belarus business and investment guide 2012

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    Tax

    Belarus business andinvestment guide

    Tax issues 2012

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    Country prole 6

    Incentives or oreign investors 7

    Tax administration 9

    Types o business presence 12

    Taxation o businesses in Belarus 15

    Belarusian-sourced income o oreign companies 25

    Taxation o individuals 27

    Customs issues 29

    Currency control issues 30

    Your contacts in Deloitte CIS 34

    Contents

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    Introduction

    This Belarus business and investment guide has been

    prepared by Deloitte to provide inormation o interest

    to those considering investing or doing business

    in Belarus. The inormation provided is primarily

    addressed to non-residents o Belarus who may

    be contemplating business activities or investment in the

    country.

    The inormation presented in this publication is correct

    at, and refects the situation as o 1 March 2012.

    The purpose o the booklet is to explain, in broad terms,

    the requirements o local laws aecting the taxation

    and also the establishment and operations o business

    enterprises in Belarus. The inormation provided in the

    ollowing pages is not exhaustive, nor is it intended

    to be so. The reader should be aware that the general

    ramework o the legislation and the detailed regulations

    underpinning it are subject to requent change.

    Thereore, beore making any decisions, urther advice

    should be sought.

    The combination o increased globalization and

    the growing complexity o tax systems in individual

    countries gives rise to many tax exposures. For both

    companies and private individuals, the consequences

    o misjudging the tax and legal situation can be serious.

    As advisors with extensive experience in Belarus and

    abroad, Deloittes role is more than merely identiying

    risks - we also nd solutions.

    Thanks to Deloittes powerul worldwide network,

    we can propose tailor-made solutions that enable

    your organization to reduce risks and take advantage

    o opportunities to optimize your tax position.

    Deloitte tax consulting services cover all o the

    tax matters that aect companies and individuals,

    irrespective o their size or sphere o activity. These

    include ling tax returns, tax planning and assistance

    in tax matters. These consulting services are specically

    designed or each industry or orm o organization.

    Deloitte is a global leader among proessional

    services organizations in terms o the number o its

    tax partners and proessionals. Deloitte oers a wide

    range o services and is able to deploy experienced

    proessionals with extensive knowledge and specialized

    skills to work or clients across a wide range o sectors.

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    4

    Consulting on direct and indirect taxation

    Consultation on various tax issues

    International tax planning and structuring

    Advice on customs and indirect taxes, value-added tax

    and excises according to domestic legislation

    Tax reviews and identication o possible tax

    optimization options

    Tax planning or investment projects

    Development o tax accounting policies and related

    procedures

    Services related to mergers and acquisitions, including

    due diligence

    Outsourcing and tax compliance services

    Accounting and reporting in accordance with Belarusian

    legislation

    Maintenance o bank accounts; bank and cash

    transaction accounting

    Tax accounting and tax reporting

    Outsourcing services related to payroll and related tax

    assessment

    Preparation o statistical reports and their submission

    to the Belarusian statistics authorities

    Services related to IAS accounting and transormation

    Accounting automation, implementation o inormation

    technologies

    Restoration o company accounting

    Tax d ispute resolution

    Tax advice in complicated legal situations

    Pre-trial settlement o tax disputes with the authorities

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    Belarus business and investment guide 5

    Global employer and employee or individual

    solutions

    Assisting individuals in preparing tax returns

    Registration with the tax authorities

    Advice on various issues relating to employment

    in Belarus

    Tax advice on personal income tax and other obligatory

    charges imposed on employees and employers

    Tax advice to individuals on the application o the

    relevant provisions o international double tax treaties

    and on the interpretation o these provisions by the tax

    authorities

    Advice on legislative requirements with regard to oreign

    nationals in Belarus, including obtaining and the

    preparation o documents necessary or their stay and

    work in Belarus

    Tax and other services or banks, insurance and

    other fnancial companies

    Planning and establishment o nancial and holding

    structuresDue diligence and assessment o risks

    Advice on compliance with bank (or insurance company)

    registration and licensing requirements; ollow-up

    advisory assistance in establishing separate bank

    departments

    Advice on the determination o various tax aspects

    o insurance activities, including orming, nancing,

    investing, placing and using insurance reserves, etc.

    Advice on regulatory acts regarding banking activities,

    analysis o internal bank regulations and their

    compliance with the principles and requirements

    o Belarusian legislation

    Advice on tax aspects o loans, securities, oreignexchange and other bank operations

    Consulting support in establishing the banks

    subsidiaries, such as leasing/insurance companies

    Other tax and legal advisory services in accordance with

    the current legislation o Belarus:

    Minimization o the banks exposure to taxation

    (application o international double tax treaties,

    analysis o taxable base and tax calculations)

    Analysis o tax risks and other possible

    consequences o applying the clients business

    structures and assistance in introducing international

    compensation schemes

    International taxation

    Advice on the application o double tax treaties

    International tax planning aimed at improving business

    eciency, reducing operating costs and managing

    economic risks

    Structuring o cross-border investments

    Consultation regarding tax ecient international holding

    structures

    International tax planning presentations, workshops,

    conerences, seminars, etc.

    Assistance in setting up companies in oreign

    jurisdictions

    International cooperation with other Deloitte practices

    ensures a direct and ecient transer o knowledge.

    The Deloitte network has a worldwide database with

    tax inormation covering more than 185 countries.

    The international network o Deloitte tax proessionals

    orms the undamental basis or providing high quality

    consulting in all international tax matters.

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    6

    Country profle

    Currency

    The Belarusian national currency is the Belarusian Ruble

    (BYR). As o 1 March 2012, the National Bank o Belarus

    established the ollowing ocial exchange rates or

    major currencies:

    BYR8,110forUSD1

    BYR10,920forEUR1

    BYR279.50forRUB1

    There are some restrictions on oreign currency

    exchange in Belarus. However, the Belarusian

    government is taking steps towards liberalization o the

    currency market.

    Banking system

    Banks dominate the Belarusian nancial market; as o

    1 January 2012, there were 32 commercial banks

    in Belarus. Most Belarusian banks have oreign investors

    as shareholders, although the state currently has

    a dominant share in the charter capitals o the three

    biggest banks. It plans to decrease the state sharein these banks and to attract oreign investments

    to meet the requirements or an initial public oering

    (IPO). To date, the Belarusian stock market remains

    largely undeveloped.

    Belarus is located in Europe, at the crossroads o both

    west-east and north-south trade routes, and links CIS

    member states with the countries o Western Europe.

    Belarus borders on Poland, Lithuania, Latvia, Russia, and

    Ukraine.

