Dttl Belarus-Business-guide en 2011

8/2/2019 Dttl Belarus-Business-guide en 2011

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Tax

Belarus business andinvestment guide

Tax issues 2011


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Country prole 6

Incentives or oreign investors 7

Tax administration 9

Types o business presence 12

Taxation o businesses in Belarus 15

Belarusian-sourced income o oreign companies 25

Taxation o individuals 27

Customs issues 29

Currency control issues 30

Your contacts in Deloitte CIS 34

Contents


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Introduction

This Belarus business and investment guide has been

prepared by Deloitte to provide inormation o interest

to those considering investing or doing business

in Belarus. The inormation provided is primarily

addressed to non-residents o Belarus who may

be contemplating business activities or investment

in the country.

The inormation presented in this publication is correct

at, and refects the situation as o 1 March 2011.

The purpose o the booklet is to explain, in broad terms,

the requirements o local laws aecting the taxation

and also the establishment and operations o business

enterprises in Belarus. The inormation provided in the

ollowing pages is not exhaustive, nor is it intended

to be so. The reader should be aware that the general

ramework o the legislation and the detailed regulations

underpinning it are subject to requent change.

Thereore, beore making any decisions, urther advice

should be sought.

The combination o increased globalization and

the growing complexity o tax systems in individual

countries gives rise to many tax exposures. For both

companies and private individuals, the consequences

o misjudging the tax and legal situation can be serious.

As advisors with extensive experience in Belarus and

abroad, Deloittes role is more than merely identiying

risks - we also nd solutions.

Thanks to Deloittes powerul worldwide network,

we can propose tailor-made solutions that enable

your organization to reduce risks and take advantage

o opportunities to optimize your tax position.

Deloitte tax consulting services cover all o the

tax matters that aect companies and individuals,

irrespective o their size or sphere o activity. These

include ling tax returns, tax planning and assistance

in tax matters. These consulting services are specically

designed or each industry or orm o organization.

Deloitte is a global leader among proessional

services organizations in terms o the number o its

tax partners and proessionals. Deloitte oers a wide

range o services and is able to deploy experienced

proessionals with extensive knowledge and specialized

skills to work or clients across a wide range o sectors.


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Consulting on direct and ind irect taxation

Consultation on various tax issues

International tax planning and structuring

Advice on customs and indirect taxes, value-added tax

and excises according to domestic legislation

Tax reviews and identication o possible tax

optimization options

Tax planning or investment projects

Development o tax accounting policies and related

procedures

Services related to mergers and acquisitions, including

due diligence

Outsourcing and tax compliance services

Accounting and reporting in accordance with Belarusian

legislation

Maintenance o bank accounts; bank and cash

transaction accounting

Tax accounting and tax reporting

Outsourcing services related to payroll and related tax

assessment

Preparation o statistical reports and their submission

to the Belarusian statistics authorities

Services related to IAS accounting and transormation

Accounting automation, implementation o inormation

technologies

Restoration o company accounting

Tax dispute resolution

Tax advice in complicated legal situations

Pre-trial settlement o tax disputes with the authorities


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Global employer and employee or individual

solutions

Assisting individuals in preparing tax returns

Registration with the tax authorities

Advice on various issues relating to employment

in Belarus

Tax advice on personal income tax and other obligatory

charges imposed on employees and employers

Tax advice to individuals on the application o the

relevant provisions o international double tax treaties

and on the interpretation o these provisions by the tax

authorities

Advice on legislative requirements with regard to oreign

nationals in Belarus, including obtaining and the

preparation o documents necessary or their stay and

work in Belarus

Tax and other services or banks, insurance and

other fnancial companies

Planning and establishment o nancial and holding

structures

Due diligence and assessment o risks

Advice on compliance with bank (or insurance company)

registration and licensing requirements; ollow-up

advisory assistance in establishing separate bank

departments

Advice on the determination o various tax aspects

o insurance activities, including orming, nancing,

investing, placing and using insurance reserves, etc.

Advice on regulatory acts regarding banking activities,

analysis o internal bank regulations and their

compliance with the principles and requirements

o Belarusian legislationAdvice on tax aspects o loans, securities, oreign

exchange and other bank operations

Consulting support in establishing the banks

subsidiaries, such as leasing/insurance companies

Other tax and legal advisory services in accordance with

the current legislation o Belarus:

- Minimization o the banks exposure to taxation

(application o international double tax treaties,

analysis o taxable base and tax calculations)

- Analysis o tax risks and other possible consequences

o applying the clients business structures and

assistance in introducing international compensation

schemes

International taxation

Advice on the application o double tax treaties

International tax planning aimed at improving business

eciency, reducing operating costs and managing

economic risks

Structuring o cross-border investments

Consultation regarding tax ecient international holding

structures

International tax planning presentations, workshops,

conerences, seminars, etc.

Assistance in setting up companies in oreign

jurisdictions

International cooperation with other Deloitte practices

ensures a direct and ecient transer o knowledge.

The Deloitte network has a worldwide database with

tax inormation covering more than 185 countries.

The international network o Deloitte tax proessionals

orms the undamental basis or providing high quality

consulting in all international tax matters.


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Country profle

Currency

The Belarusian national currency is the Belarusian

ruble (BYR). As o 1 January 2011, the National Bank

o Belarus established the ollowing ocial exchange

rates or major currencies:

BYR 3.000 or USD 1

BYR 3.999.30 or EUR 1

BYR 98.44 or RUB 1

There are some restrictions on oreign currency

exchange in Belarus. However, the Belarusian

government is taking steps towards liberalizing the

currency market.

Banking system

Banks dominate the Belarusian nancial market; as o

1 January 2011, there were 31 banks in Belarus. Most

Belarusian banks have oreign investors as shareholders,

although the state currently has a dominant share in the

charter capitals o the three biggest banks. It plans

to decrease the state share in these banks and to attract

oreign investments to meet the requirements or

an initial public oering (IPO). To date, the Belarusian

stock market remains largely undeveloped.

Belarus is located in Europe at the crossroads o both

west-east and north-south trade routes and links CIS

member states with the countries o Western Europe.

Belarus borders Poland, Lithuania, Latvia, Russia and

Ukraine.

The country has an area o 207,000 square kilometers

and a population o 9.5 million. 73% o the population

lives in urban environments, with almost one th living

in Minsk, the nations capital. Belarus is divided into six

regions and has two ocial languages: Belarusian and

Russian.

History and government

On 8 December 1991, in Viskuli (Brest region), the

leaders o the republics o the USSR, i.e. Belarus,

Russia, and the Ukraine ounded the Commonwealth

o Independent States (the CIS) leading to the

dissolution o the USSR. Minsk was chosen

as its administrative center, and Belarus became

an independent state. In 1994, a new constitution

was adopted and the rst president, an independent

candidate who did not belong to any political party, was

elected.

Belarus is a presidential republic, and legislative power

is vested in the Parliament, which is comprised o the

House o Representatives (110 members) and the

Council o the Republic (64 members). Currently, it is

dominated by supporters o the President. According

to the Belarusian Constitution, power is divided

among the legislative, executive and judicial branches

o government.



Incentives or oreigninvestors

High Technology Park (HT Park)

Belarusian legal entities (including those with 100%

oreign investment) and individual entrepreneurs,

whose activities are concerned with the analysis,

development and sotware support o inormation

systems and data processing, can become members

o the HT Park in Belarus. The HT Park provides ull

exemption rom almost all taxes and duties, including

prot tax, VAT and real estate tax. What is more, the

technical equipment imported by HT Park residents into

the Belarusian customs territory is exempt rom customs

duties and VAT. An exhaustive l ist o such equipment has

been determined by the state authorities and includes

computers, as well as copying and acsimile devices.

The income paid to a oreign entity originating rom

an HT Park residents sources is subject to withholding

tax at a rate not exceeding 5%. The residents o the

HT Park do not pay oshore duty on the dividends paid

to their shareholders.

