Tax system
The tax system
of the Republic of Belarus is rather dynamic and constantly evolving towards
optimisation of relationship between the taxpayers and the state.
The contemporary tax system of the Republic of Belarus provides for
payment of taxes by natural and artificial persons.
Legal entities in the Republic of Belarus pay: the excise tax, the
value-added tax, the extraordinary tax for liquidation of the consequences
of the catastrophe at the Chernobyl NPP, the tax for the use of natural
resources (ecological tax), payments for land, the state duty, the fee for
the use of general-use motor roads, the tax for transit across the territory
of national parks and reserves, the tax on immovable property, the income
tax, the tax on dividends, and make other deductions to funds.
Individual entrepreneurs pay: the income tax, the value-added tax,
the excise tax, the ecological tax, deductions into the social protection
fund for the population and the fund on assistance to employment as well as
other taxes in conformity with the current legislation.
Natural persons in the Republic of Belarus pay: the income tax,
deduction to the social protection fund for the population, the tax on
immovable property, the land tax and other payments.
Taxation of enterprises
According to the tax legislation of the Republic of Belarus in 2001
legal entities, including enterprises with foreign investment, as well as
foreign legal entities conducting economic activities in the territory of
the Republic of Belarus are taxpayers that are to pay the following taxes,
duties and deductions.
Tax on profits - the rate of 30% from the profit was established by
the Law of the Republic of Belarus "On Taxes On Incomes And Profits".
The value-added tax is collected from turnover from sale of
commodities (work or services) in the territory of the Republic of Belarus
in conformity with the Law of the Republic of Belarus "On Value-Added Tax"
at the rates of 20%, 10% (according to the list of food products and
children's products) and 0% (when products are exported). The zero rate is
applied to export of transport services, construction and operations on
processing of raw material imported into the country in exchange of finished
products. The zero rate is also applied to export of commodities to foreign
countries other than the CIS countries, Baltic States and states with which
agreements have been made regulating issues of collection of indirect taxes
according to the principle of the country of destination.
The rate of 20% is applied to turnover on sales of commodities from
the Republic of Belarus: to Georgia, Russia and Turkmenistan.
Excise. In conformity with the Law of the Republic of Belarus "On
Excise" (with due account of amendments and additions) the excise payers are
legal entities: manufacturing excisable commodities; importing excisable
commodities into the customs territory of the Republic of Belarus and/or
selling excisable commodities imported into the customs territory of the
Republic of Belarus.
As regards excisable commodities made from raw material imported to
the Republic of Belarus in exchange of finished products, the excise payers
are enterprises manufacturing such commodities (processing raw material).
The list of excisable commodities and the excise rates are established by
the Government of the Republic of Belarus. The list of excisable commodities
includes alcoholic, tobacco, jewelry and fur products as well as automobiles
and oil products.
Alcohol, alcohol-containing juice realised for the production of
wine, liquid coloured vodka, alcohol dietary vinegar as well as raw alcohol
for rectification strong drinks, soft drinks and medicines are not taxed
with excise if the enterprises of the Republic have the right to produce
them.
Excise is not paid on crude oil imported into the territory of
Belarus.
Commodities are not taxable that are designed for production
purposes and imported by artificial persons into the territory of the
Republic of Belarus by contracts payment for which are made at the expense
of foreign credits given against guarantee of the Government of the Republic
of Belarus.
The tax on immovable property. The annual rate of the tax on
immovable property is established at 1%. It is applied to the residual cost
of the fixed production and non-production assets.
The land tax is mandatory for all landowners, land users, including
land leasers and landowners.
The land tax is imposed on the following lands:
-
agricultural lands,
-
lands of centres of population,
-
land belonging to industry, transport, communication
and defence facilities and lands of other usage,
-
lands of the forestry fund,
-
lands of the water fund.
The size of the land tax is determined depending
on the quality and location of the land lot and does not depend on the
results of economic activities of the landowner or land user. The size of
the land tax on agricultural land is determined according to the land
cadastre assessment (a special table is used to determine the tax).
The ecological tax. The ecological tax is imposed on discharge
(release) of contaminants into the environment as well as on the volume of
extracted natural resources and the volume of processed oil and oil
products.
The extraordinary tax and mandatory deductions into the state
employment fund are to be paid by legal entities at 5% of the wages fund as
a single fee.
Deductions to the social protection fund of the population
constitute up to 35% of the wages fund.
The tax on incomes it to be paid by credit and financial
institutions and insurance at the rate of 30%; by other legal entities on
incomes from stock transactions - at the rate of 40%.
The tax on sale of automotive fuel is established by the Law of the
Republic of Belarus "On The Budget Of The Republic Of Belarus For 2001" in
the amount of 20% of the cost of sold automotive fuel.
Local taxes and duties. In conformity with the Law of the Republic
of Belarus "On The Budget Of The Republic Of Belarus For 2001" the tax rates
are to be established by local Councils of Deputies in the amounts not
exceeding:
-
on the tax on sale of commodities in the retail trade
network - 5% from the revenues obtained from sale of commodities (work
or services);
-
on targeted fees and the advertising tax - 5% from
the profit (income) remaining at disposal of the legal entity (together
with the mentioned targeted fees and tax);
-
on fees for the making (purchase) of wild plants
(their parts), mushrooms, technical and medicinal vegetation raw
materials - 5% from the cost of the volume of such making calculated
from the average purchase price for this products in the relevant
region; and for the resort fee - 3% from the cost of the resort
services.
