned through a permanent
establishment located in Belarus. Dependent agent A company or an individual that:
•C
arries on activities on behalf of and/or in the interests of the foreign
There is no tax consolidation option for company, or
groups of companies in Belarus: each •H
as and habitually exercises authority from the foreign company to
group entity is treated as a standalone conclude contracts or negotiate material terms of contracts
taxpayer.
16 Doing Business in Belarus | Tax and LawThe place of delivery of services by Deductible expenses • Services/work were performed by
a foreign entity in Belarus is deemed General provisions an individual entrepreneur who is at
to be its permanent establishment if the same time an employee of the
The list of deductible expenses is
the entity has engaged in this activity taxpayer, and the services/work form
not exhaustive. All expenses (except
for 180 days continuously or in the part of the employment duties of the
for those that are non-deductible
aggregate in any 12-month period person concerned
for tax purposes or are deductible
beginning or ending in the respective
within prescribed limits) may be fully • Services/work were performed for
tax period, including if it delivered its
deducted if they are economically the taxpayer by a company that
services at different places.
justified and were incurred in is a founder of, or participant in,
A construction, installation or assembly connection with the production/sale the taxpayer or vice versa, and the
site is also deemed to constitute a of goods, services/work or property services/work in question fall within
permanent establishment of a foreign rights or if they are classed as non- the scope of duties of an employee of
company if the site has been in operating expenses. the taxpayer
existence in Belarus for more than
Expenses may not be recognized as In practice, form often prevails over
180 days in any 12-month period
economically justified if any of the substance in audits conducted by the
beginning or ending in the relevant tax
following conditions is met: tax authorities, and expenses may
period.
therefore be declared non-deductible
• Goods (intangible assets) were not
Foreign companies are required to if the taxpayer fails to produce
received, services/works were not
keep accounting records and prepare supporting documents, such as a
performed, property rights were
financial statements in accordance contract, acceptance certificate or
not transferred, or assets were not
with Belarusian laws and regulations invoice.
leased out (under (finance) lease
in respect of activities that give rise to
agreements) and are still used
a permanent establishment in Belarus
by a lessor
and are taxable on that basis.
Doing Business in Belarus | Tax and Law 17Partly deductible expenses Doubtful debt provisions
The following expenses are tax-deductible within set limits: Doubtful debt provisions are recorded
as non-operating expenses but must
Partly deductible expenses Limits on deduction amount to no more than 5% of revenue
from sales of goods, services/work,
• Business trip expenses Limits set for each type of
property rights and intangible assets,
expense
• Fuel expenses as well as on rental transactions
• Losses due to shortage of and/or damage to goods and (leases (finance leases)) or other uses
inventory of property, either for consideration
• Expenses for management services provided by individual or free of charge, inclusive of VAT,
entrepreneurs or entities that apply special tax regimes calculated as follows:
• Expenses relating to controlled debt (see the “Thin
capitalization rules” section) Age Percentage of
debt included in
expenses
• Other expenses, such as: Deductible within a limit of no
more than 1% of sales revenue > 90 calendar days 100%
•P
ayments to individuals, such as lump sum payments upon
and property rental income,
retirement, lump sum recuperation payments (benefits,
including VAT 45 — 90 calendar 50%
material assistance)
days
•E
xpenses to improve and maintain (operate) communities,
adjacent territories and historic sites, expenses to maintainof investment in their reconstruction, Debt obligations classed as controlled debt
upgrade or renovation:
Debt due to a founder/participant whose Debt due to a related party of the founder/
• No more than 20% for buildings and direct or indirect equity interest in the taxpayer participant provided that party is still related
structures is 20% or more as at the end of the tax period on the last day of the respective tax period
• No more than 40% for machinery,
equipment and vehicles
of a Belarusian entity for the purpose Tax benefits
The application of an investment of transferring them as loans to a The corporate income tax exemption
deduction does not affect how fixed related Belarusian entity applies to:
assets are depreciated (depreciation is
• Amounts payable for engineering, • Profit (not exceeding 10% of gross
calculated based on historical cost).