Belarus benecial geographical location has made it a

country with a high potential or oreign investment.

For a company planning to establish a production

or distribution unit in Eastern Europe, Belarus oers

a skilled and cheap labor orce, low price levels,

and a relatively well developed inrastructure. The

Belarusian government has established a special

program or attracting oreign investment, and the

protection o oreign investment is guaranteed under

the Investment Code. The code states that oreign-

owned companies have the same rights as local

businesses, as well as the right to repatriate prots

without any restrictions. Furthermore, Belarus has signed

bilateral agreements on the protection and promotion

o investments with many countries around the world.

Due to policies encouraging oreign investment,

investors may gain signicant advantages, such as tax

benets and exemptions rom certain obligations,

by investing in the Republic o Belarus.

Free Economic Zones (FEZs)

An FEZ is a part o a country with well dened borders

and a special legal regime that provides more avorable

conditions or business. Basically, the objective

o these zones is to attract and ensure the eective

use o oreign and national investments to create

and develop goods or export, and will be based

on the latest technologies, as well as the eective use

o available production space. There are 6 FEZs in the

Republic o Belarus.

The appeal o a special legal regime like an FEZ ora potential investor is preerential taxation. FEZ residents

pay reduced rates o certain taxes, including prot tax

at 12% and VAT at 10%. Prot received by FEZ residents

rom supplies o goods, work or services o their own

production is exempt rom prot tax and transportation

duty or a period o 5 years ater the prot in question

is generated. Moreover, FEZ residents do not pay real

estate tax on buildings located within FEZs.


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Tax benefts rom conducting business in rural

areas and small towns

Eective rom 2008, a special tax regime and

tax benets have been provided or both oreign

and Belarusian legal entities (including branches,

representative oces, separate subdivisions) and

individual entrepreneurs located/residing in rural areas

(as well as in small town centers and not included

on the list by the Council o Ministers o Belarus) and

carrying out business activities involving the manuacture

o goods, perormance o work or provision o services

in those or other rural areas or towns.

In certain cases, legal entities and individual

entrepreneurs may be exempt rom: prot tax and

personal income tax with regard to goods (work

or services) they produce themselves; real estate tax

on property located in rural areas; customs duties and

VAT (except VAT charged on goods imported rom the

Russian Federation) payable on production equipment,

as well as related spare parts and accessories imported

or the purpose o orming or increasing the legal entity

in questions charter capital.

The oreign and Belarusian legal entities mentioned

above are exempt rom the compulsory sale o oreign

currency in the amount o 30% or 5 years rom the

date o their registration. In addition, they may apply

ree pricing to those goods they produce which are sold

internationally. They may also independently determine

employee salaries and use the services o oreign

insurance companies.

Tax benefts or motorway services

Prot received by legal entities and individual

entrepreneurs rom supplies o goods (work or services)

through motorway service acilities (e.g., motels, hotels,

campsites, service and car washing stations, retail,

canteens) is exempt rom prot or personal income tax

or a period o 5 years ater the establishment o such

acilities. In addition, motorway service acilities are not

subject to real estate tax or a period o 2 years rom the

date trading activities start.



Tax administration

The Belarusian Tax Code

General inormation

The General Part o the Tax Code came into orce on

1 January 2004. The Special Part o the Tax Code came

into eect on 1 January 2010.

Both parts o the Tax Code are eective rom 1 January

2010 but Acts previously adopted by the President

o Belarus regulating taxation issues still apply.

Types o taxes and duties

There are state as well as local taxes and duties

in Belarus. A number o special tax regimes are

mentioned in the Tax Code:

Tax applied under the simplied system o taxation

Unied tax or individual entrepreneurs and other

individuals

Unied tax or agricultural producers

Gambling tax

Lottery tax

Interactive electronic game tax

Duties or artisanal activities

Duties related to agro- and ecotourism services

The Belarusian system o taxation includes the

ollowing taxes and duties.

National taxes and duties:

Value-added tax (VAT)

Excise tax

Prot tax

Tax on the income o oreign entities not operating

in Belarus via a permanent establishmentPersonal income tax (PIT)

Real estate tax

Land tax

Environmental tax

Mining tax

Duties on the importation o ozone-depleting

substances

Duties on oreign nationals motor vehicles which travel

on Belarusian highways

Oshore duty

Stamp duty

Consular ee

State duty

Patent ees

Customs duties and ees

Local taxes and duties:

Dog tax

Resort levy

Vendor tax

In addition to taxes, there are also compulsory insurance

contributions to the Social Security Fund and RUE

Belgosstrakh and contributions to innovation unds.

Payers o taxes and duties

The Tax Code denes the payers o taxes and duties

in Belarus. The ollowing organizations are taxpayers:

Belarusian legal entities

Foreign and international organizations, including those

that are not legal entities

Simple partnerships (contract partners in joint activities)

The term individuals includes:

Belarusian citizens

Foreign citizens

Stateless persons


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Accounting and audit

Accounting

By 31 December each year, enterprises must ormulate

an annual nancial statement consisting o a balance

sheet, an income statement, a statement o changes

in shareholder equity and a cash fow statement.

According to domestic tax accounting rules, and

depending on a taxpayers accounting policy, income

in accounting and tax accounting is recognized on either

an accrual or a cash basis.

The accrual basis implies the recognition o income

at the time o the delivery o goods or services. The cash

basis involves the recognition o taxable income when

both events (delivery and payment) have taken place.

Obligatory independent audit

The ollowing entities are subject to an obligatory

annual independent audit:

Open joint stock companies

Banks and non-bank nancial intermediaries

Stock exchanges

Commercial organizations with oreign investments

Insurance companies and insurance brokers

HT Park residents

Legal entities that provide guaranteed repayment

o individual bank deposits

Other legal entities (excluding collective arms and

regular arms) and individual entrepreneurs whose

revenue or the preceding year exceeded EUR 600,000

Tax auditsThe Belarusian Ministry o Taxes and Duties

is responsible or levying taxes and duties. The local tax

authorities, which are subordinate to the Ministry, have

the right to perorm tax audits.

The local tax authorities may perorm both scheduled

and unscheduled audits o business entities. The

requency o scheduled/eld tax audits o a taxpayer (or

another liable person/entity) depends on the risk group

the audited person/entity is assigned to:

High risk not more than once in a calendar year; i no

violations are ound based on the results o a scheduled

audit, the next one will be perormed ater a minimum

o two years

Medium risk not more than once every three years;

i no violations are ound based on the results o an

audit, the next one will be perormed ater a minimum

o ve years

Low risk on an as-needed basis, but not more than

once every ve years

The criteria or assigning an audited entity to a certain

risk group are specied in the legislation.

Eective rom 2010 in Belarus is the principle o good

aith towards the audited entity. In particular, i there

is an ambiguous or unclear provision o the law,

decisions should be made in avor o the audited entity.

The legislation provides or a moratorium on audits

or two years ater the establishment o an entity (or

representative oces o oreign entities in Belarus).

However, despite these restrictions, there is a high risk

o the tax authorities perorming an unscheduled audit:

I the controlling/supervisory authority has inormation

(including that obtained rom a state authority,

a oreign state, another entity or an individual) giving

evidence o a violation o legislation being/having been

committed or o any threatening or inficted damage

Liquidation o the entity

Cross-audit o another legal entity

Where the tax authorities have inormation to suggest

that a business entity has not been conducting businessactivities or 12 consecutive months and has not

provided the tax authorities with a reason or this

To conrm the validity o setting-o or reunding

to the audited entity VAT that was excessively accrued

and charged on the sales o goods (work or services),

property rights



Audits will be perormed or a period not exceeding

three calendar years prior to the year the audit takes

place. However, please note that this restriction does

not apply to audits o compliance with budget and

tax legislation; audits perormed by order o the

President o Belarus, the Presidium o the Council

o Ministers o Belarus, the Chairman o the State

Control Committee and his/her deputies, or the General

Prosecutor and his/her deputies; and audits perormed

as part o supervision over banking activities, including

on a consolidated basis.

