Tax System of the Republic of Belarus
1. General information
The Tax Code of the Republic of Belarus, which is made up from the Primary part and Special Part, is the main document that defines the structure of the tax system in the country.
The Primary Part formulates the notions of tax obligation, taxpayers, and an object of taxation. It also contains regulations regarding tax accounting and control, and describes the procedure of appeal of decisions made by tax authorities. The Tax Code was adopted on January 1, 2004.
The Special Part of the Tax Code, that came into legal force on January 1, 2010, regulates particular taxes and duties, defines taxpayers, objects of taxation, rates, procedure of tax calculation and payments of respective taxes and duties.
According to the Tax Code of the Republic of Belarus, tax payments are subdivided into republican taxes, duties (tariffs) and local taxes and duties.
Republican taxes include the following:
- value added tax;
- profit tax;
- excise duties;
- tax on income of foreign organizations, which do not operate through a permanent representative office in Belarus;
- income tax on individuals;
- property taxes;
- land tax;
- ecological tax;
- tax on extraction (subtraction) of natural resources;
- duty for passage of automobile vehicles of foreign states on public roads of the Republic of Belarus;
- off-shore duty;
- stamp duty;
- consular fees;
- state duty;
- patent fees;
- custom tariffs and duties.
Local taxes and duties include the following:
- dog owners tax;
- resort levy;
- levy for packer shippers.
There are also other types of payments:
- dues to the Social Welfare Fund for social needs;
- dues paid by employers for obligatory insurance of employees against professional illnesses and accidents at production facilities.
2. Taxation of Business Entities
Together with general taxation system there are specific regimes of taxation, which provide a number of benefits, reduced tax rates, a complete or partial deferral of some taxes or even full exemption.
2.1. The general system of taxation: primary payments
Excise duties are used for the following types of goods:
- alcoholic products;
- non-food alcohol-containing production;
- beer, beer cocktail;
- low alcoholic beverage with overall volume part of alcohol from 1.2 to 7 %, wines with overall volume part of alcohol from 1.2 to 7 %;
- diesel fuel and diesel fuel with methyl esters of greasy acid;
- boat fuel;
- liquefied hydrocarbon gas and natural compressed fuel gas, used as automotive fuel;
- diesel motor oil and/or carburetor (injector) engine oil;
- food alcohol-containing production;
Excise rates for goods can be set in absolute amounts on a physical unit of measurement of the goods (fixed (specific) rate) or in percentage points from the cost of goods (added value rates).
The value added tax (VAT) is included into the price of products and services.
Major VAT rates:
- 0 %;
- 9.09 %;
- 10 %;
- 16.67 %;
- 20 %.
0 % on the sale of:
- goods placed under the customs procedure for export and exported (without obligation to re-import into the territory of Belarus) to the states-members of the Customs Union;
- activities (services) connected with accompanying, loading, transfer and other similar activities directly connected with the selling of exported goods, which are placed under the customs procedure of export , as well as goods exported (without obligation to re-import into the territory of the Republic of Belarus) in the states - members of the Customs Union;
- exported transport services including transit transportation, and also exported work (services) to produce goods from take-back feedstock;
- repair works (modernization, re-equipment) of aircraft and their engines, units of trains, performed for foreign organizations or individuals;
- goods of own production to owner of duty-free shop for their subsequent implementation in duty-free shops;
- goods in retail trade through shops to individuals who do not have permanent residence in the country - a member of the Customs Union, in case of export of goods by foreign persons outside the customs territory of the Customs Union within three months from the date of purchase of the goods. Foreign persons while purchasing goods, value of which according to the payment document that confirms the payment of goods, exceeds the amount of 800,000 Belarusian rubles (including VAT) during one day at the payer’s store who concluded with an organization that has the right for a refund of VAT to foreigners, the contract for services to return the VAT to foreigners, are entitled to get the refund of the amount of VAT in case of export of such goods from the customs territory of the Customs Union within three months from the date of their purchase.
9.09 % or 16,67 %:
- on sales of goods (works, services) at administered retail prices with due account for the VAT.
- on sale of goods of Belarusian origin from crop production (with the exception of floriculture, growth of ornamental plants), bee-farming, livestock breeding, (with the exception of fur farming), fishery;
- on importation and (or) sale in the territory of the Republic of Belarus of foodstuffs and goods for children that are included in the list approved by the President of the Republic of Belarus;
- on sale of goods of own manufacture by residents of free economic zone in the territory of the Republic of Belarus which were manufactured by them on the territory of the free economic zone and are import substitution according to the list of import substitution goods, defined by the Government of the Republic of Belarus in coordination with the President of the Republic of Belarus;
20 % on the sale of property rights, as well as the sale of goods (works, services) not mentioned above, with the exception of the ones, exempted from taxation and not recognized as subject to VAT.
The sum of VAT, subject to be paid to the state budget, is defined as difference between general sum of tax, calculated at the end of the reporting period and the sums of tax reductions. The calculated sum of VAT is determined on an accrual basis since the beginning of the tax period at the end of each reporting period.
As a general rule, VAT deductions are made on an accrual basis in limits of sums of VAT, calculated after realization of the goods (works, services), proprietary interests. The main exception to this rule are the paid amounts of VAT on goods (works, services) subject to taxation at the rate of 0% and 10%.The deduction of such amounts of VAT is made in full regardless of the calculated amount of VAT.
Tax period of VAT is a calendar year.
Reporting period of VAT is a calendar month or a calendar quarter by choice of a taxpayer.