    History and government

    On 8 December 1991, in Viskuli (Brest region), the

    leaders o the USSR ounding republics, i.e. Belarus,

    Russia, and Ukraine, made a decision to eliminate the

    USSR and establish the Commonwealth o Independent

    States (the CIS). Minsk was chosen as the administrative

    center o the CIS, and the Republic o Belarus became

    an independent state. In 1994, a new constitution was

    adopted and the rst president was elected. Belarus is a

    presidential republic. The Parliament is a representative

    and legislative body o the Republic o Belarus and

    consists o two houses: the House o Representatives

    (110 members) and the Council o the Republic (64

    members).

    According to the Constitution, state power in the

    Republic o Belarus is exercised on the basis o the

    separation o legislative, executive, and judicial powers.

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    Belarus business and investment guide 7

    Incentives or oreigninvestors

    High Technology Park (HT Park)

    Belarusian legal entities (including those with 100%

    oreign investment) and ind ividual entrepreneurs, whose

    activities are concerned with the analysis, development

    and sotware support o inormation systems and

    data processing, can become members o the HT Park

    in Belarus. The HT Park provides or ull exemption

    rom almost all taxes and duties, including income

    tax, VAT, and real estate tax. Moreover, the technical

    equipment imported by HT Park residents into the

    Belarusian customs territory is exempt rom customs

    duties and VAT. An exhaustive list o such equipment has

    been determined by the state authorities and includes

    computers, as well as copying and acsimile devices.

    The tax rate paid on the income received rom

    dividends, debt liabilities, royalty, and licenses by oreign

    legal entities that do not operate in the Republic

    o Belarus through permanent establishments, provided

    they originate rom an HT Park resident, amounts

    to 5%, unless more avorable terms are establishedby international treaties. In addition, the residents o the

    HT Park do not pay oshore duty on the dividends paid

    to their shareholders (participants).

    Belarus benecial geographical location has made it a

    country with a high potential or oreign investment.

    For a company planning to establish a production

    or distribution unit in Eastern Europe, Belarus oers

    a skilled and cheap labor orce, low price levels,

    and a relatively well developed inrastructure. The

    Belarusian government has established a special

    program or attracting oreign investment, and the

    protection o oreign investment is guaranteed under

    the Investment Code. The code states that oreign-

    owned companies have the same rights as local

    businesses, as well as the right to repatriate prots

    without any restrictions. Furthermore, Belarus has signed

    bilateral agreements on the protection and promotion

    o investments with many countries around the world.

    Due to policies encouraging oreign investment,

    investors may gain signicant advantages, such as tax

    benets and exemptions rom certain obligations,

    by investing in the Republic o Belarus.

    Free Economic Zones (FEZs)

    An FEZ is a part o a country with well dened borders

    and a special legal regime that provides more avorable

    conditions or business. Basically, the objective

    o these zones is to attract and ensure the eective

    use o oreign and national investments to create

    and develop goods or export, and will be based

    on the latest technologies, as well as the eective use

    o available production space. There are 6 FEZs in the

    Republic o Belarus.

    The appeal o a special legal regime like an FEZ ora potential investor is preerential taxation. FEZ residents

    pay reduced rates o certain taxes, including prot tax

    at 9% and VAT at 10%. Prot received by FEZ residents

    rom supplies o goods, work or services o their own

    production is exempt rom prot tax and transportation

    duty or a period o 5 years ater the prot in question

    is generated. Moreover, FEZ residents do not pay real

    estate tax on buildings located within FEZs.

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    8

    Tax benefts rom conducting business in rural

    areas and small towns

    Eective rom 2008, a special tax regime and

    tax benets have been provided or both oreign

    and Belarusian legal entities (including branches,

    representative oces, separate subdivisions) and

    individual entrepreneurs located/residing in rural areas

    (as well as in small town centers and not included

    on the list by the Council o Ministers o Belarus) and

    carrying out business activities involving the manuacture

    o goods, perormance o work or provision o services

    in those or other rural areas or towns.

    In certain cases, legal entities and individual

    entrepreneurs may be exempt rom: prot tax and

    personal income tax with regard to goods (work

    or services) they produce themselves; real estate tax

    on property located in rural areas; customs duties and

    VAT (except VAT charged on goods imported rom the

    Russian Federation) payable on production equipment,

    as well as related spare parts and accessories imported

    or the purpose o orming or increasing the legal entity

    in questions charter capital.

    The oreign and Belarusian legal entities mentioned

    above are exempt rom the compulsory sale o oreign

    currency in the amount o 30% or 5 years rom the

    date o their registration. In addition, they may apply

    ree pricing to those goods they produce which are sold

    internationally. They may also independently determine

    employee salaries and use the services o oreign

    insurance companies.

    Tax benefts or motorway services

    Prot received by legal entities and ind ividual

    entrepreneurs rom supplies o goods (work or services)

    through motorway service acilities (e.g., motels,

    hotels, campsites, service and car washing stations,

    retail, canteens, secured parking lots, parking lots

    or vans and residential trailers) is exempt rom prot

    or personal income tax or a period o 5 years ater the

    establishment o such acilities. In addition, motorway

    service acilities are not subject to real estate tax ora period o 2 years rom the date trading activities start.

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    Belarus business and investment guide 9

    Tax administration

    The Belarusian Tax Code

    General inormation

    The General Part o the Tax Code came into orce on

    1 January 2004. The Special Part o the Tax Code came

    into eect on 1 January 2010.

    Both parts o the Tax Code are eective rom 1 January

    2010 but Acts previously adopted by the President

    o Belarus regulating taxation issues still apply.

    Types o taxes and duties

    There are state as well as local taxes and duties

    in Belarus. A number o special tax regimes are

    mentioned in the Tax Code:

    Tax applied under the simplied system o taxation

    Unied tax or individual entrepreneurs and other

    individuals

    Unied tax or agricultural producers

    Gambling tax

    Lottery tax

    Interactive electronic game taxDuties or artisanal activities

    Duties related to agro- and ecotourism services

    The Belarusian system o taxation includes the

    ollowing taxes and duties.

    Nationaltaxesandduties:

    Value-addedtax(VAT)

    Excisetax

    Profttax

    Tax on the income o oreign entities not operating

    in Belarus via a permanent establishment

    Personalincometax(PIT)

    RealestatetaxLandtax

    Environmentaltax

    Miningtax

    Duties on the importation o ozone-depleting

    substances

    Duties on oreign nationals motor vehicles which travel

    on Belarusian highways

    Oshore duty

    Stamp duty

    Consular ee

    State duty

    Patent ees

    Customs duties and ees

    Localtaxesandduties:

    Dogtax

    Resortlevy

    Vendortax

    In addition to taxes, there are also compulsory insurance

    contributions to the Social Security Fund and RUE

    Belgosstrakh and contributions to innovation unds.