According to Belarusian legislation, the duration o a

tax audit should not exceed 30 business days (although

an extension is possible). However, in practice, the

duration o a tax audit usually does not exceed 10

calendar days.

Inormation about scheduled audits can be ound

on the website o the State Control Committee

o Belarus www.kgk.gov.by

Oences, crimes and penalties

Administrative liabilities

The eective Belarusian Code o Administrative Oenses

(hereinater, the Administrative Code) sets out the

sanctions that may be imposed on taxpayers who

have broken the law. Typical violations committed

by taxpayers are listed below.

Late registration with the tax authorities is subject

to a ne o up to the equivalent o USD 58, or both

individuals and legal entities.

I a legal entity or an individual entrepreneur operates

without registering with the tax authorities, that legal

entity is subject to a ne o 20% o the income rom the

activities carried out while unregistered, but no less than

USD 815. An individual entrepreneur is subject to a ne

o up to USD 318.

Late notication o the opening or closure o bank

accounts with a delay o more than ve days. Any

account activity will entail a ne or individual

exceeding USD 233. In the case o a legal entity, this

ne will be USD 116, and will be increased by USD 116

or each ull or incomplete month o delay but will not

exceed USD 815.

Late ling o a tax return entails a ne o 10% o the

tax due on the return or both individual entrepreneurs

and legal entities, but not less than a ne o USD 32 and

USD 159, respectively.

Non-payment or partial payment o taxes within the

term determined by the legislation, results in a ne

o 20% o the unpaid tax or both legal entities and

individuals, but not less than USD 120 and USD 25,

respectively.

A tax agents ailure to withhold taxes entails a ne

o 20% o the tax due or individual entrepreneurs and

legal entities, but not less than USD 25 and USD 120,

respectively. The penalty can be increased up to USD

725 in cases o willul violation.

Late payment o tax is subject to a daily late payment

ne o 1/360 o the National Banks renancing

rate and, eective rom 15 September 2010, a ne

o 0.0292% per day applies.

Fines imposed or non-payment/non-withholding

o taxes may not be applied to taxpayers/tax agents who

have paid/withheld the ull amount o taxes due at the

beginning o the audit perormed by the tax authorities.

Criminal liabilityIn addition to tax and administrative nes and penalties,

Article 243 o the Criminal Code, On Tax Evasion,

provides or three years imprisonment or ordinary tax

evasion and three to seven years imprisonment or tax

evasion causing extensive damage to the state budget.

Because o the personal liability that may arise or tax

violations, good tax planning and careul compliance are

essential or achieving success.


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Types o business presence

Belarusian legislation provides or a number o dierent

legal orms through which businesses may operate.

A brie description o each o these legal orms has been

set out below.

The most common orms o conducting business

in Belarus or oreign companies are:

Representative oces

Legal entities

Registration requirements

Belarusian legislation requires that a oreign legal

entity registers its presence with the tax authorities i it

conducts or intends to conduct any activities in Belarus.

Representative ofces

Historically, representative oces (ROs) are established

in order to act as the eyes and ears o a oreign legal

entity (FLE), and do not lead to a taxable presence or

the FLE in Belarus. Currently ROs may be both taxable

(i the RO perorms the unctions o a permanent

establishment it qualies as a PE) and non-taxable.

The Belarusian Civil Code envisages the activities o an

RO as representing the interests o an FLE in Belarus

and perorming other unctions that do not contradict

Belarusian legislation.

According to the Belarus Tax Code, a PE is deemed

to exist where there is a separate subdivision

or oce through which a oreign entity carries out

entrepreneurial and other activities in Belarus, including

the ollowing:A place where products are produced or sold

A place where goods or property rights are sold, work

carried out or other services or activities are provided

An entity or individual that carries out activities

on behal o and/or or the benet o a oreign entity

and/or has and exercises the authority o the oreign

entity to conclude contracts or to agree upon essential

terms and conditions

Thereore, ROs are only taxable i they carry out

commercial or other similar activities in Belarus,

including negotiating and concluding contracts.

An FLE is not deemed to have created a PE i a

Belarusian legal entity or individual carries out activities

on behal o the FLE in question in the ordinary course

o its business activities.

Taxation o a commercial RO is very similar to that

o an ordinary Belarusian legal entity, with a ew minor

distinctions.

Opening an RO

The Belarusian Ministry o Foreign Aairs will issue

a permit to open an RO on the basis o the documents

provided (an application orm, copies o statutory

documents, etc.). The RO operates on the basis

o regulations approved by the head company, and

the head o the RO acts on the basis o a power

o attorney issued by the head company. The power

o attorney must be issued and legalized (or apostillized)

in accordance with established procedures.

The state duty to open a RO is equal to 65 basic

amounts (approximately USD 750) or one year.

According to Belarusian legislation, a RO must register

with the tax authorities, keep accounting records and

pay taxes in accordance with established procedures.



Types o legal entities

The three most common types o legal entities under

the Belarusian Civil Code are joint stock companies,

limited liability companies and unitary enterprises. These

are regulated by the law On business entities and the

Civil Code, respectively. The establishment o banks and

insurance companies is regulated by separate legislative

acts.

Joint-stock companies

Joint-stock companies (JSCs) are dened as companies

whose capital is divided into a denite number

o shares. A JSC may be either open or closed, and

is deemed open i its shares are distributed to the

general public without permission rom other

shareholders. A JSC is deemed closed i the distribution

o its shares requires the consent o other shareholders,

and/or shares are distributed only to certain categories

o individuals. Both types o JSCs may issue privileged

shares o up to 25% o the statutory capital.

Open joint-stock company (Otkrytoe Aktsyonernoye

Obshchestvo, OAO)

An open jointstock-company (OAO) allows or

an unlimited number o shareholders. Subject

to disclosure requirements, an OAO is the only orm

o legal entity whose shares may be openly traded. The

minimum charter capital should be equal to 400 basic

amounts (approximately USD 4,600.)

Closed joint-stock company (Zakrytoe

Aktsyonernoye Obshchestvo, ZAO)

The most common type o JSC is a closed joint-stockcompany (ZAO). Shareholders enjoy preemption rights

to any shares oered or sale by a retiring shareholder.

There is no obligation to publish the accounts o a ZAO,

and shares are only distributed among its ounders

or within another predetermined group o individuals.

A ZAO may not hold an open subscription o shares

or an unlimited group o people. The minimum

charter capital should be equal to 100 basic amounts

(approximately USD 1,150).

Limited Liability Company (Obshchestvo

s Ogranichennoi Otvetstvennostyu, OOO)

An LLC/OOO is dened as a company, whose capital

is divided into ownership interests (units), the amount

o which is determined by the articles o association.

The number o members o an LLC/OOO should not

exceed 50.There is no established minimum amount

o charter capital.

An OOO (along with a unitary enterprise) is the most

fexible type o company. Units are not shares, and they

all outside the scope o Belarusian securities law. One

drawback o an OOO or minority participants is that

any participant has the right to withdraw rom the

company and is entitled to require the other participants

to purchase or redeem their units at a pro-rata value.

Unitary enterprise (UE)

A unitary enterprise is dened as a commercial

organization that has no ownership rights to the assets

transerred to the company by the owner o these

assets. This essentially means that the company is not

the owner o its property. A unitary enterprise may have

only one ounder.

Instead, the ounder o the company remains the owner

o the assets, which may not be divided into shares.

There is no established minimum amount o charter

capital. The simple management structure o this type

o entity oten makes it the vehicle o choice or oreign

investors.


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Formation requirements or companies with oreign

investments

According to the Belarusian Investment Code, the

minimum share capital that should be invested by a

oreign investor as the authorized share capital o a

company with oreign investments should be not less

than the equivalent o USD 20,000.