Taxpayers submit tax declaration (calculation) to the tax bodies not later than on the 20th date of the month, following the expired reporting period.
Payment of VAT is made not later than on the 22nd date of the month, following the expired reporting period.
The objects subject to profit tax are gross profit as well as dividends and similar incomes, gained by Belarusian organizations.
Gross profit for Belarusian organizations is the sum of profit from realization of goods (works, services), proprietary interests and non-realization incomes, decreased by the sum of non-realization expenses.
Proceeds from the sale of goods are determined on the basis of transaction price and the tax authorities have the right to calculate profit tax on the basis of market price. This provision shall be applied to foreign-trade transactions, also with an interdependent person when the cost of the transaction (transaction with one person) is more than 60 billion Belarusian rubles, as well as to real estate transactions, when the market price decreases by more than 20%.Main rate of the profit tax is 18%
The tax rate on dividends is 12 %.
Tax period of profit tax is a calendar year.
Reporting period of profit tax is a calendar quarter. Reporting period of profit tax on the dividends accrued by Belarussian organizations is a calendar month.
Profit tax for the reporting period shall be calculated cumulatively from the beginning of the tax period as the tax base, reduced on the amount of profit exempted from taxation, as well as on the amount of losses carried by profit of the accounting period , and the tax rate . Tax return of profit tax on the basis of past reporting period must be submitted to the tax authorities no later than the 20th of the month following expired reporting period, regardless of objects of taxation presence or absence.
Profit tax payment should be made during the tax period on the basis of past reporting period no later than the 22th of the month following expired reporting period.
Profit tax payment for the fourth quarter of 2014 should be made no later than December, 22 in the amount of 2/3 of tax profit sum calculated on the basis of the tax profit amount for the third quarter of 2014, followed by recalculation as a whole for the year 2014 and calculating the amount of tax profit to surcharge or reduction no later than January, 22 of the year 2015.
Profit tax of foreign organizations which do not operate in Belarus by virtue of the permanent representative office.
Taxpayers of the profit tax of foreign organizations which do not operate in Belarus by virtue of the permanent representative office are recognized as foreign and international organizations, including non-legal bodies not operating in the Belarusby virtue of the permanent representative office, but to produce income from sources in the Republic of Belarus.
The object of taxation is the following income received by taxpayer from sources in Belarus:
- conveyance fee, freight (including demurrage and other payments arising from the transportation) in connection with the carrying out of international carriage (except for the payment of tickets for passengers in international traffic, the carriage fees and freight in connection with international carriage of goods by sea), as well as for the provision of freight forwarding services (except services of forwarding activities in the organization of international carriage of goods by sea);
- income from debt instruments of any kind , including:
income on credits and loans;
income from securities, which terms of issue is intended to gain profits in the form of interests (discount);
income from the use of temporary available funds in bank accounts in Belarus;
- dividends and similar income;
- income from the sale of goods in the territory of the Republic of Belarus under the contracts, commission and other similar civil-law contracts;
- income from holding and (or) participation in concert and entertainment events, including attractions, zoos, circus programs in Belarus;
- income in the form of penalties (fines) and other types of sanctions for breach of contract;
- income from research, development work, development of design and technological documentation for the prototype (experimental batch) of products, from the manufacture and testing of prototypes (experimental batch) products, pre-project work and project work (preparation of feasibility studies, engineering efforts and other similar works);
-income from the performance of innovative work, including research and developmental work, development of design and technological documentation for prototypes (experimental batch) of goods, manufacturing and testing of prototypes (experimental batch) of goods, design and project work (preparation of feasibility studies, engineering design and other similar work);
- income from the guarantee and/or surety;
- income from the provision of disk space and/or a communication channel for placing information on the server and services for its maintenance;
- income from the alienation of:
real estate situated in Belarus;
enterprise (or part thereof) as a property complex located in the territory of Belarus, owner of which is a foreign organization;
securities in the territory of Belarus (except for stocks) and/or their redemption;
shares in the authorized fund (stocks) of organizations in Belarus, or their parts;
- income from services:
consulting, accounting, auditing, marketing, legal, engineering;
trust management of real estate situated in the territory of Belarus;
recruitment and/or selection of personnel, including physical bodies, to carry out their professional activities;
- in education;
possession of property;
advertising (except for income paid to foreign organizations associated with the participation of Belarusian organizations and Belarusian entrepreneurs in exhibitions and fairs in foreign countries, irrespective of whether the income payment is made directly by the participant of exhibitions and fairs, or through another organization or an entrepreneur);
installation, commissioning, testing, maintenance, measurement, testing lines, machinery, equipment, devices, appliances, buildings and intangible assets in the territory of Belarus (except for income derived from training, consultation and/or services in installation, commissioning, testing, measuring and testing lines, machinery, equipment, appliances, fixtures and facilities, which are indispensable for the foreign trade contract for their purchase in property (for temporary use));
maintenance and protection of freights (excluding revenues from services on obligatory maintenance and protection of freights, stipulated by the legislation of the state through which territory the freight is being moved, rendered by the foreign state organizations, the legislation of which establishes requirements for such obligatory maintenance and protection);
- income from real estate situated in the territory of Belarus, handed into trust management;
- income from the processing of data including data processing activities with the user’s software or own software (the full data processing, data preparation and data entry, automated data processing), hosting services (storage of Web pages, enabling them to modify and placement on the Internet for public access), services for the sale of computer time as well as income from activities with database including database development, data storage, access to databases, services of search portals and search engines in the Internet (except for the income received by foreign organizations in the Republic of Belarus from services rendered of an automated system of interbank payments, international payment systems, international telecommunication systems of information transmission for payments and (or) making payments).