    Payers o taxes and duties

    The Tax Code denes the payers o taxes and duties

    in Belarus. The ollowing organizations are taxpayers:Belarusian legal entities

    Foreign and international organizations, including those

    that are not legal entities

    Simple partnerships (contract partners in joint activities)

    Economic groups

    Thetermindividualsincludes:

    Belarusian citizens

    Foreign citizens

    Stateless persons

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    10

    Accounting and audit

    Accounting

    By 31 December each year, enterprises must ormulate

    an annual nancial statement consisting o a balance

    sheet, an income statement, a statement o changes

    in shareholder equity and a cash fow statement.

    According to domestic tax accounting rules, and

    depending on a taxpayers accounting policy, income

    in accounting and tax accounting is recognized on either

    an accrual or a cash basis.

    The accrual basis implies the recognition o income

    at the time o the delivery o goods or services. The cash

    basis involves the recognition o taxable income when

    both events (delivery and payment) have taken place.

    Obligatory independent audit

    The ollowing entities are subject to an obligatory

    annual independent audit:

    Open joint stock companies

    Banks and non-bank nancial intermediariesStock exchanges

    Commercial organizations with oreign investments

    Insurance companies and insurance brokers

    HT Park residents

    Legal entity that provides guaranteed repayment

    o individual bank deposits

    Other legal entities (excluding collective arms and

    regular arms) and ind ividual entrepreneurs whose

    revenue or the preceding year exceeded EUR 600,000

    Transer Pricing

    New transer pricing rules are included in the Belarus Tax

    Code eective rom 1 January 2012.

    The rules apply to the ollowing transactions:

    Sales o real estate where the transaction price is more

    than 20% lower than the market price on the date

    o the sale; and

    Foreign trade transactions, including transactions with

    related parties, where the price o the transaction (or

    transactions with the same party within a single calendar

    year) exceeds BYR 20 billion (approximately EUR 1.8

    million) on the date o acquisition or disposal o the

    goods and the price o the transaction deviates by more

    than 20% rom the market price o the goods.

    I the tax authorities determine that the transaction

    price deviates rom the market price by more than 20%,

    they may adjust the tax base and prots o one o the

    parties to the transaction to an amount that would have

    been obtained had the transaction price been set at the

    market level. The tax authorities can use the comparable

    uncontrolled price, resale minus, and cost-plus methods

    or determining the market price.

    Tax audits

    The Belarusian Ministry o Taxes and Duties

    is responsible or levying taxes and duties. The local tax

    authorities, which are subordinate to the Ministry, have

    the right to perorm tax audits.

    The local tax authorities may perorm both scheduled

    and unscheduled audits o business entities. The

    requency o scheduled/eld tax audits o a taxpayer (or

    another liable person/entity) depends on the risk group

    the audited person/entity is assigned to:

    High risk not more than once in a calendar year; i noviolations are ound based on the results o a scheduled

    audit, the next one will be perormed ater a minimum

    o two years

    Medium risk not more than once every three years;

    i no violations are ound based on the results o an

    audit, the next one will be perormed ater a minimum

    o ve years

    Low risk on an as-needed basis, but not more than

    once every ve years

    The criteria or assigning an audited entity to a certain

    risk group are specied in the legislation.

    Eective rom 2010 in Belarus is the principle o goodaith towards the audited entity. In particular, i there

    is an ambiguous or unclear provision o the law,

    decisions should be made in avor o the audited entity.

    The legislation provides or a moratorium on audits

    or two years ater the establishment o an entity (or

    representative oces o oreign entities in Belarus).

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    Belarus business and investment guide 11

    However, despite these restrictions, there is a high risk

    o the tax authorities perorming an unscheduled audit:

    I the controlling/supervisory authority has inormation

    (including that obtained rom a state authority,

    a oreign state, another entity or an individual) giving

    evidence o a violation o legislation being/having been

    committed or o any threatening or inficted damage

    Liquidation o the entity

    Cross-audit o another legal entity

    Where the tax authorities have inormation to suggest

    that a business entity has not been conducting business

    activities or 12 consecutive months and has not

    provided the tax authorities with a reason or this

    To conrm the validity o setting-o or reunding

    to the audited entity VAT that was excessively accrued

    and charged on the sales o goods (work or services),

    property rights

    Audits will be perormed or a period not exceeding

    three calendar years prior to the year the audit takes

    place. However, please note that this restriction doesnot apply to audits o compliance with budget and

    tax legislation; audits perormed by order o the

    President o Belarus, the Presidium o the Council

    o Ministers o Belarus, the Chairman o the State

    Control Committee and his/her deputies, or the General

    Prosecutor and his/her deputies; and audits perormed

    as part o supervision over banking activities, including

    on a consolidated basis.

    According to Belarusian legislation, the duration o a

    tax audit should not exceed 30 business days (although

    an extension is possible). However, in practice, the

    duration o a tax audit usually does not exceed 10calendar days.

    Inormation about scheduled audits can be ound

    on the website o the State Control Committee

    o Belarus www.kgk.gov.by

    Oences, crimes and penalties

    Administrative liabilities

    The eective Belarusian Code o Administrative Oenses

    (hereinater, the Administrative Code) sets out the

    sanctions that may be imposed on taxpayers who

    have broken the law. Typical violations committed

    by taxpayers and the amounts o nes in eect rom 1

    April 2012 are listed below.

    Late registration with the tax authorities is subject

    to a ne o up to the equivalent o USD 62, or both

    individuals and legal entities.

    I a legal entity or an individual entrepreneur operates

    without registering with the tax authorities, that legal

    entity is subject to a ne o 20% o the income rom the

    activities carried out while unregistered, but no less than

    USD 863. An individual entrepreneur is subject to a ne

    o up to USD 247.

    Late notication o the opening or closure o bank

    accounts with a delay o more than ve days. Any

    account activity will entail a ne or individual rom USD

    123 to USD 247, depending on the length o the delay.

    In the case o a legal entity, this ne will be rom USD

    123 to USD 863.

    Late ling o a tax return entails a ne o 10% o the

    tax due on the return or both ind ividual entrepreneurs

    and legal entities, but not less than a ne o USD 25 and

    USD 123, respectively.

    Non-payment or partial payment o taxes within theterm determined by the legislation, results in a ne

    o 20% o the unpaid tax or both legal entities and

    individuals, but not less than USD 123 and USD 25,

    respectively.

    A tax agents ailure to withhold taxes entails a ne

    o 20% o the tax due or individual entrepreneurs and

    legal entities, but not less than USD 25 and USD 123,

    respectively. The penalty can be increased up to USD

    740 in cases o willul violation. Late payment o tax

    is subject to a daily late payment ne o 1/360 o the

    National Banks renancing rate and, eective rom 1

    March 2012, a ne o 0.1056% per day applies.

    Fines imposed or non-payment/non-withholding

    o taxes may not be applied to taxpayers/tax agents who

    have paid/withheld the ull amount o taxes due at the

    beginning o the audit perormed by the tax authorities.