I one wishes to establish a joint venture with

a Belarusian investor, the minimum amount o the

statutory share capital should be more than USD

20,000. For example, a oreign investor could contribute

USD 20,000 and a Belarusian investor could contribute

USD 1,000 as their respective initial investments thereby

meeting the minimum requirements. Please note that

a oreign investor may contribute less than USD 20,000,

but the established company will not be regarded

as a company with oreign investments and, as such,

will not be able to enjoy certain privileges determined

by Belarusian legislation.

Under the existing law, in-kind contributions as wel l

as cash may be classied as capital contributions.

Registration procedure or a legal entity

Eective rom 1 February 2009, an application-based

principle o registration is applicable in Belarus.

Furthermore, the requirement or a minimum amount

o charter capital was abolished or all legal entities,

except or ZAO, OAO and companies with oreign

investments. The registration procedure includes the

ollowing stages:

State registration (including tax registration, registration

with the State Social Funds, the State Statistical Board,

etc.)

Stamp or seal production

Opening bank accounts

The registration authorities should decide whether

or not to register a legal entity on the day the

documents are submitted

Five days are now needed to obtain all o the

documents necessary or tax registration, registration

with the State Social Funds, Belgosstrakh, etc. Thus, the

whole process usually takes about 7 to 10 days. Joint-

stock companies are required to register their share issue

with the State Securities Commission and this increases

the time required or registration.



National taxes

1. Proft tax

1.1. General inormation

Prot tax is levied on gross prot, which is determined

by adding the ollowing sums:

Prot rom the sale o goods (work or services) and

property rights

Income rom non-sales operations, including share

premium (minus the deductible expenses incurred

in connection with these operations)

The prot or loss rom the sale o goods (work

or services) or property rights (except or xed

or intangible assets) is dened as the dierence between

the receipts rom their sale, less sales taxes and duties

paid rom the receipts, and the deductible expenses

associated with the production and sale o goods (work

or services) or property rights.

The prot or loss rom the sale o xed or intangible

assets is dened as the dierence between the receipts

rom the sale o the xed or intangible assets, less

taxes and duties payable rom the receipts, and the

depreciated cost o the xed or intangible assets, as well

as the cost o the xed or intangible assets sold.

Non-sales income is oset by non-sales expenses and

then included into taxable prot. Non-sales income

includes, among other things, the ollowing:

Income rom participation in other organizations,

including dividends received rom oreign entities,

income rom the sale o shares and prot rom theliquidation o an investee

Positive exchange dierences

Income rom previous years recognized in the current

tax year

Fines, penalties and interest received or breaking

contractual obligations, and compensation or losses

recognized by the debtor or payable by the debtor

under a court ruling

Income rom granting the right to use intellectual

property i it is not the payers main activity

Interest on loans and deposits

Property (work or services) or property rights, received

ree o charge

Non-deductible expenses

There are some expenses that are related to business

activities but are deducted or prot tax purposes only

within the deductible limits determined by legislation.

These expenses include business trip expenses and

expenses associated with payments o energy resources.

Most expenses are deducted in ull or tax purposes,

including the costs o consulting, marketing, inormation

services, advertising and payroll expenses.

Expenses not related to commercial activities are not

deductible with regard to calculating taxable income.

The amount o prot (income) tax paid in a oreign state

may be oset against the amount o prot tax paid

to the Belarusian government, irrespective o whether

or not this oset is provided or by a relevant double

tax treaty. In order to receive the said oset, the

payer is required to submit a certicate conrming the

payment o tax in the oreign state.

1.2. Payers

According to the General Part o the Tax Code, the

ollowing types o organizations pay Belarusian prot

tax:





Branches, ROs and other separate sub-divisions o legal

entities, which have their own separate balance sheetsand bank accounts, carry out the tax obligations

o these legal entities.

1.3. Tax base

The tax base or prot tax is determined as taxable

income expressed in monetary terms.

Taxation o businessesin Belarus


16/3616

1.4. Tax benefts

The tax prot is reduced by tax benets which are

as ollows:

a -The amount o prot expended on capital investment

used or production purposes and or housing

construction, including repayments o bank credits

obtained and used or these purposes, as well as the

loans o non-residents o the Republic o Belarus taken

out under Belarusian legislation. The maximum amount

o this benet is limited to 50% o the gross prot

amount;

b -The amount o prot received rom operations

with state securities (short-term and long-term bonds,

promissory notes), as well as bonds issued by legal

entities who are Belarusian tax residents between 1 April

2008 and 1 January 2013

c -The amount o prot expended on donations

to enterprises, institutions and other organizations

involved in public health, public education, social

welare, culture and sports, which are registered with

and unded by the state up to a maximum o 5% o the

tax prot

Enterprises in which disabled individuals make up more

than 50% o the total workorce are exempt rom prot

tax.

1.5. Tax rate

The tax rate applied to the majority o taxable income

o organizations is 24%. A 12% rate is applied

to dividends and to income rom the sale o shares

in the charter capital (interest or stocks) o the entities

in Belarus or to any part thereo.

1.6. Tax period

The tax period or prot tax is a calendar year. Taxpayers

should submit a tax return to the tax authorities once

a year, by the 20th o March in the year ollowing the

previous tax period. Tax has to be paid in advance

by 22 March, 22 June, 22 September and 22 December

in 2011 and (eective rom 2012) by 22 April, 22 July

and 22 October in the current tax period and by 22

January o the year ollowing the previous tax period.

1.7 Loss carry-orward

The net operating loss that is accumulated at the end

o a year cannot be used to oset taxable income or

the ollowing year. Loss carry-orward rules are not

applicable in Belarus.

2. Value-added tax

2.1. General inormation

Value-added tax (VAT) is charged or the supply

o the majority o goods, services and property rights

in Belarus, and on most imports into Belarus.

2.2. VAT payers

VAT payers are as ollows:


Foreign and international organizations acting via

a permanent establishment in Belarus and registered

with the Belarusian tax authorities


Trust managers with respect to sales turnover arising

in connection with the management o the trust

property on behal o the trustees and/or beneciaries.

Individual entrepreneurs whose turnover or theprevious three months exceeds the equivalent o EUR

40,000, or who voluntarily elect to pay VAT

Entities and individuals regarded as taxpayers

in relation to the handling o goods through Belarusian

customs in compliance with Belarusian legislation and

international treaties o the Republic o Belarus that

orm part o the international treaty ramework o the

Customs Union.

There are no special provisions or VAT registration

in Belarus. A company may only be registered as a

taxpayer with regard to all taxes.

The Deloitte network has

a worldwide database with

tax inormation covering

more than 185 countries.



2.3. Turnover that is not subject to VAT taxation or is

exempt rom VAT

In general, the ollowing transactions are not subject

to VAT:

The supply o goods or services in Belarus or ocial

and personal use by diplomatic and/or administrative

and technical personnel rom oreign diplomatic

representative oces

Property contributions rom the legal entitys ounders

or participants to its charter und

Compensated and gratuitous transers o goods

or property rights by one owner

Property write-o due to orce majeure

Transer o property due to gratuitous use

Supply o goods placed under the re-export customs

procedure

Cost o work or services purchased or paid or by a

companys own employees

Major VAT-exempt activities include:

Commission ees or insurance brokers rom insurance

companies or brokerage services

Sale o securities (including initial oerings made

in accordance with legislative requirements), orward

and uture contracts, options and other concurrent

nancial instruments rom the derivatives market

Rendering medical services; the sale o certain

pharmaceuticals and medical equipment

Transers o industrial property rights

Housing and communal services provided to individuals

Communication services provided to individuals

Services provided by banks and non-banking nancial

institutions

Insurance (co-insurance, reinsurance) services

2.4. Rates

VAT is levied at the ollowing rates:

0% on goods exported to Customs Union member

states, including goods exported on the basis o lease

agreements/contracts, loan agreements and contracts

or the production o goods, loading, shipment and

transshipment, and other similar services directly

related to the sale o exported goods. 0% is also levied

on exported transportation services, exported work

or services related to the production o goods using raw

materials supplied by a customer, maintenance work

or services, modernization, the re-equipment o aircrat

and their engines, railway vehicle units or services

perormed or oreign companies or individuals. .