The tax base of profit tax is defined as total sum of income, for certain types of income the costs, proved by documents are allowed to be deducted.
The rates of profit tax depend on the type of income and may amount to 5%, 6 %,
10 %, 12 % and 15 %.
The tax period of profit tax is a calendar month, when the date of the obligation to pay profit tax takes place.
The tax declaration (calculation) of profit tax is submitted by a legal entity of Belarus, a foreign organization or individual entrepreneur, that accrue and/or pay income of a foreign organization which does not operate in Belarus through the permanent representative office, to tax bodies at the place of registration of these legal entities, foreign organizations, or individual entrepreneurs not later than on the 20th of the month following the tax period.
Profit tax is to be paid not later than on the 22nd of the month following the tax period.
Real estate tax.
The objects of taxation by real estate tax for organizations are permanent structures (buildings and structures) including the above norm unaccomplished construction parking places, objects that are subject of state registration and are on the balance of organizations-taxpayers, before their state registration, as well as objects which are state property transferred to the joint stock companies established during the transformation process of rental enterprises, collective (people‘s) enterprises, state and state unitary enterprises.
Taxable amount of real estate tax is defined by organizations on the basis of buildings, structures, their parts and parking places, existing on the 1st of January of the calendar year based on residuary value and value of permanent structures (buildings, structures) of the above norm unaccomplished construction.
As a general rule, annual tax rate of real estate tax for organizations is 1 %. Local authorities may establish multiplying factors to the rate of tax. The annual tax rate of 2 % is established for the objects of the above norm unaccomplished construction.
Tax period of real estate tax is one calendar year.
The tax return is filed with (to) the tax authorities not later than March 20 of the year.
Real estate tax is paid by organizations of their choice once a year in the amount of annual sum of the tax not later than on March, 22 of the tax period or every three months not later than on the 22th day of the third month of each quarter in the amount of one-forth of the annual amount of tax.
Ecological tax is levied from entities that exploit natural resources and entities the activities of which pollute the environment. The law stipulates a number of rates for the ecological tax. Depending on the particular subject of taxation there are fixed rates for emissions of pollutants into the air and wastewater discharges, storage and disposal of industrial wastes, import of ozone-destroying substances to the territory of Belarus, including those contained in the products.
Tax period of ecological tax, except for the ecological tax for import of ozone-destroying substances to the territory of Belarus, is one calendar quarter. Payment of the ecological tax for the importation into the territory of the Republic of Belarus of ozone-destroying substances is made prior to the import into the Republic of Belarus of ozone-destroying substances, including the ones contained in the products.
Each quarter tax payers submit the tax declaration (calculation) to the tax bodies not later than on the 20th of the month, following the expired tax period.
Ecological tax is to be paid each quarter not later than 22nd of month, following expired tax period.
The amount of the environmental tax may be calculated on the basis of the amounts of emissions of pollutants into the atmospheric air, wastewater discharges, storage of pollutants specified in the permits for emissions of pollutants into the air, special wateruse, storage or integrated environmental permits and the corresponding rates of ecological tax. In this case, the tax declarations (calculations) are to be submitted not later than on April, 20 of the calendar year on the basis of the annual amount, and the payment of the ecological tax is made on the tax payer's option once a year in the amount of the calculated amount for the year not later than on April, 22 of the calendar year or every quarter not later than on the 22th of the month, following the accounting quarter in the amount of one-fourth of the calculated amount of the environmental tax.
Such taxpayers provide additional payments of the ecological tax not later than on February, 20 of the year following the expired year, on the basis of actual annual emissions of pollutants into the atmosphere, wastewater discharges, storage and disposal of wastes, and not later than on February, 22 of the year following the expired year. In case when the mentioned volumes do not exceed the established annual limits, the overpaid amounts of the environmental tax are to be earned forward or returned to the payers.
Tax for the extraction (removal) of natural resources.
The tax base is defined as the actual volume of extracted (withdrawn) natural resources. A list of such natural resources is determined by the Tax Code of the Republic of Belarus and includes extraction of:
- forming, glass-making and mortar sand;
- sand-gravel mixtures;
- building and facing stone;
- surface and underground water;
- waters, polymetallic water concentrate, mineralized water which is extracted to maintain the pressure in oil recovery;
- ground for land structures;
- clay, sand clay, clay loam and bergmeal;
- bentonitic clay;
- potassium salt (in terms of potassium oxide) and halite;
- chalk-stone, malm, limestone and dolomite;
- plaster-stone (anhydrite);
- peat with humidity of 40%;
- sapropel with humidity of 60%;
- bog oak;
- grapevine snail;
- chironomid larvae;
- green frog (pond, edible, lake);
- brown coal (in terms of standard fuel);
- oil shale (in terms of standard fuel).
Tax rates are established in Belarusian rubles to the volume of production (withdrawal) of natural resources (except for potassium salt and oil).
The tax period of tax for the extraction of natural resources, except for the tax for the extraction (removal) of natural resources regarding oil and potassium salt is a calendar quarter.
The tax period of tax for the extraction (removal) of natural resources regarding oil and potassium salt is a calendar month.
Tax declarations (calculations) for the tax for the extraction (removal) of natural resources must be submitted to the tax office not later than on the 20th of the month following the expired tax period. Payment is made every quarter not later than on the 22th of the month, following the expired tax period.
