The following income of a non-resident entity in Belarus that is not derived through a PE is deemed to be Belarusian-source income and is subject to WHT at the rates provided:
|Freight charges (including demurrage) and freight-forwarding services (excluding freight charges for marine transportation and forwarding services)||6|
|Interest on any type of debt obligations, including securities||10|
|Dividends and other similar income||12|
|Penalties, fines, and other sanctions received for breach of contractual liabilities||15|
|Income derived from the sale of goods in Belarus under a commission, mandate, or other similar contract.||15|
|Income derived from performing and/or participation in cultural events and shows, as well as from operation of attractions and wild beast shows in Belarus.||15|
|Income derived from sports, entertainment activities, or performers’ activities||15|
|Income derived from innovative, design, and R&D activities, design of technological documentation engineering design, and other similar works and services||15|
|Income from provision of guarantees||15|
|Income from provision of disk space and/or communication channel for placing information on the server and services for its maintenance||15|
|Proceeds from the sale, transfer (with title), or lease of immovable property located in Belarus||15|
|Income derived by a foreign entity from the sale of an enterprise as a complex of assets located in Belarus||15|
|Capital gains (income from the sale of shares/stocks) in local companies||12|
|Income from the sale of securities (except shares)||15|
|Income derived from provision of the range of works and services||15|
In calculation of WHT due on certain types of income, a taxpayer is permitted to deduct related expenses following the rules specified by the Tax Code.
Generally, the tax is withheld and paid to the tax authorities by a local entity, an individual entrepreneur, a branch, a PE of a foreign company, or an individual. When certain types of Belarusian-source income are received under the agreement between two non-resident entities (e.g. capital gains, sale, transfer of title of ownership or lease of immovable property, provision of licences for software, and other copyright objects), a WHT shall be withheld by the foreign entity that is the income payer.
According to Belarus tax regulations, to enjoy DTT benefits for interest/dividends/royalty (apply a decreased rate or an exemption), the income recipient shall be regarded as a beneficial owner in regard to such income. Before 2019, when a foreign company had no contract with the Belarusian resident, but in fact received income (except for dividends) as a beneficial owner, such foreign company was not allowed to apply the decreased rate/exemption.
The updated Tax Code (which entered into force on 1 January 2019) introduces the 'look-through approach' for interest/royalty payments (for dividends, it has been applied previously). Thus, foreign companies, even if they have no direct contractual relations with the Belarusian resident and do not receive any income from it directly but are tax residents in the countries that have DTTs with Belarus, can apply DTT benefits. To support the beneficial owner status in this case, the foreign company has to provide the certificate of its tax residence, as well as copies of the documents that confirm there are obligations between the foreign companies (a beneficial owner and a conduit [intermediary] company) in regard to such income.
Generally, to support beneficial ownership, a foreign company can provide any documentary proof evidencing that the foreign company can dispose of the income without any limitations, as well as documents/information that evidence the foreign company carries out business activity in the country of its tax residence.
Currently, Belarus has 70 DTTs in force with foreign countries. Where a treaty for the avoidance of double taxation with the country in question contradicts the local tax regulations, the treaty provisions prevail.
Reduction of or an exemption from WHT under a DTT may be obtained if a special residence certificate is completed and provided to the tax authorities before the payment is made.
If the payment that is covered by the DTT has already been made and WHT at the local rate was withheld, it is possible to obtain an appropriate refund (reduction) by completing a special claim for a refund. The claim for a refund must be filed with additional documents, such as a residence certificate, copies of the contract, and other documents related to the payment.
The following table indicates WHT rates stipulated in DTTs Belarus is a party to:
|Recipient||WHT (%)||Construction site duration before creation of a PE (months)|
|Dividends (3)||Interest (4)||Royalties|
|Democratic People's Republic of Korea||10||0/10||10||12|
|Egypt, Arab Republic of||15||10||15||12|
|Hong Kong||5||5||3/5 (6)||12|
|Iran, Islamic Republic of||10/15||0/5 (1)||5||12|
|Japan (2)||15||0/10||0/10 (8)||12|
|Korea, Republic of||5/15||0/10 (1)||5||12|
|Kuwait||0/5 (1)||0/5 (1)||10||6|
|Kyrgyz Republic||15||0/10 (1)||15||12|
|Lebanon||7.5||0/5 (1)||5||an aggregated period of more than 9 months in any 12-month period|
|Macedonia, Former Yugoslav Republic of||5/15||10||10||12|
|Malaysia (2)||15||0/15 (1)||10/15 (9)||12 months for construction site; 6 months for assembling object|
|Oman||0/5 (1)||0/5 (1)||10||6|
|Russia||15||0/10 (1)||10||no special provisions in the relevant DTT, local tax legislation provisions should apply|
|Singapore||0/5 (1)||0/5 (1)||5||12|
|Slovakia||10/15||0/10 (1)||5/10 (11)||12|
|South Africa Republic||5/15||0/5/10||5/10||12|
|Sri Lanka||7.5/10||0/10 (1)||10||an aggregated period of more than 183 days in any 12-month period|
|Sweden||5/10||0/5 (1)||3/5/10 (12)||12|
|Switzerland||5/15||0/5/8 (1)||3/5/10 (12)||12|
|United Arab Emirates||5/10||0/5 (1)||5/10 (13)||12|
|United Kingdom of Great Britain and Northern Ireland||5/15||5||5||12|
|United States of America (2)||0 (15)||0 (1)||0||36|
|Venezuela||5/15||0/5 (1)||5/10 (14)||9|
- In general, a 0% tax rate applies to interest payments to the governments of contracting states and to payments guaranteed by the governments of contracting states.
- The DTT with this country is in force since Belarus is a successor of the former USSR.
- In the case of two rates, the lowest rate is applicable with regard to those companies or physical persons who are the beneficial owners of dividends distributed by a company in which they hold 25% or more shares. In the case of three rates, these terms apply to the middle rate whereas application of the lowest rate requires compliance with more strict criteria with regard to participation share and amount of contribution.
- In the case of multiple rates, the lowest rate is applicable with regard to all kinds of loans provided by a government or national bank.
- 3% applies to patents and trademarks; 5% applies to copyrights.
- 3% applies to aircraft; 5% applies to all other royalties.
- 5% applies to equipment; 10% applies to all other royalties.
- 0% applies to copyrights; 10% applies to all other royalties.
- 10% applies to patents, trademarks, and equipment; 15% applies to all other royalties.
- 3% applies to patents and trademarks; 5% applies to equipment; 10% applies to copyrights.
- 5% applies to copyrights; 10% applies to patents and trademarks.
- 3% applies to patents; 5% applies to equipment; 10% applies to all other royalties.
- 5% applies to copyrights; 10% applies to patents and trademarks.
- 5% applies to copyrights; 10% applies to all other royalties.
- Zero tax rate is specified in the table based on the current approach of the Belarusian tax authorities to dividends taxation under the US-Belarus DTT. We would like to note that due to the fact that the provisions of the US-Belarus DTT do not specify directly any exemptions with regard to dividends taxation, the approach of the Belarusian tax authorities may change and 12% WHT local rate can be applied to dividends.
The Belarusian tax law regulates taxation of income derived by partnerships that are taxed in the country of their incorporation by means of taxing partners only. So, if the income is received by the partnership, the DTT applies to the income of each of the partners that provided the Belarusian tax authority with certificates of their tax residence.
If the partners are registered in different jurisdictions, foreign partnership/one of the partners/tax agent in Belarus shall provide to the Belarusian tax authorities the list of partners and an audit report that confirms the income amount received by the partners. There is no such requirement for partnerships with partners registered in the same jurisdiction.