A rate o 0.5% is applied to the importation

o diamonds and other precious stones or production

purposes (international activity number 7102, 7103)

rom countries which are Customs Union members.

10% on the supply o goods produced through plant

growing (excluding fowers and decorative plants),

animal breeding (excluding animals used in ur

production), shery and honey bee production, and

on the importation and/or supply o oodstus and

goods or children in Belarus, in accordance with a list

determined by the President

20% on other goods and services not listed above

Moreover, the law establishes rates o 9.09% and

16.67% to be applied to goods sold at regulated retail

prices. I penalties are imposed on buyers or customers

or the violation o contractual terms these penalties

include VAT at the above rates.


18/3618

2.5. Tax base

Companies calculate their VAT base as the sale

price o goods, including excise, i applicable. For

commissioners and agents, the tax base is based

on commission or ee income. A shipping companys

VAT base is the amount o shipping ees in accordance

with a shipping contract. I a contractor sells

construction work perormed by subcontractors, the

VAT base or the contractor is the cost o the work

carried out by the contractor without subcontractor

costs. For imports, the tax base is the customs value plus

customs duty and excise where applicable.

I goods are sold at regulated retail prices that include

VAT, the VAT base will be the dierence between the

sale and acquisition price o these goods. Both the

sale price and acquisition price should include VAT. The

VAT base or the sale o securities, reusable packaging

and health resort vouchers, as well as imported

vehicles included in a list approved by the President,

is determined in a similar way.

The ree-o-charge transer o goods (provision

o services or execution o work) is also subject

to VAT, except or non-taxable transers. The tax base

is determined as the cost price o the goods (work

or services) in question, or as the acquisition price in the

case o a ree-o-charge transer o acquired goods.

The VAT base or goods imported into the territory

o the Republic o Belarus is the total o their customs

value and the applicable customs and excise duties (or

goods that are subject to excise duties). I processedgoods are exported rom the customs territory, the VAT

base is determined as the cost o their processing.

2.6. VAT output, VAT input and oset rules

The invoice method o calculating VAT liabilities

is applied in Belarus. The VAT liability o a taxpayer

is calculated as the product o the tax base and the

tax rate. VAT payable to the authorities is determined

as the dierence between VAT calculated by taxpayers

and charged to customers (output VAT) and VAT

paid to suppliers o goods (work or services) (VAT

invoiced to taxpayers or input VAT), which is related

to production/sales activities, or other VAT-able

transactions.

I input VAT exceeds output VAT, the payer is not obliged

to pay VAT, and the dierence is carried over, without

penalty, and is either deducted rom the tax liability

in the next period, or reunded to the payer.

Input VAT on purchased business supplies is generally

recoverable when the supplies are received, or when

customs VAT is paid and accounted or in the book

accounts. Nevertheless, legal entities that operate on a

cash basis (i.e. whose prot is accounted or according

to the accounting policy when both delivery and

payment have taken place) can only oset previously

paid VAT.

VAT is recoverable on the basis o primary documents

(customs declarations, waybills, delivery/acceptance

certicates) that indicate VAT invoiced by suppliers and

to be paid to them.

Organizations that do not carry out any entrepreneurial

activities in Belarus should include input VAT amounts

into the cost o purchased goods (work, services and

property rights).

I the purchased goods (work, services or property

rights) are used in production and/or i tax-exempt

goods (work, services or property rights) are sold, the

VAT paid upon the purchase should be included into the

taxpayers deductible expenses.

One o two VAT oset methods may be used

by taxpayers in their accounting policy: the separate

accounting method or the VAT-able supply ratiomethod.

Starting rom 2011, taxpayers are allowed to oset VAT

paid on xed and intangible assets in the previous tax

period, in the current tax period. These amounts are

to be oset in equal portions o one twelth in every

reporting period (i a calendar month is recognized

as the reporting period) or one quarter (i a calendar

quarter is recognized as the reporting period). However,

VAT rom previous tax periods may be oset in ull.



2.7. Import VAT

VAT is collected by the customs authorities when goods

are imported into the customs territory o the Republic

o Belarus. VAT on goods imported into Belarus rom

Customs Union member states is collected by the

Belarusian tax authorities. Depending on the type

o goods imported, VAT is applied at a rate o either

10% or 20%.

Certain goods may be exempt rom import VAT. These

include, among other things, goods and cash registered

as oreign aid, goods or ocial use by oreign

diplomatic representatives (or or personal use by their

diplomatic and/or administrative and technical

personnel) who are non-residents, equipment or

research activities, and certain vehicles, in accordance

with the Presidents List.

2.8. Payments and fling tax returns

The standard VAT period is a calendar year; the VAT

reporting period is a calendar month or a calendar

quarter at the taxpayers own choice. A VAT return

is due by the 20th o the month ollowing the reporting

period, and the tax is calculated based on the amount

o tax accumulated rom the beginning o the year.

VAT is payable by the 22nd o the month ollowing the

reporting period.

International cooperation with

other Deloitte practices

ensures a direct and efcienttranser o knowledge.


20/3620

3. Excise Tax

3.1. Taxpayers

The ollowing entities are excise tax payers:





Individual entrepreneurs

In certain cases individuals upon importing goods into

Belarus.

Branches, representative oces and other separate

sub-divisions o legal entities with their own separate

balance sheets and a current, settlement or other bank

account must calculate and ulll the tax liabilities

o legal entities.

3.2. Objects o taxation

Excise tax is imposed on both imports and the

manuacture o a specic list o goods, the primary

categories o which include:

Alcohol, spirits, beer, cider, tobacco

Oil or diesel and/or petrol engines

Petrol, diesel

Automobiles and minibuses

Fixed rates are applied to these goods.

Exports o excisable Belarusian goods are exempt rom

excise tax.

Excise duty is accrued on a monthly basis on the saleamount o excisable products which are manuactured

and/or imported, and used or companies own

purposes (e.g. or testing and sampling purposes).

Excise tax is payable on a monthly basis by the 22nd day

o the ollowing month.

Certain excisable goods may only be sold in Belarus

i they bear a special excise stamp. Certain alcohol and

tobacco products require an advance payment in the

orm o an excise stamp, which must be attached

to each item prior to its sale. The stamps are purchased

rom the tax authorities on a prepayment basis at the

cost o BYR 100 (approx. USD 0.033) per stamp or

alcohol products and BYR 40 (approx. USD 0.013) per

stamp or tobacco products.

4. Property tax

4.1. Taxpayers

The ollowing entities pay property tax:



other than legal entities


Individuals


sub-divisions o Belarusian legal entities which have their

own separate balance sheets and have bank accounts

that were opened by the legal entity and whose ocials

have the right to manage these bank accounts, must

calculate the amount o taxes, duties and/or ees on the

taxable items and discharge the tax liabilities o the legal

entities in question.

Please note that a legal entity is considered to be

a taxpayer i it is acting as a lessee under a lease

contract and i the contract in question is signed

by a oreign legal entity that does not act through

a permanent establishment in Belarus, or with a oreign

individual.


The tax is imposed on the residual cost o production

and non-production buildings that are owned or are

in the possession o the taxpayer, and on the cost

o building work and construction in progress, within

the timerames set out in the design and estimate

documentation.

4.3. Tax rate

The annual property tax rate is 1%: or legal entities and

0.1% or individuals. A 2% rate is applied to the cost

o projects o above-standard construction in progress

i the organization is building the real estate itsel.