    Criminal liability

    In addition to tax and administrative nes and penalties,

    Article 243 o the Criminal Code, On Tax Evasion,

    provides or three years imprisonment or ordinary tax

    evasion and three to seven years imprisonment or tax

    evasion causing extensive damage to the state budget.

    Because o the personal liability that may arise or tax

    violations, good tax planning and careul compliance are

    essential or achieving success.

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    12

    Types o business presence

    Belarusian legislation provides or a number o dierent

    legal orms through which businesses may operate.

    A brie description o each o these legal orms has been

    set out below.

    The most common orms o conducting business

    in Belarus or oreign companies are:

    Representative oces

    Legal entities

    Registration requirements

    Belarusian legislation requires that a oreign legal

    entity registers its presence with the tax authorities i it

    conducts or intends to conduct any activities in Belarus.

    Representative ofces

    Historically, representative oces (ROs) are established

    in order to act as the eyes and ears o a oreign legal

    entity (FLE), and do not lead to a taxable presence or

    the FLE in Belarus. Currently ROs may be both taxable

    (i the RO perorms the unctions o a permanentestablishment it qualies as a PE) and non-taxable.

    The Belarusian Civil Code envisages the activities o an

    RO as representing the interests o an FLE in Belarus

    and perorming other unctions that do not contradict

    Belarusian legislation.

    According to the Belarus Tax Code, a PE is deemed

    to exist where there is a separate subdivision

    or oce through which a oreign entity carries out

    entrepreneurial and other activities in Belarus, which

    leads to prots generation.

    An entity or individual that carries out activities

    on behal o and/or or the benet o a oreign entity

    and/or has and exercises the authority o the oreign

    entity to conclude contracts or to agree upon essential

    terms and conditions

    Thereore, ROs are only taxable i they carry out

    commercial or other similar activities in Belarus,

    including negotiating and concluding contracts.

    An FLE is not deemed to have created a PE i a

    Belarusian legal entity or individual carries out activities

    on behal o the FLE in question in the ordinary course

    o its business activities.

    Taxation o a commercial RO is very similar to that

    o an ordinary Belarusian legal entity, with a ew minor

    distinctions.

    Opening an RO

    The Belarusian Ministry o Foreign Aairs will issue

    a permit to open an RO on the basis o the documents

    provided (an application orm, copies o statutory

    documents, etc.). The RO operates on the basis

    o regulations approved by the head company, and

    the head o the RO acts on the basis o a power

    o attorney issued by the head company. The powero attorney must be issued and legalized (or apostillized)

    in accordance with established procedures.

    The state duty to open a RO is equal to 65 basic

    amounts (approximately USD 800) or one year.

    According to Belarusian legislation, a RO must register

    with the tax authorities, keep accounting records and

    pay taxes in accordance with established procedures.

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    Belarus business and investment guide 13

    Types o legal entities

    The three most common types o legal entities under

    the Belarusian Civil Code are joint stock companies,

    limited liability companies and unitary enterprises. These

    are regulated by the law On business entities and the

    Civil Code, respectively. The establishment o banks and

    insurance companies is regulated by separate legislative

    acts.

    Joint-stock companies

    Joint-stock companies (JSCs) are dened as companies

    whose capital is divided into a denite number

    o shares. A JSC may be either open or closed, and

    is deemed open i its shares are distributed to the

    general public without permission rom other

    shareholders. A JSC is deemed closed i the distribution

    o its shares requires the consent o other shareholders,

    and/or shares are distributed only to certain categories

    o individuals. Both types o JSCs may issue privileged

    shares o up to 25% o the statutory capital.

    Open joint-stock company (Otkrytoe Aktsyonernoye

    Obshchestvo, OAO)

    An open jointstock-company (OAO) allows or

    an unlimited number o shareholders. Subject

    to disclosure requirements, an OAO is the only orm

    o legal entity whose shares may be openly traded. The

    minimum charter capital should be equal to 400 basic

    amounts (approximately USD 5,000.)

    Closed joint-stock company (Zakrytoe

    Aktsyonernoye Obshchestvo, ZAO)

    The most common type o JSC is a closed joint-stock

    company (ZAO). Shareholders enjoy preemption rightsto any shares oered or sale by a retiring shareholder.

    There is no obligation to publish the accounts o a ZAO,

    and shares are only d istributed among its ounders

    or within another predetermined group o individuals.

    A ZAO may not hold an open subscription o shares

    or an unlimited group o people. The minimum

    charter capital should be equal to 100 basic amounts

    (approximately USD 1,240).

    Limited Liability Company (Obshchestvo

    s Ogranichennoi Otvetstvennostyu, OOO)

    An LLC/OOO is dened as a company, whose capital

    is divided into ownership interests (units), the amount

    o which is determined by the articles o association.

    The number o members o an LLC/OOO should not

    exceed 50. There is no established minimum amount

    o charter capital.

    An OOO (along with a unitary enterprise) is the most

    fexible type o company. Units are not shares, and they

    all outside the scope o Belarusian securities law. One

    drawback o an OOO or minority participants is that

    any participant has the right to withdraw rom the

    company and is entitled to require the other participants

    to purchase or redeem their units at a pro-rata value.

    Unitary enterprise (UE)

    A unitary enterprise is dened as a commercial

    organization that has no ownership rights to the assets

    transerred to the company by the owner o theseassets. This essentially means that the company is not

    the owner o its property. A unitary enterprise may have

    only one ounder.

    Instead, the ounder o the company remains the owner

    o the assets, which may not be divided into shares.

    There is no established minimum amount o charter

    capital. The simple management structure o this type

    o entity oten makes it the vehicle o choice or oreign

    investors.

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    Formation requirements or companies with oreign

    investments

    According to the Belarusian Investment Code, the

    minimum share capital that should be invested by a

    oreign investor as the authorized share capital o a

    company with oreign investments should be not less

    than the equivalent o USD 20,000.

    I one wishes to establish a joint venture with

    a Belarusian investor, the minimum amount o the

    statutory share capital should be more than USD

    20,000. For example, a oreign investor could contribute

    USD 20,000 and a Belarusian investor could contribute

    USD 1,000 as their respective initial investments thereby

    meeting the minimum requirements. Please note that

    a oreign investor may contribute less than USD 20,000,

    but the established company will not be regarded

    as a company with oreign investments and, as such,

    will not be able to enjoy certain privileges determined

    by Belarusian legislation.

    Under the existing law, in-kind contributions as well

    as cash may be classied as capital contributions.

    Registration procedure or a legal entity

    An application-based principle o registration

    is applicable in Belarus. Furthermore, the requirement

    or a minimum amount o charter capital was abolished

    or all legal entities, except or ZAO, OAO and

    companies with oreign investments. The registration

    procedure includes the ollowing stages:

    State registration (including tax registration, registration

    with the State Social Funds, the State Statistical Board,

    etc.)