The amount of the tax for the extraction (removal) of natural resources, except for the tax for the extraction (removal) of natural resources regarding oil and potassium salt may be calculated by payers on the basis of the volumes of extraction (removal) of natural resources specified in the documents on the basis of which they are extracted (removed)and the corresponding tax rates for the extraction (removal) of natural resources. In this case, the tax declarations (calculations) must be submitted not later than on April, 20 of the calendar year.
The tax is paid at the end of the tax period, not later than on the 22th of the month, following the accounting quarter, in the amount of one-fourth of the calculated tax amount for the extraction (removal) of natural resources. At the end of the year, based on the actual volume of extraction (removal) of natural resources, recalculation of the amount of tax which should be paid is hold and the tax declarations (calculations) are to be submitted not later than on the 20th of February, following the expired year.
Land tax is levied from land plots, located in the territory of Belarus:
- belonging to individuals under the right of ownership, lifetime inheritable possession or temporary use as well as inherited;
- belonging to organizations under the right of ownership, permanent or temporary use.
Taxable amount of land tax is generally defined in the amount of cadaster value of a land plot.
Tax rate of land tax depends on the function of the land plot. Local councils of deputies have the right to increase (decrease) the rate of land tax to certain categories of taxpayers but not more than in a double amount.
Tax period of land tax is a calendar year.
Tax payers-organizations submit to the tax authorities declarations (calculations) on land tax annually, not later than on February, 20 of the current year and on new land allocation or on the termination of the right of permanent, temporary use or private property right for a land plot (except for land plots, in respect of which the decision that is the basis for the creation or transfer of the right for a land plot, is taken by the authorized state body, or the right to use the land is terminated in December of the current year) not later than on the 20th of the month following the month in which the decision that is the basis for the creation or transfer of the right for a land plot is taken by a state body, or the right to use it is terminated.
Land tax is paid by organizations:
- According to a general rule, on the choice of the organization without changes during the tax period once a year, in the amount of the calculated amount for a year - not later than on February, 22 of this year, or every quarter not later than on the 22th of the second month of each quarter - in the amount of one-forth of the annual amount of land tax;
- for agricultural land — on the choice of the organization without changes in the tax period once a year, in the amount of the calculated amount for a year not later than on April, 15 of the current year, or not later than on April 15, July 15, September 15, November 15 - at the rate of one-fourth of the annual amount of the land tax;
- for the land granted to taxpayers from (after) January 1 of the current year, and in case of loss of the right for benefits for the calculation of land tax in the process of the transition of organizations from special taxation to the general taxation regime, in the process of the payment of the land tax for land plots under the objects of above norm unaccomplished construction, in case of providing by organizations and individual entrepreneurs for rent, other onerous or gratuitous use of land, capital (buildings and structures), their parts, car places, located on land plots, which are exempt from land tax, as well as permanent structures (buildings and structures), their parts, car places of state-financed organizations the payment of land tax is made not later than by the date, corresponding with the nearest legal term of payment after the submission of the tax return (declaration) for the land tax, and for the land plots on which the decision, that is the basis for the creation or transfer of the right for a land plot, is taken by the authorized state body - in November of the current year - not later than on December 22.
Land tax for rented land plots is levied in the amount, defined by legislation, according to the procedure similar to the calculation of the land tax.
Obligatory insurance payments to the National Social Security Fund and Pension Fund. Insurance fees for obligatory insurance against occupational diseases and accidents at production facilities.
The amounts of obligatory insurance payments for retirement, disability, loss of breadwinner insurances (pension insurance) is 28 % for employers.
The amount of obligatory fees of insurance in case of temporary incapacity for work, pregnancy and childbirth, care for children under 3 years, granting of one day-off in a month for a mother (father, guardian), bringing up the child with disabilities in the age of under 18 years, death of insured person or a member of his (her) family (social insurance) for employers, natural persons independently paying obligatory insurance payments (except for the citizens working outside Belarus), Belgosstrakh (for persons who receive additional payments to a monthly average wage or receive disability benefit) is 6 %.
Payments of obligatory insurance fees to the National Social Security Fund and Pension Fund are made by payers by a single payment.
The objects for the calculation of obligatory insurance fees to the National Social Security Fund are all monetary and/or natural payments, calculated in favour of working citizens on the basis of all grounds, irrespectively of the sources of financing (hereinafter — payments), including remuneration under civil-law contracts except for those provided for by a list of payments, which are not subject to insurance fees to the Fund, approved by the Counsel of Ministers of the Republic of Belarus. Payments cannot exceed the amount of four average wages in the Republic of Belarus for the month, preceding the month for which obligatory insurance fees are paid.
Insurance fees of obligatory insurance against occupational diseases and accidents at production facilities are calculated on the basis of payments that are subject to the obligatory insurance for natural persons under labour and civil-law contracts. The insurance rate is established in the amount of 0,6 % for all organizations (except for the state-financed ones) with the possibility of benefits, discounts (increases) to the established rate.
Income tax of individuals.
The object of taxation of income tax of individuals is income, earned by taxpayers from the sources in Belarus as well as abroad.
Organizations that hire employees on the basis of labour contract or civil-law contract, fulfill obligations of tax agents and withhold the taxes from incomes of citizens and transfer them to the state budget. The most widespread source of income of natural persons, paid by organizations, is remuneration for labour or other duties, including monetary remuneration and other allowances. Belarusian legislation provides for various deductions, reducing the taxable income of individuals.
General rate of income tax is 12 %.
