Value-added tax (VAT)
All taxpayers shall recognise revenue for VAT purposes on an accrual basis. The only exception is set out for taxpayers using the simplified taxation system and keeping simplified tax records without accounting records. Such taxpayers shall recognise revenue on a cash basis.
In general, local supplies of goods, works, and services made by a taxpayer performing its economic activities in Belarus, as well as the importation of goods, are subject to VAT.
Place of supply rules established by the Tax Code of Belarus should be followed to determine whether goods, works, and services are supplied locally, and therefore subject to tax in Belarus.
When a non-resident company, which does not have a PE registered in Belarus, sells goods or provides works and services that are considered local supplies according to the place of supply rules, the VAT due on such supplies is paid by the purchaser registered with the local tax authorities from its own funds. This VAT can be deducted against output VAT, if any, or refunded by the tax authorities in the established order.
The standard VAT rate is 20%, whereas the preferential rate is 10%. All telecommunication services are subject to VAT at the rate of 25%.
The 10% preferential rate applies on:
- local supplies of crop products (excluding floriculture, cultivation of ornamental plants), wild-growing, beekeeping, livestock (except for fur production), and fisheries locally produced, as well as import of such products (both from the Eurasian Economic Union (EAEU) countries and third countries), and
- import and/or local supplies of certain food products and goods for children.
Exemptions with credit (zero-rated) include, but are not limited to, the following:
- Supply of goods exported outside of Belarus.
- Provision of works and services involving maintenance, loading, reloading, and any other similar works and services related to supply of exported goods.
- Transportation and any directly linked ancillary services related to the export or import of goods, including transit forwarding, as well as exported works for goods processing.
- Bunker fuel for fuelling aircraft of foreign companies carrying out international flights and/or international carriages by air.
- Works and services related to repair (modernisation, conversion) of aircraft (including engines and railway vehicles) and provided to non-resident companies or individuals.
- Works (services) on repair and technical maintenance of Belarusian non-resident’s vehicles performed by authorised service centres.
For VAT offset purposes, an electronic VAT invoice should be issued by all VAT payers in accordance with the legislative requirements.
In order to apply zero-rated VAT on goods carried out from Belarus, VAT payers must hold supporting documents as evidence that these goods were actually exported from Belarus to another country. Application of zero-rated VAT on respective works and services must be supported by the appropriate documents, which have to be provided to the local tax authorities where the taxpayer is registered for tax purposes.
Exemptions without credit include, but are not limited to, the following:
- Supply of material rights for certain industrial property objects (e.g. inventions, utility models, industrial designs, breeding achievements, integrated circuits, know-how).
- Supply of securities, derivatives, and other similar financial instruments; certain limitations apply.
- Provision of all types of insurance and re-insurance (co-insurance) services rendered by insurance and re-insurance agents.
- Supply of medicines, medical equipment, instruments, medical products, as well as drugs, devices, equipment, under certain conditions.
- Personal or public health care services, under certain conditions.
- Social services supplied by institutions for children and young people care, nursing homes for the elderly and/or by care/guardianship institutions for disabled or by other non-profit entities.
- Supply of services in the field of culture and art, under certain conditions.
- Public services (services of barbers, baths, and showers; laundry and dry cleaning services; watch repairing; manufacturing and repair of clothing and footwear; repair and maintenance of household appliances; repair of personal and household goods; photography).
- Services provided by religious organisations, provided these services correspond to the purposes set out in their canons, statutes, and other documents.
- Funeral services, maintenance of the graves, tombstones, fences, and other objects associated with burial, as well as works on their production, under certain conditions.
- Supply of postage stamps, postcards, and envelopes marked, excise and control (identification) stamps for marking of goods at their nominal value, and stamps that can be used as a confirmation of fees and charges payable in accordance with the legislation.
- Supplies of jewels, as well as related services, under certain conditions.
- Retail trade of goods in duty-free shops, under certain conditions.
- Research and development (R&D), design, and technological works and services, under certain conditions.
- Education and training services.
- Financial services supplied by the banks, under certain conditions.
- Goods and equipment imported into Belarus, under certain conditions.
- Remuneration of lessee and its investments expenditures not compensated in the value object of leasing on transfer of the object of a financial leasing arrangement to individuals (lessees) if the relevant leasing contracts contain a provision on the buyout of the leasing object.
In order to apply exemptions, taxpayers should ensure that the services and goods supplied meet the appropriate VAT exemption requirements.
VAT returns shall be submitted on either a monthly or quarterly basis, by the 20th day of the month following the reporting period. VAT shall be paid on either a monthly or quarterly basis, no later than the 22nd day of the month following the reporting period.
VAT on e-services
On 1 January 2018, Belarus introduced VAT on e-services provided to Belarusian individuals (including individual entrepreneurs) by foreign companies.