marketing, consulting, management profit) donated to (i) companies
and intermediary services, for the construction and/or
Thin capitalization rules information services and personnel reconstruction of sports facilities,
recruitment and supply services, (ii) government-funded health
The thin capitalization rules that came
and consideration for the transfer of care, educational, cultural and
into force in 2013 limit the deductibility
industrial property rights sports organizations, (iii) religious
of certain types of costs/expenses
where the taxpayer has controlled debt • Fines, penalty interest and other organizations, (iv) social services
to a foreign or Belarusian founder/ sanctions, including damages for providers and (v) certain public
participant. contractual breaches associations
The thin capitalization rules apply if the • Liabilities arising from the • Profit from sales of prosthetic
taxpayer’s debt-to-equity ratio (for all performance of a guarantee and orthopaedic appliances and
controlled debt) at the end of the tax obligation to repay the above rehabilitation and support equipment
period is at 3:1. debt for the disabled
The thin capitalization rules do not
apply to banks, insurers or lessors,
including property lessors that receive
more than 50% of their total revenue Maximum amount of Amount of each item of
from leasing activity. deductible expense/ = controlled debt in the tax / Capitalization ratio
interest period
The thin capitalization rules apply to
the following types of controlled debt:
Where the capitalization ratio is:
• Debt on loans (excluding commercial
loans). This amount does not include Capitalization Controlled debt in the tax period Equity at the end of
loans provided in their entirety = / / 3
ratio (total amounts due to all persons) the tax period
using proceeds from the placement
of bonds issued by the founder/
participant or another related party
Doing Business in Belarus | Tax and Law 19• Until 1 January 2025, profit (except Taxpayers have discretion to decide documents to the tax authorities if
for profit from procurement or whether to use any tax benefits they they decide to apply them (unless such
intermediary activities, as well as are legitimately entitled to. They are documents are required during a tax
rental income (income from leases not required to submit any supporting audit).
(finance leases)), received by
companies that employ disabled
CIT rates
persons, if disabled employees
account for at least 30% of the
Rate Taxpayer
average headcount
• Profit from sales of own 18% All companies (this is the standard tax rate)
manufactured cars and components
5% Companies engaged in the production of high-tech products (on the list approved by
(provided that a relevant agreement
the Council of Ministers)
has been concluded with the Ministry
of Industry) 10% High-tech parks, technology transfer parks and residents of high-tech parks
• Income from transactions involving
bonds issued by Belarusian 12% Belarusian companies when paying dividends (applicable to the amount of dividends
companies either between 1 April paid)
2008 and 1 January 2015 or since
1 July 2015, and income from 25% Banks, insurers, forex companies and certain types of microfinance companies
transactions involving state securities
50% Companies engaged in the transit of crude oil and petroleum products through trunk
issued by the Ministry of Finance and
pipelines within the Republic of Belarus
bonds issued by the NBRB
20 Doing Business in Belarus | Tax and LawReduced tax rates may also apply in a Dividends paid by a foreign company parcels), and selling costs. Losses on
number of other cases. may be taxed in the foreign jurisdiction. sales of fixed and intangible assets
The amount of tax withheld in a foreign reduce the tax base for CIT.
As an additional measure to consolidate
jurisdiction may be offset against CIT
budget revenue in order to combat Gains derived from sales of securities
due in Belarus (see the “Offset of taxes
COVID-19, it was determined that (except in cases indicated in the
paid in foreign jurisdictions” section).
cellular mobile network operators and “Tax benefits” section) are taxed at
commercial microfinance organizations Tax on income from dividends the standard rate. There are special
shall pay income tax at a rate of 30% distributed by Belarusian companies rules for calculating gains on REPO
from 1 January 2021 till 1 January is assessed in each month in which transactions.
2023. dividends are distributed and must
be paid no later than the 22nd of the
Local councils of deputies are Tax filing and payment
following month.
authorized to raise the income tax rate The tax period for CIT is the calendar
by no more than two percentage points. year. The reporting period for CIT is a
Capital gains and losses calendar quarter. The reporting period
Dividends Gains derived from the sale of fixed for CIT on dividends distributed by
and intangible assets are determined Belarusian companies is a calendar
Dividends received by Belarusian
as revenue from the sale less taxes, net month. The amount of CIT for a
companies from residents or non-
book value (in the case of depreciable reporting period is calculated on a
residents are subject to CIT at 12%.
assets) or acquisition cost (in the cumulative basis from the beginning of
A reduced rate may apply if the
case of non-depreciable assets, such the tax period.
Belarusian company has not paid
as construction in progress and land
dividends to Belarusian residents
(participants/ shareholders) for several
consecutive years. Deadlines for filing a return and paying tax
Number of Reduced Quarter I II III IV
consecutive years in rate applicable
which profits were at next dividend
not distributed payment Filing deadline 20 March of the
20 April 20 July 20 October
(no later than) following year
3 years 6%
22 December*
Payment deadline
22 April 22 July 22 October and 22 March of the
5 years 0% (no later than)
following year**
* Two thirds of the amount of tax determined for Q3.