The income tax rate is set at 9% of the income received by:
- individuals (other than employees performing maintenance and security of buildings, land) from the residents of the High-Tech Park(HTP) on the basis of labor agreements (contracts);
- individual entrepreneurs - residents of the HTP;
- individuals involved in the implementation of the registered business project in the field of new and high technology, from non-residents of HTP on the basis of labor agreements;
- individuals in the form of wages received on the basis of labor agreements (contracts) from the joint venture, and (or) the residents of the Chinese-Belarusian Industrial Park.
The income tax rate is set at 15% in respect of the income, received by Belarusian individual entrepreneurs (notaries, solicitors) from business (notary, individually conducted advocacy) activities.
Organizations — tax agents are obliged to withhold the calculated sum of income tax from individuals directly from the income of the payer at the moment of their actual payment.
Tax agent has to withhold the calculated sum of income tax form individuals. Such a withholding is produced from any monetary assets paid to a taxpayer by a tax agent. Withholding is to be made at the moment of payment to a taxpayer or to third parties on behalf of him (her).
The tax period of the income tax from individuals is a calendar year. Accounting periods of the income tax from individuals for individual entrepreneurs (private notaries, advocates) are three, six and nine months of the calendar year and a calendar year.
3. Special Tax Regimes
Belarusian legislation provides the following special tax regimes for business entities:
- Simplified tax system;
- Single tax from individual entrepreneurs and other individuals;
- Single tax for producers of agricultural products;
- Tax for gambling business;
- Tax on income from lottery activity;
- Tax on income from electronic interactive games;
- Сharge for craft activities;
- Сharge for rendering the service in the field of rural tourism;
- Single tax on imputed income.
3.1. Simplified tax system
The scope of the system is activity of small enterprises with the level of income no higher than the size, stated by the legislation. Organizations, willing to apply a simplified tax system are required to satisfy the following criteria: simultaneous observance of average number of workers and a total gain within first nine months of the year previous to the year from which the system is applied: number of workers shall be not more than 100 people, individual entrepreneurs and notaries performing notarial activities in a notary's office, advocates (further for this tax regime - individual entrepreneurs) , the amount of their gross proceeds for the nine month on an accrual basis makes no more than 9 000 000 000 belarusian rubles.
Under the simplified tax system a vast number of taxes are replaced by one tax with a simplified procedure of calculation. However, the simplified tax system doesn’t replace the obligation to pay import and export payments, stamp, consular and off-shore duties, state and patent fees, social insurance payments, income tax on income from securities, dividends, shares in business entities, the difference between the estimated and the residual value of property transferred as an equity contribution, tax for the extraction (removal) of natural resources, environmental tax for the disposal of industrial wastes at landfills (if the payer initially was not the income owner) and also property taxes under stipulated circumstances. In particular land tax is paid if the aggregate land space exceeds 0,5 hectare, and real estate tax is paid if the aggregate real estate space exceeds 1 500 square metres or if the real estate is given in tenancy.
The simplified tax system cannot be applied by organizations and individual entrepreneurs with regard to certain types of activity:
- Production of excisable goods (produce of alcohol, tobacco production and others);
- Sale of jewellery;
- realization of property rights to the means of individualization of parties to a civil transactions, of goods, works or services;
- Lottery activity;
- Professional activity on securities market;
- Activity within the ordinary partnership (the group);
- Activity as a resident of free economic zones, the special tourist and recreational park "August Channel", the Park of High Technologies, the Chinese-Belarusian Industrial Park;
- Activities for the organization and holding of interactive electronic games;
- Organizations that carry out:
- Real estate activity;
- Insurance business (insurance companies including mutual insurance companies, insurance associations;
- Banking (banks);
- Activity in the gambling;
- insurance agency business;
- Organizations that produce agricultural products in the Republic of Belarus and pay a single tax for agricultural producers;
- Individual entrepreneurs in part of activities which shall be paid with a single tax from entrepreneurs and other persons.
If gross proceeds for calendar year on an accrual basis exceed 12 000 000 000 belarusian rubles and (or) the number of employees is more than 100 then an organization is obliged to apply the generally established tax system.
Currently business entities can use the following variants of the simplified tax system:
- tax at a rate of 5 % — for legal entities and individual entrepreneurs, which do not pay VAT. This rate can be applied and VAT can be not paid by individual entrepreneurs and organizations which have not more than 50 employees in case their gross profit doesn’t exceed 8 200 000 000 Belarusian rubles;
- tax at a rate of 3 % — for legal entities and individual entrepreneurs, which do pay VAT.
Also the rate of 3% is applied by the retailing organizations and individual entrepreneurs, which do not pay VAT, if the average number of employees from the beginning of the year till the reporting period including is not more than 15 people and the gross proceeds are not more than 4 100 000 000 Belarusian rubles.
Business entities with less than 15 people and a gross revenue up to 4.1 billion of Belarusian rubles, paying tax in accordance with the simplified tax system are exempt from accounting recording and reporting and make recording in the book (ledger) of incomes and expenses of legal entities and individual entrepreneurs, using the simplified tax system.
A tax period of tax under the simplified tax system is a calendar year.
A reporting period of tax under the simplified tax system is recognized as:
- a calendar month — for entities applying the simplified tax system with payment of VAT monthly;
- a calendar quarter — for entities applying the simplified tax system without payment of VAT or with payment of VAT quarterly.
A tax declaration is submitted no later than the 20th day of the month following the expired tax period.
Tax under the simplified tax system is paid no later than the 22th day of the month following the expired tax period.
3.2. The single tax from individual entrepreneurs and other individuals
Payers of the single tax from individual entrepreneurs and other individuals (hereinafter in this paragraph referred to as a single tax) are individual entrepreneurs and individuals not involved in entrepreneurial activities.