The e-services falling within the scope of e-services VAT cover licensing of software (including computer games), databases, electronic books, information materials, graphic images, music, audio-visual works via the Internet; advertising services via Internet; placing sales offers via the Internet; automated data search, selection, sorting, and provision to users via the Internet; providing domain names and hosting services, etc.
The e-services VAT base is the amount of funds received by a foreign company from providing e-services to Belarusian individuals. The e-services VAT rate is 20%.
E-services VAT is a special tax that is paid by e-services VAT registered foreign companies directly to the Belarusian tax authorities. Such companies shall be registered for e-services VAT in the quarter when they started to provide e-services to Belarusian individuals.
Submission of e-services VAT returns/e-services VAT information forms (when applicable), as well as e-services VAT payment, shall be carried out quarterly.
Belarus, Kazakhstan, and Russia have continued their integration process, and, since 1 January 2015, have launched the Eurasian Economic Union on the basis of Agreement on the EAEU, which is considered as a further step of integration after the Customs Union of these countries. Armenia and Kyrgyzstan entered into the EAEU on 2 January 2015 and on 12 August 2015, respectively. The unified trade regulations and the EAEU Customs Code, entered into force on 1 January 2018, have become a part of the EAEU legislation. Within the EAEU, single markets of goods, services, labour, and capital, with certain limitations, are introduced.
Indirect taxation issues within the EAEU shall be administered in compliance with the Agreement on the EAEU and Annex 18 to the Agreement that is the ‘Protocol on the procedure of collection of indirect taxes and the mechanism of control over their payment for export and import of goods, works, services’.
The following charges are considered customs payments:
- Import duties.
- Export duties.
- Special, anti-dumping, and countervailing duties.
- VAT and excise taxes due upon importation of goods.
- Fees for customs processing/services.
Rates of import duties as well as descriptions of goods subject to them are established by the Single Nomenclature of Goods of the EAEU (HS Nomenclature) and Single Customs Tariff of the EAEU.
Export duties are not levied on exported goods, with the following exceptions: certain soft oil; light and medium distillates; fuels and gasoline; wasted petroleum products; propane, butane, ethylene, propylene, and other liquefied gases; petroleum coke; petroleum bitumen, benzol, toluene, xylenes, potash fertilisers; rape or colza seeds; timber; rough skin; and tannage. According to the EAEU regulations, rates of export duties in regards to mentioned goods shall be established by the Belarusian government and shall be equal to the rates applied in Russia.
Import and export duties are calculated on the customs value of the goods. The EAEU customs valuation legislation is based on rules and principles of the World Trade Organization (WTO). There are six methods of the customs valuation applied in sequential order:
- The transaction value method (Method 1).
- The method on the transaction value of identical goods (Method 2).
- The method on the transaction value of similar goods (Method 3).
- The deductive value method (Method 4).
- The computed value method (Method 5).
- The fallback method (Method 6).
The main customs valuation method is the transaction value method. Generally, the following components are considered when calculating the customs value of imported goods:
- Contract price of the goods.
- Rebates and discounts provided by a supplier, under certain conditions.
- Transportation-related expenses to the border of the Customs Union (i.e. Belarusian border).
- Insurance premiums.
- Cost of containers and other packaging.
- Part of direct or indirect income to be derived by the seller from future resale, transfer, or other use of imported goods.
- Licence and other similar payments.
Special, anti-dumping, and countervailing duties could be imposed as a measure to protect economic interests of Belarus.
The tax base for VAT calculation due on imported goods includes the total amount of customs value, import duty, and excise tax paid, if any.
Generally, the taxpayer is required to pay customs duties before the customs clearance of the appropriate goods; however, under certain conditions, a taxpayer may be provided with an extension of payment deadlines or allowed to pay only part of customs duties. It is also possible to pay customs duties in advance.
Electronic customs declaration is currently available for customs clearance of the goods declared in customs procedures of temporary exports, re-exports (exports) as well as re-imports, free circulation (imports), and free customs zones.
Rules on determination of moment of actual supply of excisable goods are adjusted as consistent with the obligation of taxpayers to record revenue on an accrual basis.