Dividends distributed by Belarusian
** Subsequent adjustment of tax for Q4 and payment of outstanding amount or refund of overpayment
companies are taxed at source. Tax on
income from dividends is withheld and
Tax returns (except for returns for tax on dividend income) must be filed even
paid by the companies that distribute
when there is no taxable income or assets.
them.
Doing Business in Belarus | Tax and Law 21Tax accounting The carry forward mechanism does not documents confirming amounts of
Tax accounting is based on financial apply to losses incurred: losses incurred.
accounting with appropriate • As a result of activities outside
adjustments. The tax accounting Belarus in which the Belarusian Offset of taxes paid in foreign
process must be set out in the company engaged as a foreign tax jurisdictions
taxpayer’s accounting policy. resident, or
Belarusian companies are also subject
Deferred tax assets and liabilities arise • In a tax period (tax periods or to Belarusian CIT on profits from
when amounts of income (expenses) part of a tax period) in which the activities in foreign jurisdictions in
are the same for both financial and Belarusian company was entitled to which they engage as foreign tax
tax accounting purposes, but they CIT exemption for more than one tax residents. To avoid double taxation,
are recognised in different reporting period. tax paid by a Belarusian company
periods. Deferred tax assets and Losses are carried forward by type abroad may be offset against tax due
liabilities must be recorded in statutory of transaction against corresponding in Belarus. The offset amount may not
accounts in accordance with the items of income: exceed the amount of tax payable in
Finance Ministry’s guidelines. Belarus.
• Group 1 — transactions involving
Deferred tax assets and liabilities financial instruments and securities, Belarusian companies that pay tax
typically arise when the taxpayer: including derivatives abroad are required to submit to the
Belarusian tax authorities a certificate
• carries losses forward (see the • Group 2 — disposals of fixed assets, issued by the tax authorities in the
“Loss carry forward” section) construction in progress, uninstalled
foreign jurisdiction confirming the
• receives gratuitous aid equipment or an enterprise as a
amount of tax paid there.
portfolio of assets
Deferred tax assets and liabilities are They may also be required to submit
Remaining losses are then carried
recognised in the reporting period in other supporting documents prescribed
forward regardless of the transaction
which the temporary differences arise. by the tax or other competent
or activity that gave rise to them.
authorities in the foreign jurisdiction
To apply loss carry forwards, a as proof that they have paid tax in that
Loss carry forward
company must maintain separate jurisdiction.
Loss carry forward is a mechanism that accounting records and keep
allows companies that have incurred a
loss in a tax period to carry it forward
entirely or partially to future tax
periods, reducing the tax base in the
future tax periods by all or part of the
amount of the loss.
Losses may be carried forward for
10 years, starting with losses incurred
in 2011.
22 Doing Business in Belarus | Tax and LawTransfer pricing The following methods are used to
Transfer pricing rules have been in force in Belarus since 2012. determine whether transaction prices
are at arm’s length:
Transactions are considered at arm’s length with no subsequent adjustments
required to the CIT base if their prices are within the market range. • Comparable uncontrolled price
method
Controlled transactions • Resale price method
Annual threshold values • Cost plus method
(excluding VAT and excise tax)
for transactions with the same party • Comparable profits method
Transaction type to be considered controlled, BYN
• Profit split method
For large For large
taxpayers taxpayers To enable the checking of transfer
prices, starting from 1 January 2016
with related parties 2,000,000 400,000
taxpayers are required to notify the tax
involving the sale or authorities of all transactions made in a
Foreign trade 2,000,000
purchase of strategic goods tax period by providing relevant details
transactions
in electronic VAT invoices (irrespective
with residents of offshore
400,000 of the value of the transactions), and
jurisdictions
to prepare and submit transfer pricing
with related parties that do documentation if requested by the tax
Transactions with
not assess or pay CIT/are 2,000,000 400,000 authorities to support the arm’s length
Belarusian residents
exempt from CIT nature of their transactions.
Transactions involving with related parties No threshold The TP documentation or economic
the sale or purchase of justification must be prepared in special
immovable property or with payers that apply
No threshold formats prescribed by Resolution
housing bonds special tax regimes
No. 2 of the Belarusian Tax Ministry of
* The list of strategic goods is approved by Council of Ministers Resolution No. 470 of 16 June 2016. The 3 January 2019.
list includes crude oil and petroleum products, petroleum gases and other gaseous hydrocarbons, timber,
potassium chloride, iron and non-alloy steel bars, et al.