    Stamp or seal production

    Opening bank accounts

    The registration authorities should decide whether

    or not to register a legal entity on the day the

    documents are submitted.

    Five days are now needed to obtain all o the

    documents necessary or tax registration, registration

    with the State Social Funds, Belgosstrakh, etc. Thus, the

    whole process usually takes about 7 to 10 days. Joint-stock companies are required to register their share issue

    with the State Securities Commission and this increases

    the time required or registration.

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    Belarus business and investment guide 15

    National taxes

    1. Proft tax

    1.1.Generalinformation

    Prot tax is levied on gross prot, which is determined

    by adding the ollowing sums:

    Prot rom the sale o goods (work or services) and

    property rights

    Income rom non-sales operations, minus the deductible

    expenses incurred in connection with these operations

    The prot or loss rom the sale o goods (work

    or services) or property rights (except or xed

    or intangible assets) is dened as the dierence between

    the receipts rom their sale, less sales taxes and duties

    paid rom the receipts, and the deductible expenses

    associated with the production and sale o goods (work

    or services) or property rights.

    The prot or loss rom the sale o xed or intangible

    assets is dened as the dierence between the receipts

    rom the sale o the xed or intangible assets, lesstaxes and duties payable rom the receipts, and the

    depreciated cost o the xed or intangible assets, as well

    as the cost o the xed or intangible assets sold.

    Non-sales income is oset by non-sales expenses and

    then included into taxable prot. Non-sales income

    includes, among other things, the ollowing:

    Income rom participation in other organizations,

    including dividends received rom oreign entities,

    income rom the sale o shares and prot rom the

    liquidation o an investee

    Positive exchange dierences

    Income rom previous years recognized in the currenttax year

    Fines, penalties and interest received or breaking

    contractual obligations, and compensation or losses

    recognized by the debtor or payable by the debtor

    under a court ruling

    Income rom granting the right to use intellectual

    property i it is not the payers main activity

    Interest on loans and deposits

    Property (work or services) or property rights, received

    ree o charge

    Non-deductibleexpenses

    There are some expenses that are related to business

    activities but are deducted or prot tax purposes only

    within the deductible limits determined by legislation.

    These expenses include business trip expenses and

    expenses associated with payments o energy resources.

    Most expenses are deducted in ull or tax purposes,

    including the costs o consulting, marketing, inormation

    services, advertising and payroll expenses.

    Expenses not related to commercial activities are not

    deductible with regard to calculating taxable income.

    The amount o prot (income) tax paid in a oreign state

    may be oset against the amount o prot tax paid

    to the Belarusian government, irrespective o whether

    or not this oset is provided or by a relevant double

    tax treaty. In order to receive the said oset, the

    payer is required to submit a certicate conrming the

    payment o tax in the oreign state.

    1.2.Payers

    According to the General Part o the Tax Code, the

    ollowing types o organizations pay Belarusian prot

    tax:

    Belarusian legal entities

    Foreign and international organizations, including those

    that are not legal entities

    Simple partnerships (contract partners in joint activities)

    Economic groups.

    Branches, ROs and other separate sub-divisions o legal

    entities, which have their own separate balance sheetsand bank accounts, carry out the tax obligations

    o these legal entities.

    1.3.Taxbase

    The tax base or prot tax is determined as taxable

    income expressed in monetary terms.

    Taxation o businessesin Belarus

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    1.4.Taxbenets

    The tax prot is reduced by tax benets which are

    as ollows:

    a) The amount o prot received rom operations with

    state securities (short-term and long-term bonds,

    promissory notes), as well as bonds issued by legal

    entities who are Belarusian tax residents between 1 April

    2008 and 1 January 2013

    b) The amount o prot expended on donations

    to enterprises, institutions and other organizations

    involved in public health, public education, social

    welare, culture and sports, which are registered with

    and unded by the state up to a maximum o 10%

    o the tax prot

    Enterprises in which disabled individuals make up more

    than 50% o the total workorce are exempt rom prot

    tax.

    Furthermore, the taxpayers may deduct part o the value

    o the newly acquired property, plant, and equipmentor intangible assets when they are rst recorded

    in books (up to 10% o the value o buildings and up to

    20% on machinery, equipment, vehicles, and intangible

    assets).

    1.5.Taxrate

    The tax rate applied to the majority o taxable income

    o organizations is 18%. A 12% rate is applied

    to dividends. The income rom the sale o shares

    in the charter capital (interest or stocks) o the entities

    in Belarus or to any part thereo is taxable at the 9%

    rate.

    1.6.Taxperiod

    The tax period or prot tax is a calendar year. Taxpayers

    should submit a tax return to the tax authorities once

    a year, by the 20th o March in the year ollowing the

    previous tax period. Tax has to be paid in advance

    by 22 March, 22 June, 22 September and 22 December

    in 2011 and (eective rom 2012) by 22 April, 22 July

    and 22 October in the current tax period and by 22

    January o the year ollowing the previous tax period.

    1.7Losscarry-forward

    Since 2012, Belarus has introduced the loss carry-

    orward rules. Entities are entitled to loss carry-orward,

    including losses o 2011, or subsequent 10 years.

    2. Value-added tax

    2.1.Generalinformation

    Value-added tax (VAT) is charged or the supplyo the majority o goods, services and property rights

    in Belarus, and on most imports into Belarus.

    2.2.VATpayers

    VAT payers are as ollows:

    Belarusian legal entities

    Foreign and international organizations acting via

    a permanent establishment in Belarus and registered

    with the Belarusian tax authorities

    Simple partnerships (contract partners in joint activities)

    Economic groups

    Trust managers with respect to sales turnover arising

    in connection with the management o the trustproperty on behal o the trustees and/or beneciaries.

    Individual entrepreneurs whose turnover or the

    previous three months exceeds the equivalent o EUR

    40,000, or who voluntarily elect to pay VAT

    Entities and individuals regarded as taxpayers

    in relation to the handling o goods through Belarusian

    customs in compliance with Belarusian legislation and

    international treaties o the Republic o Belarus that

    orm part o the international treaty ramework o the

    Customs Union.

    There are no special provisions or VAT registration

    in Belarus. A company may only be registered as a

    taxpayer with regard to all taxes.

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    a worldwide database with

    tax inormation covering

    more than 185 countries.