The tax to the economy stabilisation fund is
collected at the rate of 2.5% of the revenues received from the sales of
commodities, work or services.
The tax to the fund for support of agricultural producers is paid at
the rate of 2% from the revenues (gross income) obtained from the sale of
commodities, work or services.
Taxation of enterprises with foreign investments
Enterprises with foreign investments are to pay taxes, duties and
deductions in conformity with the legislative acts of the Republic of
Belarus and as provided for by the Law of the Republic of Belarus "On
Foreign Investments In The Territory Of The Republic Of Belarus" and other
legislation of the Republic of Belarus. Privileges, except for general
privileges, cover foreign and joint enterprises when they are aimed at
creating a favourable investment climate in the country.
Enterprises with the share of a foreign investor over 30% have a
number of privileges on taxation.
Privileges on the tax on profits
The tax shall not be collected during three years from the time,
when the profit is declared, including the first profitable year, from
profits of enterprises with foreign investment when the share of the foreign
investor in the authorised capital is over 30%, when such profits is
received from sale of products (work or services) of their own manufacture,
except for trade and trade and purchase activities.
The right to this privilege may be exercised by the enterprise when
it received from the Chamber of Commerce and Industry of the Republic of
Belarus the document confirming that these products (work or services) are
products (work or services) of their own manufacture and if each participant
has formed, during the year from the day of registration of the authorised
capital, at least 50% of the amount stipulated by the documents of
foundation and 100% before two years expire from the time of registration.
If enterprises with foreign investment manufacture products that are
very important for the Republic, then the Government of the Republic of
Belarus has the right, according to the list set by it, to reduce the tax
rate on profits up to 50% for another period up to three years. However, if
an enterprise with foreign investment is liquidated during the period of tax
holidays or during three years after the completion of the period of tax
holiday, then the enterprise is to pay the tax on profits for this period
when it had tax holiday.
An enterprise with foreign investment has the right to form its
reserve fund by reducing the balance profits by the amount of deductions
into the reserve (insurance) fund in the amounts established in its
foundation documents, but by not more than 25% of the actual formed
authorised capital.
Taxable profits of joint and foreign enterprises is to be reduced by
the amount of the profit used for financing capital investments for
production purpose and housing construction as well as for repay of banks'
credits received and used to these purposes.
Privileges on mandatory sale of currency
Enterprises with foreign investment with the share of the foreign
investor exceeding 30% of their authorised capital, when they receive
currency revenues from the sale of products (work or services) of their own,
are not to make mandatory sale of these revenues in currency provided they
observe the conditions stipulated by the legislation.
Privileges on customs fees and the value-added tax
When property in imported for the authorised capital, the part owned
by the foreign partner is not liable to customs fees and the value-added tax
provided this property:
In case of sale of imported share of the
authorised capital the enterprise loses the privileges. The customs fees and
the value-added tax are collected according to the general procedure.
Foreign legal entities that are not conducting activities ion the
Republic of Belarus through a permanent representation and obtaining incomes
from sources in the Republic of Belarus and are resident of the country
shall pay the tax at the rates:
-
dividends - at the 15% rate;
-
royalty - at the 15% rate;
-
licenses - at the 15% rate;
-
incomes from debts of any kind, in particular bonds
(except for state bonds), bills, loans (deposits, credits, use of
temporarily free resources on accounts of the banks in the Republic of
Belarus) - at the 10% rate;
-
freight fees in connection with the international
carriage - at the 6% rate;
-
incomes from sale of commodities at exhibitions and
fairs - at the 10% rate;
-
other incomes - at the 15% rate.
The above tax rates are applied if otherwise is
not mentioned in agreements on avoidance of double taxation.
As for 1.01.2001, the Republic of Belarus applied agreements on
avoidance of double taxation made with Poland, Bulgaria, Sweden, India,
Ukraine, Kyrgyzstan, Yugoslavia, Kazakhstan, Cyprus, Netherlands, Egypt,
Russia, Switzerland, Uzbekistan, Tajikistan, Belgium and Slovakia.
Along with new agreements made by the Republic of Belarus, other
agreements are applied made earlier by the USSR with other states. However,
as new agreements made by the Republic of Belarus come into force, the
agreements made by the USSR with the respective country become invalid.
Taxation of natural persons
In conformity with the Law of the Republic of Belarus "On Income Tax
From Natural persons: the income tax is paid by citizens of the Republic of
Belarus, foreign citizens and stateless persons.
This tax is collected by the progressive scale from the amount of
taxable income received during the calendar year, is calculated and exacted
monthly by incrementing total from the beginning of the year by enterprises
paying incomes to natural persons depending on the amount of such incomes
according to the differentiated rates 95 to 30%. Foreign and stateless
persons without permanent residence in the country pay the 20% tax on
incomes received from sources in Belarus (except for incomes from providing
hired services).
Incomes obtained abroad by Belarusian citizens and by stateless
persons and foreign citizens who stay permanently in the territory of the
Republic are included into incomes liable to taxation in the Republic of
Belarus. However, for the purpose of exclusion of double taxation the
amounts of income tax paid abroad, provided it is confirmed by relevant
documents, are counted when income tax is to be paid in the Republic of
Belarus.
On completion of the calendar year natural persons who have obtained
incomes from several sources are obliged to submit to tax authorities of the
Republic of Belarus a declaration on the total annual income for the year
not later than the 1st of March (and the detailed declaration before the
15th of April).