4.4. Tax allowances

The tax is not imposed on:

Buildings and acilities designated or social or cultural

use, as well as those which orm part o the

housing portolios o local Councils o Deputies and

other organizations (excluding those that belong

to organizations based in residential buildings containing

a number o fats, where these buildings do not house

individual residents)

Buildings and structures that have been temporarily put

out o operation

Buildings and structures designed to protect the

environment and/or improve environmental conditions,

as specied by the President

General-purpose roads including roads with drains,

pavements, articial constructions, and street urniture

to organize road trac and associated inrastructure

Agricultural buildings and structures used to grow crops,

or bee-keeping or or animal husbandry

New buildings and structures belonging to an

organization that were rst put into service within a year

o being commissioned.

4.5. Payments

Tax is calculated annually or legal entities, subject to the

existence o buildings and structures, as o 1 January

o the respective calendar year. This is based on the

residual cost and the cost o buildings and structures

o above-standard construction in progress, and the

approved annual tax rates. Tax or individuals is set

according to an assessment o the buildings by the

President.

Legal entities should pay tax on a quarterly basis and

in our equal installments by the 22nd day o the rst

month o each quarter.

The amount o real estate tax paid to a oreign state

may be oset against the amount o real estate tax paid

to the Belarusian government, irrespective o whether

such an oset is provided or by a relevant double tax

treaty or not. In order to receive this oset, taxpayers

are required to submit a certicate conrming the

payment o tax to the oreign state in question.


22/3622

5. Environmental tax and mining tax

5.1. Taxpayers

The ollowing entities are payers o environmental and

mining tax:

Legal entities

Owners o production waste

Individual entrepreneurs


The ollowing items are subject to this type o taxation:

Volume o air pollution emissions

Volume o sewage water and environmental pollutants

Volume o production waste subject to storage and

underground disposal

Volume o material harmul to the ozone layer (including

that contained in products) imported into Belarusian

territory

Volume o extracted or processed natural resources

Ozone-destroying materials imported into Belarusian

territory are taxable at the rate o BYR 23,000

(approximately USD 7) per kilogram o harmul ozone

material (including that which is contained in products.)

The environmental tax and natural resource extraction/

processing tax rates are determined pursuant to the

Appendices to the Special Part o the Tax Code o the

Republic o Belarus.

The co-ecient is determined or environmental tax

rates in amounts varying rom 0.006 to 0.9, depending

on the type o waste. The limits (volumes) o permissible

environmental pollutants and extracted/processed

natural resources are subject to restrictions. I the

set limit is exceeded, or the extraction (procession)o natural resources is carried out beyond the limits

(volumes) determined by the eective legislation, tax

o ten times the determined rate must be paid.

6. Land tax

Both Belarusian and oreign legal entities and individuals

that have been granted lietime ownership rights

to plots o land in Belarus with hereditary succession,

or permanent or temporary use o the land, or to whom

land has been transerred into private ownership, are

deemed to be payers o land tax.

The object o land tax is a plot o land that is owned,

held or used by the taxpayer.

The amount o land tax on agricultural land

is determined based on the cadastral value o the

plot o land and is established as an annual xed

payment per hectare o the plot o land; i the cadastral

value is not established, the agricultural land tax rate

is calculated in the amount o the average rate o the

land tax determined or every region.

The amount o land tax on populated land is calculated

in percentage terms, based on the cadastral value o the

plot o land, depending on the use o the land and

subject to the category o the respective locality.

The amount paid on leased plots o land is specied

in the relevant contract.



7. Simplifed system o taxation

Both legal entities and individuals may qualiy or

the simplied system o taxation within a particular

calendar year, provided that they meet the criteria below

throughout the year:

Total headcount is not in excess o 100 employees

on average

Total gross revenue is not in excess o BYR 3.09015

billion

The simplied system o taxation replaces the ollowing

taxes and payments: corporate income tax, property tax,

land tax, environmental tax, natural resource extraction/

processing tax, services tax, inrastructure development

duty and value-added tax, where total headcount does

not exceed 15 employees and total revenue does notexceed BYR 1.1772 billion.

The tax base is the gross revenue, comprising the

proceeds rom goods (work and services) property rights

and non-operating revenue over the reporting period.

Subject to certain conditions, retail enterprises and

public catering companies are entitled to use taxable

income as their tax base.

The tax rates are as ollows:

8% or non-VAT payers (both legal entities and

individual entrepreneurs)

6% or VAT payers (both legal entities and individual

entrepreneurs)

3% applicable to revenue rom goods sold and services

rendered outside o Belarus

15% or retail enterprises and public catering companies

(both legal entities and individual entrepreneurs)

Deloitte tax consulting

services cover all o the tax

matters that aect companies

and individuals, irrespectiveo their size or sphere

o activity.


24/3624

Other taxes

1. Oshore duty

1.1. Oshore duty payers

According to the General Part o the Tax Code, the

ollowing types o organizations pay Belarusian oshore

duty:






sub-divisions o legal entities with their own separate

balance sheets and a current or other bank account.


The ollowing transactions are subject to oshore duty:

Transers o monetary unds by a resident to a

non-resident in an oshore zone or to another

company, to which an oshore resident has obligations,

or into an oshore bank account

Non-cash settlements with any non-resident

Transers o property rights and/or obligations between

parties, one o whom is a resident o the Republic

o Belarus and the other a non-resident registered in an

oshore zone

Oshore duty does not apply to the ollowing

transactions:

Transers o monetary unds by the state authorities

in order to discharge Belarusian obligations

to international organizations, in accordance with

international or intergovernmental agreements

Transers o monetary unds rom Belarusian banks

by VISA and MasterCard transactions to non-residents

or owners o international payment systems who are

registered in oshore zones or who have bank accounts

in these zones.

Transers o monetary unds to repay credit, loans and

interest

Transers o monetary unds in accordance with

contracts to transport goods by sea

1.3. Tax rate

The oshore duty rate is 15% o the transerred sum.



Belarusian-sourced incomeo oreign companies

Elimination o double taxation

The Republic o Belarus has signed more than 60

international double tax treaties providing or a lower

tax rate or ull tax exemption. Where there is no valid

double tax treaty, Belarusian tax legislation permits

prot tax and real estate tax paid in oreign countries

to be oset against the payment o the relevant taxes

in Belarus.

In order to take advantage o a lower tax rate or tax

exemption in accordance with an international treaty,

prior to payment the oreign company must provide

the Belarusian tax agent with conrmation o their

tax residency, signed by a competent authority in the

oreign country. The Belarusian tax authorities may

also require a Belarusian or a Russian translation o the

conrmation.

I this conrmation is not provided prior to payment,

and the oreign company suers a withholding rate

greater than that stipulated by the agreement, it is

possible to apply or a reund within three years

o making the payment. In theory, upon receiving the

proper documentation, the Belarusian tax authorities

should reund any excess tax no later than one month

ater the application date.

Special provisions allow oreign banks and airlines

to bypass the residence conrmation requirements,

provided that they have a copy o an extract rom the

international publications The Bankers Almanac,

The International Bank Identier Code, or The Airline

Coding Directory.


26/3626

Withholding tax

Withholding tax on the income o oreign legal entities

that do not operate in the Republic o Belarus through

permanent establishments is compulsory - particularly

on the ollowing types o Belarusian-sourced income or

oreign entities that are resident in Belarus:

Dividends 12%

Income rom the disposal o shares in charter capital,

stocks and/or interest o legal entities located in Belarus

12%

Royalties (including payments or leased property)

15%

Licenses 15%

Interest 10%

Freight (charges or international shipping and

orwarding services, except or international

transportation by sea) 6%

Other income - 15%

For tax purposes, royalties include payments or the

use o or granting the right to use property and rights

to copyrighted items, including literary and scientic

works, computer programs and other copyrighted work.