The payers are exempt from the following taxes:
- income tax on income earned by them in carrying out the activities, which are the subject of the single tax;
- value added tax, except for the value added tax levied on import of goods into the territory of the Republic of Belarus;
- ecological tax;
- tax for extraction (removal) of natural resources;
- local taxes and fees being paid for the activities, which are the subject of the single tax.
Payment of the single tax is a mandatory regime of taxation for individual entrepreneurs and individuals performing certain activities, providing certain types of work and services. Individuals performing in the group or the ordinary partnership do not use the single tax regime.
The tax base is determined by single tax payers on the basis of ongoing activities and (or) the number of shops and other commercial facilities, retail spaces on the market, public catering establishments, service facilities, the proceeds from the sale of goods (works, services).
Activities for which individuals pay a single tax are the following: services for growing agricultural products; providing services for crushing grain; livestock grazing; tutoring; household cleaning; caring for children and adults; services performed by domestic workers: washing and ironing of bed linen and other things; walking pets and care for them; buying food; cooking; washing dishes; the payment from the person served for the use of living quarters and utilities; weddings music service; anniversaries and other celebrations service; the activities of independent actors, entertainers, musicians; master of ceremonies services; photography, production of photographs; activity involving congratulation on different holidays; sale of kittens and puppies on condition of keeping a pet (cat, dog); keeping services, care and training of domestic animals except for farm animals; providing secretarial services and translation services; provision of services provided by means of automatic devices for measuring the weight , growth; repair and alteration of knitwear, furs, apparel and headwear.
The list of activities for which individual entrepreneurs pay a single tax is broader and is defined in Article 296 of the Tax Code of the Republic of Belarus and include food and nonfoods retail trade (without limitation of square of selling space (place) and it’s number), catering and provision of other services to consumers.
The tax period of the single tax is a calendar year.
The reporting period of the single tax is a calendar month, when the activities are performed.
The single tax is paid by individual entrepreneurs generally - at the place of tax registration each month no later than the 1th of the month of activities; by individuals not engaged in business activities — at the place of tax registration or at the place of sale of goods (works, services) before the sale of goods (works, services).The basic single tax rate for the reporting month is set in a fixed amount in Belarusian rubles, depending on the type and location of the activity, and makes between 60 thousand rubles to 9620 thousand rubles.
If proceeds from the sale of goods (works, services) 30 times exceed amount of the single tax for corresponding reporting period then addition payment of the single tax is calculated by individual entrepreneurs at a rate of eight (8) percent of the amount of such excess.
3.3. Single tax for producers of agricultural products
The single tax for producers of agricultural products is set at a rate of 1 % of gross proceeds.
A term "producers of agricultural products" includes organizations and their branches, who gain not less than 50% of their proceeds from selling of products of plant growing (except floriculture, growing of decorative plants), primary treatment of flax, apiculture, animal husbandry and fish breeding.
Payment of the single tax replaces payments of all taxes, duties, and other obligatory payments to state budget and non-budgetary funds, land rents, royalties in the innovation funds, which are formed in accordance with the legislation; except excises; VAT; tax, charges (duties) on goods imported (exported) into the territory of the Republic of Belarus; state dues; patent fees; consular fees; offshore duty; stamp duty; fees for travel of foreign states motor vehicles on public roads of the Republic of Belarus; the income tax on dividends and similar income; obligatory insurance payments to Social Welfare Fund of the Ministry of Labour and Social Security.
The tax period of the single tax is a calendar year. The reporting period of the single tax can be a calendar month or a calendar quarter depending on the VAT payment scheme.
3.4. Tax on gambling business
The activities in the gambling business is carried out exclusively by legal entities of the Republic of Belarus.
Organizations are exempt from VAT (except VAT at import) and profit tax in the sum of income received from gambling business. As for activities which do not relate to gambling, organizations pay taxes according to the common rules.
The objects of tax on gambling business are: gambling tables; slot machines; bookmaker office counters; totalizator counters; positive margin between the amount of accepted bets in gamblings and the amount of paid wins (returning of unplayed bets).
These first four objects are registered in the tax office in witness whereof the payer certificate is issued.
The tax rates on gambling installed on the unit object of taxation are in the following amounts:
- 48 459 300 BYR - Game table;
- 1 845 600 BYR - Slot machine;
- 9 934 500 BYR - Cash sweepstakes;
- 4 967 300 BYR - Cash bookmaker.
The tax rate on positive margin between amount of accepted stakes in gamblings and the amount paid wins (unplayed return stakes) is 4%.
The amount of tax on gambling business is calculated as the product of the tax base and tax rate determined for corresponding object of taxation for tax on gambling business at the location of the object.
The tax period of tax on gambling is a calendar month. Payment of tax on gambling is made no later than the 22th of the month following the expired tax period.
3.5. Tax on income from lottery activity
Tax payers are organizations, which organize lotteries. Only state, state bodies, local executive committees, state legal entities can be organizers of lotteries on the territory of the Republic of Belarus.
Payers are exempt from VAT and profit tax in the sum of incomes earned from organization of lotteries. Other incomes are taxable according to the common rules.
The rate of tax is 8 % of income from lottery activity per month.
3.6. Tax on income from organization of electronic interactive games
Tax on income from organization of electronic interactive games is paid by a legal entity that organizes electronic interactive games and replaces VAT and profit tax.
The rate of tax is 8% of income from lottery activity per month.
3.7. Сharge for craft activities
The object of taxation is craft activities of different types, implemented by individuals. The list of such activities is determined by the President of the Republic of Belarus.
