Belarus

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Tax policy

TAX POLICY

Income Tax Rate 12%

Corporate Tax Rate 18%

Sales Tax / VAT 20%

Income Tax

Belarus individual income tax rate for 2012 is a flat 12%.

Income in the form of dividends, income from business and private notary activities are taxed at 15% in Belarus. Income received from High Technologies Park residents under labour agreements, income of individual entrepreneurs who are residents at the High Technologies Park are taxed at 9%.

Belarus individuals are taxed on their worldwide income. Nonresidents are taxed only on Belarus source income. An individual is resident in Belarus if he / she is physically present in the country for more than 183 days in a calendar year. Taxable income in Belarus is all income regardless of source, including property, services or other benefits in-kind and income to which the taxpayer has the right of disposal, less allowable deductions and exemptions.

Tax Year: Tax year in Belarus is the calendar year.

Corporate Tax

The changes, unless otherwise indicated, came into effect on 1 January 2012.

The major changes are summarized as follows:

· The general rate of corporate income tax has been decreased from 24% to 18%. Also, the tax exemption for profits reinvested in fixed assets and housing has been abolished. Instead, taxpayers may deduct up to 10% of the acquisition costs for buildings and up to 20% for other fixed assets on the day they are entered into the books. If the assets are sold within three years, the deduction becomes taxable.

· Thin capitalization rules have been introduced. The interest payable on a debt owed to a foreign parent company which, directly or indirectly, owns more than 20% of the shares in (i) a Belarusian subsidiary, or (ii) a Belarusian company that is recognized as a related party of the foreign company, that exceeds the maximum allowable debt to equity ratio of 3:1, is not deductible. These rules come into effect on 1 January 2013.

Loss carry-forward is now permitted. The losses may be carried forward for up to 10 years. For these purposes, the losses are split into three groups:

· Losses from transactions with securities

· Losses from transactions with fixed assets

· Other losses.

Losses from one of the groups may be set off against profits from the same group. Certain other restrictions also apply.

The taxpayers now have the option to switch from the first method of advance quarterly payments (whereby one-quarter of the corporate income tax paid in the previous tax year is paid) to the second method (whereby one-quarter of the presumed corporate income tax payable in the current tax period, but in total no less than 80% of the actual amount payable after the current tax period is completed, is paid) during the current tax period.

Belarus also has double taxation agreements with over 60 countries including the UK, USA, all CIS States and most EU members.

VAT tax

The Belarus government has updated the list of goods which are zero rated for VAT.  The new list includes medical, as perscribed by the custom union with other former Soviet states.  Certain foodstuffs also no longer benefit from the reduced VAT rate of 10%.  They will be subject to the standard VAT Belarus VAT rate of 20%.

It has also withdrawn the import VAT exemption on motor vehicles.

The reduced rate no longer applies to soya oil, potato starch, sweeteners for people suffering from diabetes, jams, canned fruit and vegetables, juices and live fish.

These are now subject to the general 20% VAT rate. Baker’s yeast has been added to the list.

Medical goods exempt from VAT

Simplified taxation system (STS) 

As an alternative to the general system of taxation, businesses may use the STS. Businesses subject to the STS pay a unified tax imposed on gross revenues. Gross revenues are considered to be revenues received during the taxation period as the result of sales of goods (works services), property rights, and nonoperating income.

The STS can be used by companies that meet the established requirements on gross revenues within one calendar year and number of personnel. The requirements are as follows: 

· Gross revenues do not exceed BYR 1.1772 billion (approx EUR 294,351) and the number of personnel is not more than 15 employees (such companies need not pay VAT).

· Gross revenues do not exceed BYR 3.815 billion (approx EUR 953,917) and the number of personnel is not more than 100 employees (such companies must pay VAT).

The following main tax rates under the STS apply:

·  8% – as to companies which do not pay VAT;

·  6% – as to companies which pay VAT;

·  3% – with regard to revenues from export of goods

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Sources: http://tmagazine.ey.com/
http://www.sorainen.com/