Taxation in Belarus
Belarus has a complex taxation system that is fundamental to the country’s economic strategy, striking a balance between generating revenue and promoting growth and investment. This system includes various taxes, each regulated by intricate rules and rates. It is crucial for businesses, investors, and individuals to have a thorough understanding of this environment for effective financial management and adherence to regulations.
Taxation system
Belarus’s taxation system is structured to be in harmony with national fiscal strategies as well as international commitments, providing an organized yet flexible framework for taxes. This system likely incorporates a mix of flat rates, progressive scales, and specific exemptions, mirroring the nation’s economic goals and social aspirations. Grasping the complexities of these tax systems is crucial for maximizing financial results, maintaining compliance, and taking advantage of the opportunities permitted within the legal structure.
Capital gains tax
In Belarus, capital gains are treated as part of regular income and are taxed based on individual or corporate tax rates, which vary according to the taxpayer category. The standard personal income tax rate for individuals is 13%, but capital gains from selling stocks and shares are subject to an 18% tax rate. When an individual sells real estate, such as a house, apartment, or land, there is no tax owed if it’s the first sale made within a five-year timeframe. However, any second or additional sales of the same type of property within that five years are fully taxable. Likewise, selling a vehicle is exempt from tax for the first sale within a calendar year, while later sales are taxed like regular income.
Corporate taxation
In Belarus, the standard corporate income tax rate is set at 18%. Taxable income encompasses gross profit, dividends, and additional revenue. Certain companies, such as those manufacturing laser optical equipment and high-tech firms listed in the High Technology Park (HTP) directory, benefit from a special reduced rate of 10%. Residents of Free Economic Zones enjoy a five-year tax exemption, followed by a 50% reduced rate for qualifying activities. There are provisions for tax deductions on acquisition costs of buildings (10%) and other fixed assets (20), subject to specific criteria. Taxpayers have the option to carry forward losses for a period of up to 10 years, although there are limitations on losses incurred outside of Belarus.
Personal income taxation
In Belarus, personal income tax (PIT) is imposed at a flat rate of 12% for the majority of income types. Certain circumstances warrant special rates, including a 9% rate for earnings from individuals working in the High Technology Park (HTP) with labor agreements or participating in high-tech projects. Furthermore, a 15% rate is applicable to earnings derived from private notary and private advocacy services. The PIT tax base encompasses employment income, business income, income from securities, and other personal earnings. The system permits various deductions, including those for dependents and low-income individuals, to lower the taxable income. The tax year corresponds with the calendar year, and residents are assessed taxes on their global income.
Dividend taxation
In Belarus, dividend income is taxed at a flat rate of 12%. This rate applies to both individual and corporate recipients of dividends. Typically, the company that distributes the dividends withholds the tax at the source, so the taxpayer does not have to make an additional tax payment for this income. This withholding tax is definitive, and individuals are not required to report the dividends on their annual tax return. The tax is applicable to dividends from both local and international sources, although certain tax treaty stipulations may permit lower rates or exemptions in specific situations.
Property tax
In Belarus, property tax is imposed on the ownership or utilization of immovable assets like land and buildings. The typical tax rate for individuals is set at 0.1% of the property’s assessed value. For businesses, the standard rate is usually 1% of the depreciated value of structures, including parking facilities. However, for incomplete construction projects that exceed the designated timeframes, a higher rate of 2% is applied. Local governments have the authority to modify tax rates within defined boundaries for particular groups of taxpayers, such as offering reductions for projects deemed socially significant.
Inheritance taxation
Belarus does not impose a distinct inheritance tax. Nonetheless, any capital gains resulting from inheritance might be liable for income tax in certain instances. Typically, heirs are not required to pay income tax on inherited assets, but specific inherited rights, including art, copyright, licenses, and trademarks, could incur income tax obligations. Additionally, the legal system in Belarus includes provisions for safeguarding and managing inheritances through notaries. The administration of the estate ensures that assets are appropriately managed and transferred to heirs.
International taxation
International taxation in Belarus involves different tax rates and regulations based on the nature of the income or transaction. Foreign entities with a permanent establishment in Belarus are liable for an 18% corporate tax rate on corporate income, which aligns with the rate for domestic companies. Non-residents receiving dividends generally face a 12% withholding tax, unless a relevant tax treaty provides for a reduction. Foreign businesses operating in Belarus must adhere to specific international tax regulations, which include how taxable income is calculated, transfer pricing regulations, and rules concerning thin capitalization. Additionally, Belarus has established several double tax treaties to mitigate the risk of double taxation on international income.
Cryptocurrency taxation
In Belarus, cryptocurrency transactions are governed by Decree No. 8 ‘On the Development of Digital Economy,’ which has legalized activities like mining, trading, and issuing tokens. Companies within the High-Tech Park (HTP) enjoy a beneficial tax system, only needing to pay a 1% turnover tax on crypto-related operations until January 1, 2025. Outside the HTP, regular tax rates are enforced, including an 18% corporate income tax. Generally, individuals are exempt from income tax on cryptocurrency transactions such as mining and buying and selling crypto assets for fiat currency until 2025. Belarus is working to establish a favorable environment for blockchain and cryptocurrency enterprises.
VAT system
In Belarus, the VAT system encompasses the majority of goods and services, including imports. The typical VAT rate is set at 20%, while a lower rate of 10% is designated for specific food items, children’s products, and agricultural goods. Goods and services that are exported are subject to a 0% VAT rate. VAT is also imposed on imported goods and services, calculated based on the customs value of the imports. Businesses are obligated to collect and remit VAT on their sales and can deduct input VAT on their purchases. Certain industries have unique regulations, and taxpayers are required to report VAT either monthly or quarterly, based on their preference.
Our taxation solutions
In a tax environment that is constantly changing, expert advice is essential. Our firm provides a range of specialized tax solutions customized to address the varied requirements of individuals, corporations, and investors in Belarus. Our services aim to maneuver through the intricate tax regulations, reduce liabilities, and guarantee complete compliance with regulations.
- Personal tax advisory: Tailored advice to minimize tax exposure while ensuring legal compliance.
- Corporate tax strategy: Comprehensive planning to maximize tax efficiency and leverage incentives.
- Capital gains optimization: Expert guidance to manage and reduce taxes on capital gains.
- International tax planning: Advanced strategies for optimizing cross-border tax outcomes.
- Cryptocurrency advisory: Compliant tax strategies for both individual and corporate crypto activities.
- Inheritance and estate planning: Strategic planning for efficient wealth transfer and reduced inheritance taxes.
- VAT compliance: Full-service support for VAT registration, reporting, and optimization.
Book a consultation
In the intricate realm of taxation, obtaining professional guidance can greatly impact your outcomes. Reach out to us today to arrange a consultation with our team of tax specialists. We will collaborate with you to create a customized tax strategy that meets your goals while ensuring complete adherence to the regulatory framework in Belarus.
Disclaimer
Tax laws and regulations are continually evolving and can differ depending on personal situations. The information presented here is intended for general guidance and may not represent the latest updates. It is strongly suggested to seek advice from a qualified tax professional for thorough and current insights tailored to your circumstances.