Tax laws Belarus
Tax Laws in Belarus are governed by the Ministry of Taxes and Duties of the Republic of Belarus, which administers tax collection and enforcement. Belarus has a range of taxes that apply to individuals, businesses, and various forms of income. Below is an overview of the key tax laws in Belarus:
1. Personal Income Tax
Personal income tax in Belarus is progressive, with rates depending on the income level and source.
Tax Rates for Individuals:
- Up to BYN 1,000: 9%
- Above BYN 1,000: 13% (flat rate)
Belarus also applies a flat tax rate of 13% on employment income, pensions, and other personal income. However, non-residents are subject to a 13% withholding tax on income earned from Belarus.
2. Corporate Income Tax
Corporate income tax is applied to the profits of companies operating in Belarus.
- Standard Corporate Tax Rate: 18% on net taxable income.
- For Export-Oriented Companies: There are some tax relief options available for companies that export goods and services, including a 10% tax rate on profits derived from export activities.
3. Value-Added Tax (VAT)
Belarus levies a Value-Added Tax (VAT) on the sale of goods and services, which is administered by the Ministry of Taxes and Duties.
- Standard VAT Rate: 20% on most goods and services.
- Reduced VAT Rate: 10% for certain goods, such as food products, medical equipment, and medicines.
- Exemptions: Certain goods and services, such as educational services, healthcare, and financial services, are exempt from VAT.
Businesses with a turnover exceeding BYN 1,000,000 annually are required to register for VAT and file returns regularly (monthly or quarterly).
4. Social Security Contributions
Both employers and employees are required to make social security contributions to fund the state social security system.
- Employee Contribution: 1% of monthly salary (up to a maximum salary of BYN 1,410).
- Employer Contribution: 34% of the employee’s gross salary (also subject to a maximum salary threshold).
These contributions are used to finance pensions, sickness benefits, and other social welfare programs.
5. Property Tax
Property tax is levied on real estate owners, including land, buildings, and other property.
- Property Tax Rates: Vary depending on the region and type of property. Local governments may impose additional rates.
- Land Tax: Levied on the ownership of land, with rates depending on land type, location, and purpose.
6. Environmental Tax
Belarus imposes an environmental tax on businesses that generate environmental pollution. The tax is designed to promote environmental protection and sustainability.
- The rate of this tax depends on the level of pollution produced by the business or industry. It is intended to incentivize companies to reduce environmental harm.
7. Excise Duties
Excise duties are levied on specific goods such as alcohol, tobacco, and fuel.
- Excise Rates: The rates vary by product type. For example, cigarettes and alcohol are subject to high excise rates to discourage excessive consumption.
- Fuel: Petrol and diesel are also subject to excise duties.
8. Withholding Taxes
Withholding taxes are applied to certain types of income paid to non-residents, including dividends, interest, royalties, and certain payments for services.
- Interest: 13% withholding tax.
- Dividends: 13% withholding tax on dividends paid to foreign shareholders.
- Royalties: 13% withholding tax on royalty payments to foreign entities.
9. Capital Gains Tax
Capital gains from the sale of real estate, shares, and other assets are subject to tax in Belarus.
- Real Estate Sales: Capital gains tax applies to profits from the sale of real estate, with rates depending on the duration of ownership. If the property is held for more than 5 years, the capital gain is tax-exempt.
- Shares and Securities: Capital gains from the sale of shares and securities are also taxed at 13% for residents and 13% for non-residents.
10. Tax on Dividends
A 13% withholding tax is applied to dividends distributed to non-resident shareholders.
11. Stamp Duty
Belarus applies stamp duties on certain transactions, including the transfer of property, company registration, and some contractual agreements.
- Property Transfer: The stamp duty varies based on the value of the property being transferred.
- Contracts: Certain contracts (e.g., those related to land or real estate) may be subject to stamp duty, typically calculated as a percentage of the contract value.
12. Tax Incentives
Belarus offers several tax incentives aimed at attracting foreign investment and supporting economic development in specific sectors.
- High-tech Park: A special economic zone for IT companies offers tax exemptions, including zero VAT and corporate tax holidays for up to 10 years for qualifying companies.
- Export-Oriented Businesses: Companies involved in exporting goods and services may benefit from lower corporate tax rates (e.g., 10% tax rate).
- Investment Projects: Investment projects in certain sectors (such as agriculture and technology) may qualify for tax holidays or reduced tax rates.
13. Transfer Pricing Rules
Belarus has established transfer pricing regulations to ensure that transactions between related parties are priced at arm's length, to prevent tax avoidance through manipulation of prices. Companies must submit documentation supporting their transfer pricing arrangements.
14. Double Taxation Treaties (DTAs)
Belarus has signed Double Taxation Treaties (DTAs) with multiple countries to prevent double taxation on income and to foster international trade and investment.
- DTAs typically reduce withholding tax rates on dividends, interest, and royalties paid to foreign investors.
- These treaties often provide exemptions or reductions in taxes paid on cross-border income.
15. Tax Filing and Compliance
- Individual Tax Filing: Individuals are required to file an annual tax return by April 15th for the previous tax year.
- Corporate Tax Filing: Corporations are required to submit an annual tax return, and the tax is due by March 1st of the following year.
- VAT Filing: VAT returns are filed on a quarterly or monthly basis, depending on the size of the business.
Conclusion
Belarus has a relatively simple tax system with progressive income tax rates for individuals and a standard corporate tax rate of 18%. The country imposes a 20% VAT on most goods and services, with a reduced rate of 10% for certain essential goods. Belarus offers a range of tax incentives for export-oriented businesses, high-tech companies, and specific investment projects. Withholding taxes apply to various forms of income, and there is no capital gains tax for assets held longer than 5 years. The country also has transfer pricing rules to prevent tax avoidance in cross-border transactions and has signed double taxation treaties with numerous countries to promote international trade and investment.
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