The goods that are subject to excise tax and the tax rates applicable in 2020 are represented in the table below.
|Description of tax object||Taxable item||Tax rate per taxable item (BYN*)|
|Rectified ethyl alcohol and alcoholic drinks, including beer and wine||1 litre of 100% alcohol, or 1 litre of complete product||From 0 to 21.62|
|Tobacco (excluding raw tobacco), including cigarettes, cigars, cigarillos, and smoking tobacco||1 kg of pipe and smoking tobacco, or 1 cigar or 1,000 cigarettes, cigarillos||From 6.19 to 122.60|
|Energetic products (petrol, kerosene, diesel and biodiesel, gasoline, fuel, marine fuel, oils for diesel engines and engines with a carburettor and an injector)||1 ton||From 0 to 481.08|
|Liquefied hydro carbonated gas and compressed natural gas used as motor fuel||1,000 litres and 1,000 cbm||From 28.71 to 108.42|
|Diesel and/or carburettor (jet) oil||1 ton||386.35|
* Belarusian rubles
The tax rate depends on the type of goods. Rates of excise taxes are stipulated by the Appendix to the Tax Code of Belarus. The rates of excise tax are increased over the course of the year by establishing different rates effective during each following half a year proportionally to inflation processes in Belarus.
The excise tax rate for cigarettes with filters is defined on the basis of (i) maximum retail price per pack of cigarettes of certain brands declared by a taxpayer and (ii) reference of certain brands of cigarettes to one of three price groups defined in the Tax Code.
Excise taxes paid on the purchasing/importation of excisable goods to be used in manufacturing of goods or provision of works and services in Belarus are considered as deductible for CIT purposes, with certain exceptions.
Excise taxes are reported and paid on a monthly basis. The tax return should be submitted no later than the 20th day of the month following the reporting period, while the payment should be made no later than the 22nd day of the month following the reporting period.
Real estate tax (immovable property tax)
Real estate tax is levied at the annual rate of 1% on the residual value of buildings, installations, including separated premises, and car-parking spaces owned by legal entities.
On 1 January 2019, new rates of real estate tax for new capital contractions are introduced. The rates will be applied as follows: 0.2% during the second year (12 months) from putting capital constructions into operation; 0.4% during the third year (12 months) from putting capital constructions into operation; 0.6% during the fourth year (12 months) from putting capital constructions into operation; and 0.8% during the fifth year (12 months) from putting capital constructions into operation.
The local administrative bodies can increase (decrease) the rates of real estate tax by 2 times.
The amount of tax is deductible for CIT purposes.
The tax reporting obligation must be fulfilled by a taxpayer not later than 20 March of the reporting year. Taxpayers are entitled to choose whether to pay tax on a quarterly basis by equal parts, not later than the 22nd day of the third month of each quarter, or once a year, not later than 22 March of a current tax period (tax year).
Belarusian and foreign entities are subject to land tax collected by the local tax authorities with respect to land that they own or use in Belarus.
The tax base depends on plot location and plot type and is determined pursuant to cadastral value of a land plot or its size. The tax base is established in BYN per hectare.
The Tax Code provides for a number of land plot categories that are exempt from, or not subject to, land tax in Belarus.
The tax is payable on an annual basis at the rates established by the Appendices to the Tax Code of Belarus. Tax rates for agricultural plots vary from BYN 0.05 to BYN 13.71 per hectare.
Local state authorities are authorised to increase (decrease) the land tax rates by a coefficient that should not exceed 2.
Land tax is deductible for CIT purposes.
Land tax is reported annually, no later than 20 February of the current reporting year.
Taxpayers are entitled to choose whether to pay tax on a quarterly basis, by equal parts not later than the 22nd day of the second month of each quarter, or once a year, not later than 22 February of a current year on plots other that agricultural and not later than 15 April with regard to agricultural plots.
State dues are payable by legal entities that apply to the state institutions for the issuance of documents having legal force or other deeds, bring the cases before the courts for consideration, use bills of exchange in their activities, etc.
State dues include the following payments and duties:
- State fees (payable on suits, applications, appeals, and other documents that are submitted to or claimed from the courts or prosecution authorities, payable on applications for state registration of a legal entity, notary public services, real estate registration services, etc.).
- Patent fees (payable for registration and use of intellectual property).
- Stamp fees (payable on activities with bills of exchange).
- Consular fees (payable on the activities of state consular and diplomatic departments performed under the request of any applicant).
State dues for state registration of a business entity are not charged if registration-related documents are filed with the registration authorities electronically via the official web-portal. State dues paid are refunded if proceedings in the economic court are terminated due to the parties consent to resort to mediation.
Social insurance contributions (SICs) and other similar payments
All payments to employees are subject to SICs at the total rate of 35%. SICs at a rate of 34% (28% pension insurance and 6% social insurance) are paid by an employer and deducted for CIT purposes. SICs at a rate of 1% are withheld from employee's salary and paid by the employer. Please note that starting from 2019 permanent establishments of foreign companies are treated as employers in regard to SICs, therefore they must be registered accordingly and pay SICs to the budget.
