On 1 January 2019, Belarus elaborated on the 'business purpose' in taxation. Thus, if the main purpose of a business transaction is (i) non/partial payment of taxes and/or (ii) tax offset/refund, then the tax base for such transaction is subject to adjustment based on the results of a tax audit. This means that each transaction should have a clear business purpose and economic contents. Otherwise, the tax consequences of such transaction may be revised by the Belarusian tax authorities. What's especially important is that the 'business purpose' concept may be applied in tax audit starting in 2019. This means that adjustments may touch transactions that took place in 2014 through 2018 (and earlier in some cases).
From 1 January 2019, offset/refund of the overpaid amounts of taxes will be possible within five years from the date of payment.
Tax law introduces the following new criteria for the parties to be recognised interdependent under transfer pricing and thin capitalisation rules:
- Companies owned by shareholders-individuals that are related parties and hold at least 20% of the shares in these companies.
- Companies owned by the same beneficial owner-individual.
Furthermore, since 2019, Belarusian courts are entitled to recognise legal entities/individuals as interdependent parties on other grounds than those established in the Tax Code. This means that the list of criteria has become non-exhaustive.
On 1 January 2019, Belarus had significant changes in transfer pricing rules. The updated transfer pricing rules bring the Belarusian tax legislation in this sphere closer to the approaches adopted within the Organisation for Economic Co-operation and Development (OECD) and applied in many countries, in particular, to the OECD Guidelines on transfer pricing for transnational corporations and tax authorities.