The rate of the Charge (regardless of the number of these activities which are carried out) shall be equal to one base unit per calendar year. The base unit is determined on the date of payment. On January 15, 2013 the amount of the base unit is 100 000 Belarusian rubles. But if the revenue gained from such activities is declared in the amount that 100 times exceeds the amount of the base unit, the extra charge should be paid at the rate of 10% from the amount of such excess.
The tax period for the Charge for craft activities is a calendar year.
The charge is paid before the beginning of the craft activities.
For every following year the charge is paid no later than the 28th of the last month in a current calendar year in which craft activities are carried out.
3.8. Charge for rendering the service in the field of rural tourism
The object of this taxation is rendering services in the field of rural tourism. Such activities include non-business activities of individuals, private (peasant) farms, which provide living quarters (before ten) to accommodate tourists; ensure tourists with food (mainly using their own production), organize the cognitive, sporting and cultural entertainment tours and programs, provide other services relating to the reception, accommodation, transport and other services for tourists.
Payers in the part of income derived from implementation of service activities in the field of rural tourism are exempted from payment of taxes, dues (duties).
The rate of duty (regardless of number of ongoing activities to provide services in the field of rural tourism) shall be equal to one base unit per calendar year. The base unit is determined on the date of payment. On January 15, 2013 the amount of the base unit is 100 000 Belarusian rubles. But if the revenue gained from such activities is declared in amount that 100 times exceeds the amount of the base unit, the extra charge should be paid at the rate of 10% from the amount of such excess.
Tax collection period is a calendar year.
Payment of the fee is made before commencement of the services provision in the field of rural tourism. If a taxpayer plans to provide these services next year he has to pay the charge before December, 28 of the ongoing year.
3.9. Single tax on imputed income
Payers of this tax are the legal entities of the Republic of Belarus which carry out activities on providing services for maintenance and (or) repairing of vehicles and their components, and have the number of employees no more than 15 people.
The object of taxation is the income from providing services on maintenance and repair. The tax rate is set at 5%.
The income from providing services on maintenance and repair is the margin between the sum of imputed income and the revenue from providing services on maintenance and repair in the amount higher than imputed income.
Imputed income for each month is calculated as the product of the basic profitability per employee and the average number of employees in the organization. Basic profitability per employee per month is 26 million rubles. Regional (Minsk city) councils of deputies have the right to increase (decrease) this rate, but not more than twice (half).
4. Taxation for certain categories of taxpayers
In addition to special tax regimes in the legislation of the Republic of Belarus taxation for certain categories of taxpayers is defined.
4.1. Taxation in free economic zones
Currently in Belarus there are six free economic zones: «Minsk», «Brest», «Gomel-Raton», «Mogilev», «Grodnoinvest», «Vitebsk».
In order to become a resident of a free economic zone, it is necessary to satisfy the following requirements:
- place of business — the territory of a free economic zone;
- conclusion of contract with free economic zone administration, concerning the terms of activities within the free economic zone;
- range of investments not less than 1 000 000 Euros.
Taxation in free economic zones is specified by granting a list of privileges and benefits (exemption from payments of import custom duties, some other payments, and reduced tax rates).
Tax privileges for FEZ residents are not applied to banks and insurance organizations, public catering, gambling activity, activity in electronic interactive games, trading and trade-purchasing activities, stock operations; selling of goods (works, services), which are totally or partly produced with the help of fixed assets, which are owned by the FEZ resident and (or) with the help of labour of the FEZ resident employees outside the FEZ territory.
The benefits of this regime apply to the following sales of free economic zones residents:
- of goods (works, services) of own production, produced by these residents in the territory of a free economic zone for non-residents out of the Republic of Belarus;
- of import-substitution goods of own production, produced by these residents in the territory of a free economic zone, on the territory of the Republic of Belarus;
- of goods (works, services) of own production, produced by these residents in the territory of the free economic zones for other residents of the free economic zones.
Tax privileges of residents:
- rate of the profit tax is reduced by 50 % (but no more than 12 %);
- profit of free economic zone residents, gained from realization of the goods (works, services) of their own production, is exempt from taxes during 5 years starting from declaration of profit;
- exemption from real estate tax for taxation objects , located on the territory of free economic zones, irrespectively of their designated function;
- payment of VAT at the rate of 10% from realization of the goods of own production, which are manufactured in the territory of Belarus and are recognized as import-substituting production.
- exemption from land tax for land within the boundaries of free economic zones to residents of free economic zones registered as such from January 1, 2012 for projects construction - for the period of design and construction of these projects, but not more than five years from the date of this registration.
A free custom zone can be established in the territory of a FEZ. The goods are located and used in the territory of a free custom zone without payment of import custom duties, taxes and without fulfillment of prohibitions and restrictions for these goods.
If the goods recognized as goods of the Customs Union are transported from the territory of a free custom zone to the rest territory of the Customs Union the exemption from import custom duties, VAT and excise duties is applied.
4.2 Taxation of High Technologies Park residents
The High Technologies Park was created in order to develop high-tech production in Belarus. The main direction of activity of High Technologies Park residents is elaboration of software and informational systems.
The regime is applied by organization and individual entrepreneurs, which are registered as High Technologies Park residents and which carry out certain types of activity, connected with software, data processing with fundamental and applicable researches, experimental works in the sphere of natural and technical sciences.