This also extends to objects o allied rights, including the

creation o soundtracks to programs by broadcasting

companies, as well as payments or any license, patent,

trademark, service mark, business name, drawing, utility

model, diagram, ormula, industrial standard or process.

Equally included are payments or any inormation

regarding industrial, commercial or scientic research

(including know-how), payments or the use o property

in Belarus or or granting the right to use such

property. Excluded are payments made or international

(continental and intercontinental) channels and leasing

telecommunications networks.

Other types o income include, among other things,

income derived rom training services, inormation,

management, advertisement, insurance and audit

services, and income derived rom the disposal o real

estate located in Belarus.



Taxation o individuals

Personal income tax in Belarus

Payers

According to the law, individuals are regarded

as personal income tax payers.

Belarusian citizens and oreign nationals who are tax

residents are taxed on their worldwide income paid

in cash or in kind, and on any material benets received

during a calendar year.

Individuals who are not considered to be tax residents

o Belarus (the duration o their stay in Belarus is 183

days or less) pay tax on their Belarusian-sourced income

only.

The actual duration o stay is the period o time

an individual stays in Belarus, and is not interrupted

by trips abroad or medical treatment or business trips.

Payroll taxes

Payroll taxes resulting rom employment or civil

contracts include the ollowing:

Personal income tax (PIT)

Payments to the Social Security Fund

Payments to RUP Belgosstrakh

The employer should calculate, withhold and remit PIT

to the government on behal o the employee.

Payments to the Social Security Fund are made by the

employer (34%) and the employee (1% o their salary,

including other remuneration paid by the employer).

Payments to Belgosstrakh are made by the employer

at rates varying rom 0.1% to 2.4% o the gross payroll.

Personal income tax rates

A fat rate o 12% is applied in Belarus both to tax

residents and to those not regarded as tax residents.

Other rates apply to specic income:

9% - Income received by individuals rom residents

o the HT Park under labor contracts (except or support

personnel who service and guard premises, rooms

or plots o land)

15% - Income rom entrepreneurial and private notary

activities

Taxable income

Taxable income is dened as any and all income,

irrespective o the source, less allowable tax deductions

(standard, social, property and proessional).

There are limited types o income that are tax-exempt

in Belarus:

Pecuniary aid paid by the employer that is the taxpayers

principal place o employment is exempt rom tax at the

rate o 150 basic amounts (approximately USD 1,700)

during the year, or 10 basic amounts (approximately

USD 110) during the year i paid by other employers

Monetary unds received rom individuals who are not

individual entrepreneurs totaling 500 basic amounts

(approximately USD 5,650) rom any source within the

tax period as a result o git and immovable property

under a rental contract

Income received by way o inheritance

Income rom the state securities o Belarus and bonds

issued by banks

Income in the orm o interest received on bankaccounts and deposits with a bank situated in Belarus

It is the responsibility o the individual to declare his/her

income and to pay PIT to the authorities.


28/3628

Deloitte tax consulting

services cover all o the tax

matters that aect companies

and individuals, irrespective

o their size or sphere

o activity.

Tax returns

Individuals must calculate their PIT liability and le

a tax return/declaration in the prescribed ormat i the

ollowing applies:

(a) Income has been received rom other individuals who

are not approved tax agents

(b) Income has been received by the tax resident rom

sources based abroad

(c) Other income withholding o PIT which is not

charged by the tax agents; and income received

in certain other cases.

Filing procedures

An individual who must le a tax return/declaration

is required to do so no later than 1 March o the

ollowing tax year. The tax return should be submitted

to the local tax authorities. In the tax return, the

taxpayer must report all income received in the taxable

year and speciy every item, source, amount and date.

Social and property deductions may be made either

by the employer (during the tax period) or by the tax

authorities (at the time o ling the tax return). Taxable

income is taxed at the rates listed above.

Belarusian tax liabilities are payable by 15 May o the

year ollowing the tax year. Any overpaid tax may

be reimbursed (although this is dicult and time-

consuming in practice) or credited against any uture

tax liability, but only with regard to amounts overpaid

during the previous three years.

Elimination o double taxation

Belarus has signed a number o bilateral double tax

treaties, which, under certain conditions, enable

individuals to avoid taxation o the same income under

the tax systems o two or more countries by way

o application o tax exemption in one o the countries

or through a reduction in the tax rate.

Thereore, according to national legislation, personal

income taxes paid in oreign countries may be credited

against Belarusian PIT, provided that the documents

conrming the amount o taxes paid into oreign

budgets are shown to the Belarusian authorities.

In other words, a taxpayer may avoid double taxation

without needing to ollow the application procedure

or international tax treaties. Proper allowance must

be made or the act that the amounts o tax paid

into a oreign budget cannot exceed the amount

o tax calculated rom the income in accordance with

Belarusian legislation.

Penalties

Individuals who ail to submit tax returns on time, pay

taxes, or who avoid the payment o taxes, are subject

to administrative and criminal liabilities.



Customs issues

Import duties

Eective rom 1 January 2010, the rates o import

customs duties are set in accordance with the Unied

Customs Tari o the Customs Union o the Republic

o Belarus, the Republic o Kazakhstan and the Russian

Federation. The most commonly applied customs duties

rates are ad valorem, and are calculated as a percentage

o the customs value o the goods. In addition, customs

duties may be set at xed rates per unit o measurement

o goods (specic rates). A combination o both

methods is also allowed (combined rates).

Import customs duty rates depend on the classication

o the imported goods under the Unied Trade

Classication o Foreign Economic Activities o the

Customs Union. However, customs duty rates may

vary depending on the country o origin o the

goods and on certain other actors. For example,

with respect to goods originating rom developing

countries (Customs Union users o the Unied System

o Customs Preerences), the import customs duty rate

applied is 75% o the usual import customs duty rate

in accordance with the Unied Customs Tari. The list

o countries using the Unied System o Customs Union

Tari Preerences and the list o goods originating

rom developing or least-developed countries that are

granted tari preerences when imported into member

countries unied customs territory are determined

by the Customs Union Commission.

On 1 July 2010, the unied customs territory with Russia

and Kazakhstan was created. A unied economic area

is planned or the middle o 2011.

Export duties

A limited number o goods, e.g. uels and marine

products, are subject to export duties upon their

exportation outside the borders o the Eurasian

Economic Community.

Special customs procedures

The Customs Code o the Customs Union provides or

17 customs procedures.

A number o special customs procedures grant either ull

or partial relie rom customs duties. For example, ull

relie may be granted or goods that are imported into

the Customs Territory or processing and subsequent

re-export (Processing in the Customs Territory). Import

duties are not payable unless the conditions o this

procedure are violated.

A similar procedure may also be applied to goods that

are exported rom the Customs Territory or processing

and subsequently re-imported. Under this procedure

(Processing outside o the Customs Territory), relie

is granted or goods placed under the procedure o issue

or domestic consumption. Import duties are, thereore,

calculated based only on the value which has been

added to the goods outside the Customs Territory (i.e.

the processing element.)

Goods may also be registered under the temporary

import (allowance) procedure.

As the name suggests, this allows or either ull or partial

relie rom import duties and taxes or goods that are

temporarily imported into the territory o the Customs

Union. Henceorth, non-tari regulation measures

do not apply to these goods.

Certain goods may not, however, be eligible to be

listed under the temporary import procedure. Once thespecied time limit (typically two years) has expired,

the goods must either be exported rom the customs

territory or placed under a dierent customs procedure.


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Currency control issues

Currency control

Both residents and non-residents o Belarus are

permitted to have oreign currency and ruble accounts

with authorized banks.