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    Belarus business and investment guide 17

    2.3.Turnoverthatis notsubjectto VATtaxationor is

    exemptfromVAT

    In general, the ollowing transactions are not subject

    to VAT:

    The supply o goods or services in Belarus or ocial

    and personal use by d iplomatic and/or administrative

    and technical personnel rom oreign diplomatic

    representative oces

    Property contributions rom the legal entitys ounders

    or participants to its charter und

    Compensated and gratuitous transers o goods

    or property rights by one owner

    Sale o securities (including initial oerings made

    in accordance with legislative requirements), orward

    and uture contracts, options and other concurrent

    nancial instruments rom the derivatives market

    Transer o property due to gratuitous use

    Supply o goods placed under the re-export customs

    procedure

    Cost o work or services purchased or paid or by a

    companys own employees

    Major VAT-exempt activities include:

    Commission ees or insurance brokers rom insurance

    companies or brokerage services

    Rendering medical services; the sale o certain

    pharmaceuticals and medical equipment

    Transers o industrial property rights

    Housing and communal services provided to individuals

    Communication services provided to individuals

    Services provided by banks and non-banking nancial

    institutions

    Insurance (co-insurance, reinsurance) services

    2.4.Rates

    VAT is levied at the ollowing rates:

    0% on goods exported to Customs Union member

    states, including goods exported on the basis o lease

    agreements/contracts, loan agreements and contracts

    or the production o goods, loading, shipment and

    transshipment, and other similar services directly

    related to the sale o exported goods. 0% is also levied

    on exported transportation services, exported work

    or services related to the production o goods using raw

    materials supplied by a customer, maintenance work

    or services, modernization, the re-equipment o aircrat

    and their engines, railway vehicle units or services

    perormed or oreign companies or individuals. .

    A rate o 0.5% is applied to the importation

    o diamonds and other precious stones or production

    purposes (international activity number 7102, 7103)

    rom countries which are Customs Union members.

    10% on the supply o goods produced through plant

    growing (excluding fowers and decorative plants),

    animal breeding (excluding animals used in urproduction), shery and honey bee production, and

    on the importation and/or supply o oodstus and

    goods or children in Belarus, in accordance with a list

    determined by the President

    20% on other goods and services not listed above

    Moreover, the law establishes rates o 9.09% and

    16.67% to be applied to goods sold at regulated retail

    prices. I penalties are imposed on buyers or customers

    or the violation o contractual terms these penalties

    include VAT at the above rates.

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    2.5.Taxbase

    Companies calculate their VAT base as the sale

    price o goods, including excise, i applicable. For

    commissioners and agents, the tax base is based

    on commission or ee income. A shipping companys

    VAT base is the amount o shipping ees in accordance

    with a shipping contract. I a contractor sells

    construction work perormed by subcontractors, the

    VAT base or the contractor is the cost o the work

    carried out by the contractor without subcontractor

    costs. For imports, the tax base is the customs value plus

    customs duty and excise where applicable.

    I goods are sold at regulated retail prices that include

    VAT, the VAT base will be the dierence between the

    sale and acquisition price o these goods. Both the sale

    price and acquisition price should include VAT. The VAT

    base or the sale o securities, reusable packaging and

    health resort vouchers.

    The ree-o-charge transer o goods (provisiono services or execution o work) is also subject

    to VAT, except or non-taxable transers. The tax base

    is determined as the cost price o the goods (work

    or services) in question, or as the acquisition price in the

    case o a ree-o-charge transer o acquired goods.

    The VAT base or goods imported into the territory

    o the Republic o Belarus is the total o their customs

    value and the applicable customs and excise duties (or

    goods that are subject to excise duties). I processed

    goods are exported rom the customs territory, the VAT

    base is determined as the cost o their processing.

    2.6.VAToutput,VATinputandoffsetrules

    The invoice method o calculating VAT liabilities

    is applied in Belarus. The VAT liability o a taxpayer

    is calculated as the product o the tax base and the

    tax rate. VAT payable to the authorities is determined

    as the dierence between VAT calculated by taxpayers

    and charged to customers (output VAT) and VAT

    paid to suppliers o goods (work or services) (VAT

    invoiced to taxpayers or input VAT), which is related

    to production/sales activities, or other VAT-able

    transactions.

    I input VAT exceeds output VAT, the payer is not obliged

    to pay VAT, and the dierence is carried over, without

    penalty, and is either deducted rom the tax liability

    in the next period, or reunded to the payer.

    Input VAT on purchased business supplies is generally

    recoverable when the supplies are received, or when

    customs VAT is paid and accounted or in the book

    accounts. Nevertheless, legal entities that operate on a

    cash basis (i.e. whose prot is accounted or according

    to the accounting policy when both delivery and

    payment have taken place) can only oset previously

    paid VAT.

    VAT is recoverable on the basis o primary documents

    (customs declarations, waybills, delivery/acceptance

    certicates) that indicate VAT invoiced by suppliers and

    to be paid to them.

    Organizations that do not carry out any entrepreneurial

    activities in Belarus should include input VAT amountsinto the cost o purchased goods (work, services and

    property rights).

    I the purchased goods (work, services or property

    rights) are used in production and/or i tax-exempt

    goods (work, services or property rights) are sold, the

    VAT paid upon the purchase should be included into the

    taxpayers deductible expenses.

    One o two VAT oset methods may be used

    by taxpayers in their accounting policy: the separate

    accounting method or the VAT-able supply ratio

    method.

    Starting rom 2011, taxpayers are allowed to oset VAT

    paid on xed and intangible assets in the previous tax

    period, in the current tax period. These amounts are

    to be oset in equal portions o one twelth in every

    reporting period (i a calendar month is recognized

    as the reporting period) or one quarter (i a calendar

    quarter is recognized as the reporting period). However,

    VAT rom previous tax periods may be oset in ull.

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    2.7.ImportVAT

    VAT is collected by the customs authorities when goods

    are imported into the customs territory o the Republic

    o Belarus. VAT on goods imported into Belarus rom

    Customs Union member states (Russia and Kazakhstan)

    is collected by the Belarusian tax authorities. Depending

    on the type o goods imported, VAT is applied at a rate

    o either 10% or 20%.

    Certain goods may be exempt rom import VAT. These

    include, among other things, goods and cash registered

    as oreign aid, goods or ocial use by oreign

    diplomatic representatives (or or personal use by their

    diplomatic and/or administrative and technical

    personnel) who are non-residents, equipment or

    research activities, and certain vehicles, in accordance

    with the Presidents List.

    2.8.PaymentsandlingtaxreturnsThe standard VAT period is a calendar year; the VAT

    reporting period is a calendar month or a calendar

    quarter at the taxpayers own choice. A VAT return

    is due by the 20th o the month ollowing the reporting

    period, and the tax is calculated based on the amount

    o tax accumulated rom the beginning o the year.

    VAT is payable by the 22nd o the month ollowing the

    reporting period.

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    other Deloitte practices

    ensures a direct and efcient

    transer o knowledge.

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    3. Excise Tax

    3.1.Taxpayers

    The ollowing entities are excise tax payers:

    Belarusian legal entities

    Foreign and international organizations, including those

    that are not legal entities

    Simple partnerships (contract partners in joint activities)

    Economic groups

    Individual entrepreneurs

    In certain cases individuals upon importing goods into

    Belarus.

    Branches, representative oces and other separate

    sub-divisions o legal entities with their own separate

    balance sheets and a current, settlement or other bank

    account must calculate and ulll the tax liabilities

    o legal entities.

