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Belarus

General Information

Country Name: Belarus
Currency: Belarusian Ruble (BYN)
Primary Tax Authority: Ministry of Taxes and Duties of the Republic of Belarus
Key Legislation:

  • The Tax Code of the Republic of Belarus
  • Presidential Decrees on Special Economic Zones (SEZs)
  • Law on Value Added Tax

Fiscal Authority Allocation

Centralized Fiscal System:
Belarus operates a centralized tax system, with all taxes being collected and administered by the Ministry of Taxes and Duties. There are no regional taxes, but local governments can collect property taxes and other minor fees.

Corporate Income Tax (CIT)

Standard Rate: 18%
The corporate income tax rate in Belarus is 18%. Resident companies are taxed on their worldwide income, while non-resident companies are taxed on income sourced from Belarus.

Corporate Forms and Taxation:

  1. Limited Liability Company (LLC): The most common corporate form, subject to the standard CIT rate of 18%.
  2. Joint-Stock Company (JSC): Typically used for larger businesses, also taxed at 18% on distributed profits.
  3. Branches of Foreign Companies: Taxed on Belarus-sourced income at 18%.

Exemptions and Incentives:

  • Free Economic Zones (FEZs): Companies operating in FEZs are eligible for reduced CIT rates, with full CIT exemptions for the first five years and 50% reduction for the following years.
  • High Technology Park (HTP): Companies engaged in IT and software development within HTP benefit from a 0% CIT rate for the first 15 years of operation.
  • R&D Deductions: R&D expenses can be deducted at a higher rate to incentivize investment in innovation.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 20%
Belarus applies a VAT rate of 20% on most goods and services, including imports. A reduced VAT rate of 10% applies to certain essential goods, such as food and pharmaceuticals.

Exemptions:
Healthcare services, education, and certain financial services are VAT-exempt. Exports of goods and services are zero-rated.

Personal Income Tax (PIT)

Flat Rate: 13%
Belarus imposes a flat personal income tax rate of 13% on residents, which applies to their worldwide income. Non-residents are taxed at a flat rate of 30% on Belarus-sourced income.

Capital Income:
Dividends and capital gains are generally taxed at a flat rate of 13%.

Additional Mandatory Contributions

Social Security Contributions:
Both employers and employees are required to contribute to Belarus’s social security system.

  • Employer Contribution: 34% of gross salary (covering pensions, healthcare, and unemployment).
  • Employee Contribution: 1% of gross salary.

Withholding Taxes

  • Dividends: 12% (for residents), 15% (for non-residents)
  • Interest: 10%
  • Royalties: 15%
    These rates may be reduced under double taxation agreements (DTAs).

Transfer Pricing Rules

Belarus follows the arm’s-length principle for transfer pricing. Transactions between related parties must adhere to this principle, and transfer pricing documentation is required for certain cross-border transactions.

Special Tax Regimes

  • Free Economic Zones (FEZs): Companies operating in designated FEZs enjoy CIT exemptions for the first five years and reduced tax rates thereafter.
  • High Technology Park (HTP): Companies operating in the HTP are exempt from CIT, VAT, and personal income tax on employees for up to 15 years.
  • Small Business Incentives: Small businesses with turnover below a specific threshold can opt for a simplified taxation system with reduced tax rates.

Other Taxes

  • Real Estate Tax: Levied at rates between 1% and 2% of the cadastral value of immovable property, depending on the type and location.
  • Land Tax: Paid by landowners and lessees at rates set by local authorities.
  • Excise Duties: Imposed on specific goods, including alcohol, tobacco, and fuel.

Double Taxation Agreements (DTAs)

Belarus has signed over 60 double taxation agreements with countries such as Russia, China, Germany, and the UK. These agreements help prevent double taxation of income and provide reduced withholding tax rates on cross-border payments.

Local Taxes

Belarus does not impose regional or municipal income taxes. However, local governments may impose minor taxes and fees, such as property and land taxes.

Compliance and Reporting

Annual Filing:
Corporate income tax returns must be filed by March 31st of the following year. The tax year follows the calendar year. For personal income tax, returns must be filed by April 1st of the following year.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. Interest is generally calculated at 0.05% per day on overdue tax amounts.

Recent Developments

Tax Incentives for IT and Innovation:
Belarus is focusing on developing its IT sector and has extended the tax benefits for companies in the High Technology Park (HTP) to attract foreign investors. These include CIT exemptions and reduced personal income tax for employees in the sector.

Digital Services Tax:
Belarus has introduced new regulations requiring foreign companies that provide digital services to Belarusian consumers to register for VAT and collect VAT on sales.

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