Doing Business in Belarus | Tax and Law 23Type of Transactions subject When
transfer pricing to documentation Filing deadline documentation Exemption from documentation requirement
documentation requirements may be requested
Comprehensive • Foreign trade To be filed only if May be requested No documentation requirement for:
TP documentation transactions of large requested by the tax not earlier than • Transactions for which an advance pricing agreement
taxpayers authorities 1 June of the has been concluded
• Foreign trade • Within 10 working year following the
• Transactions yielding income that is exempt from
transactions involving days if requested in reporting year
income tax; transactions made on an exchange, except
strategic goods the course of a desk for transactions with related parties and residents of
audit offshore jurisdictions
Simplified TP • All other types • Within the time May be requested
• Transactions with a related party which cannot be
documentation of controlled limit specified in the after the end of the
grouped into a group of homogeneous transactions
(economic transactions request, which must reporting year
and the total amount of which with one counterparty
justification) be not less than within one calendar year is no more than 10% of the
two working days, established thresholds
if requested in the
• Transactions in securities in the organized securities
course of an on-site
market
audit
Advance Pricing Agreement Levies Ministry* in relation to certain on the approach to determining arm’s
with the Taxes and Levies controlled transactions. length prices and help minimize tax
Ministry risks associated with compliance
APAs free taxpayers from the
with transfer pricing requirements in
Starting 1 January 2019, taxpayers need to prepare transfer pricing
relation to transactions covered by the
may enter into advance pricing documentation, enable taxpayers and
agreement.
agreements (APAs) with the Taxes and tax authorities to agree in advance
Purpose of the agreement Agreeing on pricing principles for tax purposes and/or applicable methods for determining arm’s length prices
Eligibility Large taxpayers and taxpayers that have concluded controlled transactions totalling more than BYN 2 million in the
course of a year
Agreement term Up to three calendar years with an option to extend by up to two years
Documentation processing The Taxes and Levies Ministry has three months to process documents submitted by taxpayers (application, draft
times agreement, etc.). This period may be extended to six months if the Ministry needs to obtain additional information
from a foreign country
Fee State duty for the consideration of a pricing agreement application is set at 500 base units (~ USD 6,200)
Advantages Exemption from transfer pricing documentation requirements and lower risk of additional CIT liabilities
* An advance pricing agreement is an agreement between a taxpayer and the Taxes and Levies Ministry setting out pricing principles for taxation purposes and/or
establishing methods to be applied in determining arm’s length prices in relation to a particular transaction or group of similar transactions contemplated by the taxpayer.
24 Doing Business in Belarus | Tax and LawWithholding tax structures and intangible assets in base is calculated as income minus
Belarus relevant documented expenses (for
Taxpayers example, in the case of the sale of
• Income from fines, penalty interest
This tax is payable by foreign immovable property or equity
or other sanctions for contractual
companies, including unincorporated interests in Belarusian companies).
breaches
entities, that do not have a permanent
establishment in Belarus but receive • Other income from sources in
income from Belarusian sources. Tax agents
Belarus covered by the exhaustive list
prescribed by law Withholding tax (WHT) is calculated,
withheld and paid by legal entities
Scope of taxation and individual entrepreneurs that
The following Belarusian-source income Tax base pay income to foreign companies.
is taxable: The tax base is usually determined as Individuals may also be considered tax
total income. In some cases, the tax agents under certain circumstances.
• Dividends
• Income from debt obligations of any
kind, including loans and securities Tax rates
that generate interest (discount)
income Type of income Rate
• Royalties Income from loans granted to Belarus, the Government or Belarusian residents
against government guarantees; income on Belarusian state securities and income 0%
• Income from the sale of immovable from the sale or redemption thereof, and certain other types of income
property situated in Belarus, the
sale of an enterprise as a portfolio of Transport, freight, demurrage or other charges paid for shipments, including
6%
international shipments, and charges for forwarding services
assets and the sale of securities and
equity interests (units or shares) in Income from debt obligations of any kind, including interest on loans and credits 10%
Belarusian companies
Dividends and income from the disposal of shares/equity interests in Belarusian
12%
• Income from consulting, accounting, companies
audit, marketing, legal, engineering,
Royalties and other taxable income of foreign companies from sources in Belarus 15%
intermediary, management,
advertising or educational services
and from services involving the Double tax treaties signed by Belarus may provide more favourable tax treatment
recruitment and the supply of (see Appendix 1).
personnel for activities in Belarus
Foreign companies may be required to file tax returns and pay tax in Belarus if
• Income from services involving other foreign companies receive the following types of income from them:
the installation, set-up, inspection,
• Income from the sale of immovable property situated in Belarus
maintenance, measurement or
testing of lines, mechanisms, • Income from the sale of shares and equity interests in Belarusian
equipment, instruments, appliances, companies
Doing Business in Belarus | Tax and Law 25You can also read