The Currency Control Law separates transactions

involving oreign currency and securities in oreign

currency into two groups:

Current currency transactions, which have ewer

restrictions

Currency transactions associated with the movement

o capital, which may require permission rom the

National Bank o Belarus (the NBRB)

The eective legislation provides a closed list

o current currency transactions:

Settlements related to exported and/or imported goods

(except or monetary unds, securities and real estate),

proprietary inormation, exclusive rights to the results

o intellectual activity, work or services

Settlements related to leasing out property or acquiring

property under lease

Transer and receipt o dividends and other investment

income

Non-trading operations:

- Transers and receipt o unds or the payment

o wages and salaries, stipends, pensions, alimony,

state benets, allowances and compensation, as well

as disbursements or damages

- Transers o unds or the purpose o reimbursing

expenses in connection with employee business trips

abroad

- Transers and receipt o inherited unds and undsreceived rom selling inherited property

- Transers and receipt o unds related to the death

o citizens, including transportation and other burial

expenses

- Receipt o monetary compensation or the victims

o political repression, as well as members o their

amilies and their heirs

- Payment o unds in order to maintain Belarusian

diplomatic missions and consular institutions abroad

- Receipt o unds by judicial and arbitration

authorities, including notaries, investigation and other

law enorcement agencies in connection with the

above authorities

- Receipt o unds in connection with court rulings and

other procedural documents

- Transer o membership ees to public, religious

or international organizations as well as other

obligatory payments or participation in international

organizations

- Transer and receipt o Belarusian rubles, oreign

currency, transer and receipt o other oreign

currencies under git contracts, including donations,

in compliance with Belarusian legislation

- Residents taking currency valuables received rom

non-residents into custody

- Payment o taxes and other compulsory payments

envisaged by the legislation o Belarus or other

countries

- Transers o unds or duties and other payments

to patent authorities

- Transers and receipt o unds in connection with

participating in conerences, seminars, sporting

events, exhibitions and airs

- Repayment o unds transerred due to an error

- Other transactions listed by the President o Belarus

or, upon the Presidents initiative, by the Belarusian

Council o Ministers, including those envisagedby international treaties ratied by Belarus



Currency transactions associated with the

movement o capital

Currency transactions associated with the movement

o capital include currency transactions between

residents and non-residents, other than those classied

as current currency transactions.

Residents may perorm currency transactions associated

with the movement o capital on the basis o the

National Banks permits, except as otherwise expressly

stipulated by legislation. The transactions below require

permits:

Acquisition o shares to be distributed among the

ounders, and acquisition o a share in the statutory

und or in a non-residents property

Acquisition o securities rom non-residents, as issued

by non-residents, except or the acquisition o shares

to be distributed among the ounders

Acquisition o property outside o Belarus and treated

as real estate under Belarusian legislation

Placing money in a non-residential bank account

or transerring money to non-residents (other than

to non-resident banks) under a trust management

contract

Extension o loans

Settlements relating to the liabilities o subjects/

residents o currency transactions (other than banks)

to non-residents under suretyship or guarantee

agreements concluded between them

Receipt o credit and/or loans or a period o over 180

days, providing that at least one o the conditions below

is met:

- The interest rate or a credit and/or a loan exceedsthe limit set by the Board o Directors o the National

Bank (14% per annum or currency transactions

in USD and EUR and the renancing rate o the

relevant central or national bank, eective as o the

date o receiving a credit and/or loan by the currency

transaction subject-resident, increased by 5%)

- The interest rate or a credit and/or loan in case

o a delay in the repayment o a credit and/or a loan

(in the amount o the increase in the interest or the

delay in repayment o the credit and/or loan) and the

penalty amount in total exceed 0.01% or each day

o delay (3.65% per annum). To work out this rate, the

penalty amount should be expressed as a percentage

i it is expressed as a xed amount in the contract.

- Apart rom the interest rate or a credit and/

or a loan, the agreement between a currency

transaction subject or resident (except or a bank)

and a non-resident (except or a non-resident bank)

provides or additional payments, except or the

interest rate on delays in repaying a credit and/or

a loan (in the amount o the increase in the interest

or the delay in repayment o a credit and/or loan

as well as payments related to paying the penalty)

- A credit and/or a loan is used to ulll a residents/

borrowers monetary obligations not through their

bank account

- Obligations related to the repayment o a credit

and/or a loan are not ullled through the borrowers

account

- A creditor or a lender is registered with the state

register o the country (in the country) in which

a preerential tax regime applies and/or which

permits the non-disclosure o inormation on nancial

transactions (oshore zones)

Settlements relating to the obligations o a currency

transaction subject/resident (except or a bank) and to a

non-resident based on a duly concluded agreement

on the assignment o a debt or claim


32/3632

The law On currency regulation and currency control

contains a list o currency transactions related to the

movement o capital that do not require permission

rom the National Bank.

Banks and customs authorities are responsible or

controlling the correct and timely payment o costs

and the receipt o goods or services under export and

import contracts, regardless o the currency used in the

settlement.

Obligatory conversion o export revenue

Belarusian legal entities are currently required to convert

30% o their oreign currency export revenue into

Belarusian rubles by selling through authorized banks

within seven working days o receipt.

Purchase o oreign currency

Currency transaction subjects may purchase oreign

currency, on the ollowing conditions:

Currency transaction subjects/residents may only

purchase oreign currency on the exchange market

via a designated bank (i.e. the bank with which

the residents in question have opened an account

specically intended or the receipt o oreign currency

purchased on the Belarusian internal exchange market,

or any other account whatsoever specically opened

in order to make bank transer transactions related

to purchasing, selling or converting oreign currency)

Currency transaction subjects/residents may purchase

oreign currency on the o-exchange market:

- rom a designated bank (i.e. the bank with which

the residents in question have opened an account

specically intended or the receipt o oreign currency

purchased on the Belarusian internal exchange

market, or any other account whatsoever specically

opened in order to make bank transer transactions

related to purchasing, selling or converting oreign

currency); or

- rom a selling bank.

As there is instability in the Belarusian currency

market, the National Bank may introduce limitations

on purchases o oreign currency or the settlement

o import contracts.

Deloitte oers a wide range

o services and is able

to deploy experienced

proessionals with extensive

knowledge and specializedskills to work or clients

across a wide range o sectors.



Payments or imports

Please note that the NBRB currently prohibits

advance payments under oreign economic contracts

involving import transactions. This prohibition applies

to Belarusian rubles as well as to oreign currency.

An exception is made or importers acquiring raw

materials under the terms o an advance payment

or the urther production o export-oriented goods.

Eective rom 15 January 2009, these importers are only

entitled to make advance payments using their own

export proceeds in oreign currency. Advance payments

may also be made rom loans.

In other cases, advance payments made to a

non-resident rom a Belarusian bank account may only

be perormed i the importer has permission rom the

NBRB. In order to obtain permission rom the NBRB,

an importer should submit an application orm rom

the Belarusian Council o Ministers and a copy o the

oreign trade contract. The NBRB is entitled to request

additional documents related to the transaction.

Enorcement o currency regulations

Belarusian legislation provides or penalties or any

breach o currency regulations, both or the individual

carrying out the transaction and the Belarusian bank

that, as a currency control agent, is obliged to ensure

compliance with legislation. The range o penalties

includes the ollowing:

Penalties up to a maximum o 100% o the value o the

transaction in question

Invalidation o any licenses or permits previously

issued by the currency control authorities to both the

participant and the bank involved

Currency control measures include the ollowing:

Settlements relating to transactions between Belarusian

residents (including companies with oreign investments)

may only be conducted in Belarusian rubles, with a ew

exceptions.

Settlements between residents and non-residents

o the Republic o Belarus may be perormed in a reely

convertible oreign currency or in Belarusian rubles.

There are also strict rules relating to oreign currency

held in cash when the use o cash is possible.

Furthermore, there are limitations on the amount

o oreign currency that a company may keep in its cash

oce.

Anti-money laundering legislation provides or additional

measures to be taken by the authorities in order

to prevent illegal operations. These measures include the

registration o suspicious transactions, communication

o inormation to the tax authorities and other special

bodies, inspections and audits o suspicious transactions

by

Dttl Belarus-Business-guide en 2011

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