In addition to SICs, an employer is liable for payments under mandatory insurance against accidents at work and professional diseases to the state insurance company ‘Belgosstrakh’ on behalf of all its individuals employed. These payments are charged at a flat rate of 0.6%. For employees engaged in certain sectors of the economy, special coefficients of up to 1.5 are applied; consequently, the amount of payments under mandatory insurance against accidents at work and professional diseases could increase.
Such payments as dismissal allowances, compensations for moral damages, legally provided compensations (with some exceptions), insurance premiums payable under certain personal mandatory and voluntary insurance, dividends and interests from participation in legal entities, and others, are exempt from SICs and from mandatory insurance against accidents at work and professional diseases.
An offshore charge is levied upon the following activities of domestic entities:
- Any transfer of funds to an entity registered in an 'offshore jurisdiction', to a third party who is a creditor of that entity in discharge of an obligation before the latter, or to the bank account of an offshore jurisdiction.
- In kind performance of obligation to an offshore entity, with some exceptions.
- Any transfer of material rights and obligations as a result of changes in commitment (cession or transfer of debt) between a domestic entity and an offshore entity.
The following transactions are excluded from the scope of offshore charge:
- Performance of the obligations in kind to a non-resident as a result of transfer of responsibilities due to substitution of parties in an obligation, the parties of which are a resident of Belarus and a non-resident registered in the offshore zone, under the conditions when transfer of monetary funds is not subject to offshore charge.
According to Belarusian laws, an offshore jurisdiction is a territory that is included in the list of offshore territories established by the President, has a preferential tax treatment, and/or does not disclose the information related to financial transactions made by resident entities.
A list of 52 offshore territories has been published. With certain exceptions specified in the law, all payments to offshore companies or their branches for any kind of work or services, commodities, interest on loans, insurance premiums, guarantees, etc. are subject to an offshore charge, which is deductible for CIT purposes.
Tax relief is granted to: (i) repayment of loans, including interests on them, borrowed from entities located in offshore territories, (ii) payments due under international marine cargoes and forwarding services, and (iii) payments made by banks due to the fact of performing banking operations, under certain conditions.
An offshore charge is paid at a 15% rate and is deductible for CIT purposes.
The tax is reported and paid on a monthly basis, no later than the 20th day of the month following the reporting period.
Ecological (environmental) tax
Ecological (environmental) tax is imposed on pollutants discharged into the environment, storage and disposal of industrial wastes, and wastewater discharges.
The amount of tax due is decreased by the amount of disbursed capital investments in renewable energy plants and facilities for removing pollutants.
Emissions of pollutants into the atmospheric air are subject to ecological tax, provided the total volume of emissions regarding all the groups of substances amounts to not less than three tons a year from all sources of emissions.
Emissions of pollutants of the 1st hazard rating and pollutants having no hazard rating are not subject to ecological tax. The tax base of ecological tax is the actual quantity of respective pollutants used/discharged. Tax rates of ecological tax are stipulated by the Tax Code of Belarus.
Since 1 January 2020, a new object of ecological tax has been introduced which is a transit transportation of oil and oil products by main pipelines in Belarus. Tax is payable by companies carrying out such transit and cannot be deductible for CIT purposes.
Ecological tax paid, with certain exceptions, is treated as deductible for CIT purposes.
The tax is reported on a quarterly basis, by the 20th day of the month following the reporting quarter. Taxpayers who pay tax on the basis of established annual limits are entitled to choose whether to pay tax on a quarterly basis, by the 22nd day of the month following the reporting quarter, or once a year, not later than 22 April of a current year. Other legal entities pay the tax on a quarterly basis.
Tax on natural resources
A tax on natural resources is payable on the actual value of extracted natural resources. It depends on the kind and quantity of extracted resources.
The amount of tax on natural resources is fully deducted (regardless of being over the limit of natural resources extraction) for CIT purposes.
In general, the tax is reported and paid on a quarterly basis. If taxpayers calculate the tax on the basis of volumes of extraction specified in documents being the ground of extraction, the tax is reported and paid as follows:
- The initial tax return is submitted to the tax authority not later than 20 April of the reporting year based on the planned volumes of resources to be extracted, and the tax is paid on a quarterly basis.
- The final tax return is submitted not later than 20 February of the year following the reporting year based on the volumes actually extracted, and the additional tax, if any, is paid not later than 22 February of the year following the reporting year. The amounts of tax overpaid as a result are to be offset (refunded) in accordance with the legislation.
Local tax on providers (suppliers)
The local tax on providers is levied on legal entities engaged in gathering/purchasing of wild plants (or parts thereof), mushrooms, and technical and medical raw materials of floral origin for their further industrial processing or resale.
The tax base is the cost of gathered items defined on the basis of procurement (purchasing) prices.
The tax rates do not exceed 5%. Tax on providers is treated as deductible for CIT purposes.
The tax is reported and paid on a quarterly basis.