    3.2.Objectsof taxation

    Excise tax is imposed on both imports and themanuacture o a specic list o goods, the primary

    categories o which include:

    Alcohol, spirits, beer, cider, tobacco

    Oil or diesel and/or petrol engines

    Petrol, diesel

    Automobiles and minibuses

    Fixed rates are applied to these goods.

    Exports o excisable Belarusian goods are exempt rom

    excise tax.

    Excise duty is accrued on a monthly basis on the sale

    amount o excisable products which are manuacturedand/or imported, and used or companies own

    purposes (e.g. or testing and sampling purposes).

    Excise tax is payable on a monthly basis by the 22nd day

    o the ollowing month.

    Certain excisable goods may only be sold in Belarus

    i they bear a special excise stamp. Certain alcohol and

    tobacco products require an advance payment in the

    orm o an excise stamp, which must be attached

    to each item prior to its sale. The stamps are purchased

    rom the tax authorities on a prepayment basis at the

    cost o BYR 170 (approx. USD 0.021) per stamp or

    alcohol products and BYR 70 (approx. USD 0.009) per

    stamp or tobacco products.

    4. Property tax

    4.1.Taxpayers

    The ollowing entities pay property tax:

    Belarusian legal entities

    Foreign and international organizations, including those

    other than legal entities

    Simple partnerships (contract partners in joint activities)

    Economic groups

    Individuals

    Branches, representative oces and other separate

    sub-divisions o Belarusian legal entities which have their

    own separate balance sheets and have bank accounts

    that were opened by the legal entity and whose ocials

    have the right to manage these bank accounts, must

    calculate the amount o taxes, duties and/or ees on the

    taxable items and discharge the tax liabilities o the legal

    entities in question.

    Please note that a legal entity is considered to be

    a taxpayer i it is acting as a lessee under a lease

    contract and i the contract in question is signedby a oreign legal entity that does not act through

    a permanent establishment in Belarus, or with a oreign

    individual.

    4.2.Objectsof taxation

    The tax is imposed on the residual cost o production

    and non-production buildings that are owned or are

    in the possession o the taxpayer, and on the cost

    o building work and construction in progress, within

    the timerames set out in the design and estimate

    documentation.

    4.3.TaxrateThe annual property tax rate is 1%: or legal entities and

    0.1% or individuals. A 2% rate is applied to the cost

    o projects o above-standard construction in progress

    i the organization is building the real estate itsel.

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    4.4.Taxallowances

    The tax is not imposed on:

    Buildings and acilities designated or social or cultural

    use, as well as those which orm part o the

    housing portolios o local Councils o Deputies and

    other organizations (excluding those that belong

    to organizations based in residential buildings containing

    a number o fats, where these buildings do not house

    individual residents)

    Buildings and structures that have been temporarily put

    out o operation

    Buildings and structures designed to protect the

    environment and/or improve environmental conditions,

    as specied by the President

    General-purpose roads including roads with drains,

    pavements, articial constructions, and street urniture

    to organize road trac and associated inrastructure

    Agricultural buildings and structures used to grow crops,

    or bee-keeping or or animal husbandry

    New buildings and structures belonging to an

    organization that were rst put into service within a yearo being commissioned.

    4.5.Payments

    Tax is calculated annually or legal entities, subject

    to the existence o buildings and structures, as o 1

    January o the respective calendar year. This is based

    on the residual cost and the cost o buildings and

    structures o above-standard construction in progress,

    and the approved annual tax rates. Tax or individuals

    is set according to an assessment o the buildings

    methodology approved by the President.

    Legal entities should pay tax on a quarterly basis andin our equal installments by the 22nd day o the third

    month o each quarter.

    The amount o real estate tax paid to a oreign state

    may be oset against the amount o real estate tax paid

    to the Belarusian government, irrespective o whether

    such an oset is provided or by a relevant double tax

    treaty or not. In order to receive this oset, taxpayers

    are required to submit a certicate conrming the

    payment o tax to the oreign state in question.

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    5. Environmental tax and mining tax

    5.1.Taxpayers

    The ollowing entities are payers o environmental and

    mining tax:

    Legal entities

    Owners o production waste

    Individual entrepreneurs

    5.2.Objectsof taxation

    The ollowing items are subject to this type o taxation:

    Volume o air pollution emissions

    Volume o sewage water and environmental pollutants

    Volume o production waste subject to storage and

    underground disposal

    Volume o material harmul to the ozone layer (including

    that contained in products) imported into Belarusian

    territory

    Volume o extracted or processed natural resources

    Ozone-destroying materials imported into Belarusian

    territory are taxable at the rate o BYR 23,000(approximately USD 3) per kilogram o harmul ozone

    material (including that contained in products).

    The environmental tax and natural resource extraction/

    processing tax rates are determined pursuant to the

    Appendices to the Special Part o the Tax Code o the

    Republic o Belarus.

    The co-ecient is determined or environmental tax

    rates in amounts varying rom 0.006 to 0.9, depending

    on the type o waste. I the set limit is exceeded, or the

    extraction (procession) o natural resources is carried out

    beyond the limits (volumes) determined by the eective

    legislation, tax o ten times the determined rate mustbe paid.

    6. Land tax

    Both Belarusian and oreign legal entities and individuals

    that have been granted lietime ownership rights

    to plots o land in Belarus with hereditary succession,

    or permanent or temporary use o the land, or to whom

    land has been transerred into private ownership, are

    deemed to be payers o land tax.

    The object o land tax is a plot o land that is owned,

    held or used by the taxpayer.

    The amount o land tax on agricultural land

    is determined based on the cadastral value o the

    plot o land and is established as an annual xed

    payment per hectare o the plot o land; i the cadastral

    value is not established, the agricultural land tax rate

    is calculated in the amount o the average rate o the

    land tax determined or every region.

    The amount o land tax on populated land is calculated

    in percentage terms, based on the cadastral value o theplot o land, depending on the use o the land and

    subject to the category o the respective locality.

    The amount paid on leased plots o land is specied

    in the relevant contract.

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    Belarus business and investment guide 23

    7. Simplifed system o taxation

    Both legal entities and individuals may qualiy or

    the simplied system o taxation within a particular

    calendar year, provided that they meet the criteria below

    throughout the year:

    Total headcount is not in excess o 100 employees

    on average

    Total gross revenue is not in excess o BYR 9 billion

    (approximately USD 1.11 mln) or the rst 9 months

    o the year

    The simplied system o taxation replaces the ollowing

    taxes and payments: prot tax, property tax, land

    tax, environmental tax, natural resource extraction/

    processing tax, and value-added tax, where total

    headcount does not exceed 15 employees and total

    revenue does not exceed BYR 3.4 billion (approximately

    USD 420,000).

