Foreign tax credit
If a Belarusian legal entity derives income subject to taxation abroad, the tax paid abroad may be deducted from the calculated CIT. In accordance with the Tax Code, the amount deducted from CIT may not exceed that part of the tax calculated in Belarus that is attributed to the income received in a foreign jurisdiction. If there is a valid DTT with the country in question, the provisions of the treaty regarding avoidance of double taxation shall apply.
Special tax treatments
The Belarusian Tax Code provides a more favourable tax environment for particular resident legal entities. Special tax treatments are available for certain taxpayers depending on their location, amount of revenue, number of individuals employed, types of business, etc. Special tax treatments include, but are not limited to, the following:
- Simplified taxation.
- Tax on farmers and other producers of agricultural products.
- Tax on gambling business.
- Tax on lotteries.
- Tax on electronic interactive games.
- Single tax on imputed income, with regard to companies conducting maintenance and servicing of cars and other motor vehicles.
- Free economic zones.
In cases where activities fulfil the criteria of a special tax treatment, the taxpayer is not permitted to use the general taxation regime with regard to income deriving from those activities, with certain exceptions. Concerning simplified taxation, tax on farmers, and taxation of a free economic zone resident, the taxpayer is entitled to determine whether to apply such treatment or not.
Incentive for employing disabled persons
Entities employing disabled persons, if their average number equals or exceeds 50% of the average number of employees for the reporting period, are exempt from CIT due on taxable profit derived from production activity.
Exemption of CIT on profits derived from various activities
- Profits of entities engaged in baby food production are exempt from CIT.
- Profits derived by insurance companies from investments of insurance reserves under the contracts of voluntary life insurance are exempt from CIT.
- Entities engaged in manufacturing of prosthetic and orthopaedic devices (including dental prostheses), provision of rehabilitation, and disability services are exempt from CIT due on profits derived from sales of these items.
Incentives for the production of innovative, high-technology goods and laser-optical equipment
Income derived from selling goods of one's own production included in the list of innovative goods approved by the Council of Ministers is exempt from CIT.
Income from selling goods of one's own production that are included in the list of high-technology goods approved by the Council of Ministers is exempt from CIT, provided revenue from selling of such goods comprises at least 50% of total revenue of a taxpayer. If revenue from selling high-technology goods is less than 50% of total revenue, such income is taxable at a reduced CIT rate of 10%.
Free economic zones
Entities that are registered in Belarusian free economic zones are exempt from CIT as follows. Those who are registered as free economic zone residents till 1 January 2012 are entitled to apply CIT exemption during the period from 1 January 2017 till 31 December 2021, even if they used their right for a five-years CIT exemption before with regard to profits received from export of goods, works, and services of their own production. Free economic zone residents who are registered during the period from 1 January 2012 are entitled to apply CIT exemption with regard to profits received from own production during ten calendar years starting from the date when the profits were declared in relation to goods, works, and services of their own production that are exported. After expiration of the terms above, the CIT rate is 9%.
Land plots within the borders of free economic zones are exempt from land tax during the period from 1 January 2017 till 1 January 2022, regardless of the land plots designed purpose.
Moreover, residents of free economic zones are granted, under certain conditions, a relief from real estate tax on buildings and constructions located in free economic zones.
High Technologies Park (HTP)
The following tax privileges are granted to residents of the HTP:
- Full exemption from CIT.
- Full exemption from VAT when selling goods, works, services, or property rights in the territory of Belarus.
- Full exemption from VAT and customs duties when importing certain goods for the purpose of using them in activities connected with high technology.
- No land tax is applicable to land plots situated in the HTP on which a construction project is being carried out; however, this exemption will last no longer than three years.
- Full exemption from real estate tax on buildings and installations, including late constructions in progress but excluding the objects rented, that are situated in the territory of the HTP.
- 9% PIT for employees of residents of the HTP.
- No SICs on the part of employees’ income exceeding the average salary in Belarus.
Taxation of holding companies
A holding company is a group of companies where one company of the group is considered to be a management company by virtue of influence over decisions passed by other group companies (i.e. the subsidiaries) as a result of holding 25% and more of their ordinary stock (shares).
A management company is entitled to create a centralised fund by means of contributions of subsidiaries from net income thereof. Subject to certain conditions, monetary means received by a management company (Belarusian tax resident) from subsidiaries (Belarusian tax residents) for the purpose of a centralised fund formation as well as monetary means transferred from a centralised fund to subsidiaries are not considered taxable income for CIT purposes.
Free of charge transfer of assets within a qualifying holding group is exempted from CIT in Belarus, conditional on certain terms, in particular:
- Participants of a holding group receiving or transferring assets are not (i) participating in another holding; (ii) registered as residents of free economic zones, the Special Tourist and Recreational Park ‘Avgustovski Canal’, HTP, or China-Belarusian Industrial Park; (iii) professional participants of the securities market and do not manufacture alcoholic and tobacco products; (iv) banks, non-bank financial intermediaries, or insurance companies; and (iv) engaged in realtor activity, lottery activity, activity on organising and conducting electronic interactive games, or activity in the sphere of gambling business.
- Received assets are used to manufacture products, to perform works, and to render services.