Tax privileges of High Technologies Park residents:
1. Exemption from:
- Profit tax (except tax on profit paid as a tax agent);
- VAT on turnovers from realization of the goods (works, services, proprietary interests for the objects of intellectual property);
- Land tax from land plots in limits of the High Technologies Park for the period of construction of buildings, designated to business activity of High Technologies Park residents, but no longer than for three years;
- Real estate tax on buildings and facilities of High Technologies Park residents, situated in the territory of the High Technologies Park (excluding leased fixed assets and objects of unaccomplished construction);
- Off-shore duty in case of payment (transfer) of dividends to founders (shareholders).
2. Obligatory insurance fees are not compounded on income of employees of High Technology Park residents, that exceeds the amount of one month average wage in the Republic of Belarus.
3. Income of individuals, earned during a calendar year under labour contracts, as well as income of individual entrepreneurs — High Technologies Park residents, are taxable at a rate of 9 %.
4. Reduced tax of 5 % for foreign organizations, which do not operate through a permanent representative office in Belarus, is applied for income from dividends, interest (coupon) income from debt, royalties, license agreements, if the source of this income is High Technologies Park residents.
- exemption from custom duties and VAT in case of import of the goods to the custom territory of Belarus for the purposes of business activity. In order to use this privilege the residents have to obtain the resolution of the Park administration about the purposes of usage of these goods.
4.3. Taxation of Chinese-Belarusian Industrial Park
The Chinese-Belarusian Industrial Park was created in accordance with Edict of the President of the Republic of Belarus dated June 5, 2012 No 253.
The Chinese-Belarusian Industrial Park (hereinafter - Park), a special economic area, is located in the territory of 8048 hectares which have a specific legal status on assignment of tax privileges on a systematic base for a period of 50 years and was created for involvement of national and foreign investments for development and organization of high-tech and competitive works in the spheres of electronics, fine chemistry, biotechnology, engineering industry and new materials.
Park residents are presented by legal entities created in the territory of the Republic of Belarus with the location at the park territory or being created (reorganized) directly in the park, including commercial organizations with foreign investments (hereinafter — legal entities), and those who implement (are planning to implement) in the park territory investment projects which meet the following requirements:
- an investment project presupposes business activity implementation by a legal entity in the park territory according to main activities in the park which include production creation and development in the spheres of electronics, fine chemistry, biotechnology, engineering industry and new materials;
- declared investment volume for investment project implementation equals to no less than 5 mln. US dollars.
Tax privileges of Park residents:
1. Park residents are absolved from the following taxes for a period of 10 years after the date of their registration:
- Profit tax as to profit from realization of domestic manufacture goods (works, services), which have been produced in the Park;
- Real estate tax on buildings and constructions (including above-standard constructions in progress), parking spaces which are situated in the Park territory regardless of using direction;
- Land tax from land plots in the Park territory.
2. After 10 calendar years following the year of their registration as a Park resident within the next 10 calendar years they pay profit tax, land tax, real estate tax at the rate reduced to 50 percent.
3. Within 5 calendar years, beginning with the first year in which there was a gross profit of Park residents, the 0% rate is applied for the profit tax and the tax on income of foreign organizations, which do not operate through a permanent representative office in Belarus, dividends and similar income are accrued to their founders (participants, shareholders and owners) by Park residents.
4. Prior to January 1, 2027 the tax rate on income of foreign organizations, which do not operate through a permanent representative office in Belarus, of royalties accrued by Park residents to foreign organizations, which do not operate through a permanent representative office in Belarus in the form of rewards for information concerning industrial, commercial or scientific experience (including know-how), license fees, patents, drawings, utility model, scheme, formula, design or process, is 5 percent.
5. Up to 2027 income of individuals, earned under labour contracts, are taxable at a rate of 9 percent.
6. Park residents are exempt from VAT and profit tax payment obligation which arises in connection with donation of capital structures (buildings), isolated premises, facilities construction in progress and other fixed assets, located in the Park and transferred to construction (reconstruction) of buildings and structures in their property.
Another preferences and benefits of Park residents:
1. Park residents are exempt from:
- payment of state fees for issuance, renewal of permits for involvement of foreign workers into the Republic of Belarus, special permits for work in the Republic of Belarus of foreign citizens and stateless persons, who are involved for the construction of the Park, as well as the implementation of investment projects within the boundaries of this Park;
- compensation for loss of agricultural and (or) forestry production, caused by withdrawal or temporary occupation of agricultural land and forest land, located within the boundaries of the Park;
- compulsory sale proceeds in foreign currency on the domestic market of the Republic of Belarus before January 1, 2027;
- payment of contributions to the innovation funds when running in the Park boundary of the design and construction of the Park, as well as other works related to the design and construction of such facilities.
2. Foreign citizens and stateless persons are exempt from payment of the fee for issuing temporary residence permits in the Republic of Belarus.
3. Obligatory insurance fees are not compounded on income of employees of Park residents, which exceeds the amount of one month average wage in the Republic of Belarus.
4. Park residents and their employees which are foreign citizens temporarily residing (staying) in the Republic of Belarus and mobilized for implementation of investment projects in the Park territory, are exempt from the mandatory insurance premiums from payments to their advantage.
5. Park residents have a right to deduct the full amount of VAT paid on purchasing (importing to the territory of the Republic of Belarus) goods (works, services), property rights used for the design, construction and equipping of buildings, which are located in the Park but not later than 31 December of the year following the year of placing into operation of such buildings and structures.
6. Park residents are exempted from customs duties and VAT on goods imported into the customs territory of the Republic of Belarus for usage in the Park boundary for implementation of investment projects if the residents have the resolution of the Park administration about the purp