    The tax base is the gross revenue, comprising the

    proceeds rom goods (work and services) property rightsand non-operating revenue over the reporting period.

    Subject to certain conditions, retail enterprises and

    public catering companies are entitled to use taxable

    income as their tax base.

    The tax rates are as ollows:

    7% or non-VAT payers (both legal entities and

    individual entrepreneurs)

    5% or VAT payers (both legal entities and individual

    entrepreneurs)

    2% applicable to revenue rom goods sold and services

    rendered outside o Belarus

    15% or entities and ind ividual entrepreneurs usingtaxable income as the tax base

    Deloitte tax

    consulting services

    cover all o the taxmatters that aect

    companies and

    individuals,

    irrespective

    o their sizeor sphere

    o activity.

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    24

    Other taxes

    1. Oshore duty

    1.1.Offshoredutypayers

    According to the General Part o the Tax Code, the

    ollowing types o organizations pay Belarusian oshore

    duty:

    Belarusian legal entities

    Foreign and international organizations, including those

    that are not legal entities

    Simple partnerships (contract partners in joint activities)

    Branches, representative oces and other separate

    sub-divisions o legal entities with their own separate

    balance sheets and a current or other bank account.

    1.2.Objectsof taxation

    The ollowing transactions are subject to oshore duty:

    Transers o monetary unds by a resident to a

    non-resident in an oshore zone or to another

    company, to which an oshore resident has obligations,

    or into an oshore bank account

    Non-cash settlements with any non-residentTransers o property rights and/or obligations between

    parties, one o whom is a resident o the Republic

    o Belarus and the other a non-resident registered in an

    oshore zone

    Oshore duty does not apply to the ollowing

    transactions:

    Transers o monetary unds by the state authorities

    in order to d ischarge Belarusian obligations

    to international organizations, in accordance with

    international or intergovernmental agreements

    Transers o monetary unds rom Belarusian banks

    by VISA and MasterCard transactions to non-residents

    or owners o international payment systems who are

    registered in oshore zones or who have bank accounts

    in these zones.

    Transers o monetary unds to repay credit, loans and

    interest

    Transers o monetary unds in accordance with

    contracts to transport goods by sea

    1.3.Taxrate

    The oshore duty rate is 15% o the transerred sum.

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    Belarusian-sourced incomeo oreign companies

    Elimination o double taxation

    The Republic o Belarus has signed more than 60

    international double tax treaties providing or a lower

    tax rate or ull tax exemption. Where there is no valid

    double tax treaty, Belarusian tax legislation permits

    prot tax and real estate tax paid in oreign countries

    to be oset against the payment o the relevant taxes

    in Belarus.

    In order to take advantage o a lower tax rate or tax

    exemption in accordance with an international treaty,

    prior to payment the oreign company must provide

    the Belarusian tax agent with conrmation o their

    tax residency, signed by a competent authority in the

    oreign country. The Belarusian tax authorities may

    also require a Belarusian or a Russian translation o the

    conrmation.

    I this conrmation is not provided prior to payment,

    and the oreign company suers a withholding rate

    greater than that stipulated by the agreement, it is

    possible to apply or a reund within three years

    o making the payment. In theory, upon receiving the

    proper documentation, the Belarusian tax authorities

    should reund any excess tax no later than one month

    ater the application date.

    Special provisions allow oreign banks and airlines

    to bypass the residence conrmation requirements,

    provided that they have a copy o an extract rom the

    international publications The Bankers Almanac, BIC

    Directory, or The Airline Coding Directory.

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    Withholding tax

    Withholding tax on the income o oreign legal entities

    that do not operate in the Republic o Belarus through

    permanent establishments is compulsory - particularly

    on the ollowing types o Belarusian-sourced income or

    oreign entities that are resident in Belarus:

    Dividends 12%

    Income rom the disposal o shares in charter capital,

    stocks and/or interest o legal entities located in Belarus

    12%

    Royalties (including payments or leased property)

    15%

    Licenses 15%

    Interest 10%

    Freight (charges or international shipping and

    orwarding services, except or international

    transportation by sea) 6%

    Other income - 15%

    For tax purposes, royalties include payments or the

    use o or granting the right to use property and rights

    to copyrighted items, including literary and scientic

    works, computer programs and other copyrighted work.

    This also extends to objects o allied rights, including the

    creation o soundtracks to programs by broadcasting

    companies, as well as payments or any license, patent,

    trademark, service mark, business name, drawing, utility

    model, diagram, ormula, industrial standard or process.

    Equally included are payments or any inormation

    regarding industrial, commercial or scientic research

    (including know-how), payments or the use o property

    in Belarus or or granting the right to use such

    property. Excluded are payments made or international

    (continental and intercontinental) channels and leasing

    telecommunications networks.

    Other types o income include, among other things,

    income derived rom training services, inormation,

    management, advertisement, insurance and audit

    services, and income derived rom the d isposal o realestate located in Belarus.

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    Belarus business and investment guide 27

    Taxation o individuals

    Personal income tax in Belarus

    Payers

    According to the law, individuals are regarded

    as personal income tax payers.

    Belarusian citizens and oreign nationals who are tax

    residents are taxed on their worldwide income paid

    in cash or in kind, and on any material benets received

    during a calendar year.

    Individuals who are not considered to be tax residents

    o Belarus (the duration o their stay in Belarus is 183

    days or less) pay tax on their Belarusian-sourced income

    only.

    The actual duration o stay is the period o time

    an individual stays in Belarus, and is not interrupted

    by trips abroad or medical treatment or business trips.

    Payroll taxes

    Payroll taxes resulting rom employment or civilcontracts include the ollowing:

    Personal income tax (PIT)

    Payments to the Social Security Fund

    Payments to RUP Belgosstrakh

    The employer should calculate, withhold and remit PIT

    to the government on behal o the employee.

    Payments to the Social Security Fund are made by the

    employer (34%) and the employee (1% o their salary,

    including other remuneration paid by the employer).

    Payments to Belgosstrakh are made by the employer

    at rates varying rom 0.1% to 2.4% o the gross payroll.

    Personal income tax rates

    A fat rate o 12% is applied in Belarus both to tax

    residents and to those not regarded as tax residents.

    Other rates apply to specic income:

    9% Income received by ind ividuals rom residents

    o the HT Park under labor contracts (except or support

    personnel who service and guard premises, rooms

    or plots o land)

    15% Income rom entrepreneurial and private notary

    activities

    Taxable income

    Taxable income is dened as any and all income,

    irrespective o the source, less allowable tax deductions

    (standard, social, property and proessional).

    There are limited types o income that are tax-exempt

    in Belarus:

    Pecuniary aid paid by the employer that is the taxpayers

    principal place o employment is exempt rom tax at therate o BYR 8 mln (approximately USD 990) during the

    year, or BYR 530,000 (approximately USD 65) during the

    year i paid by other employers

    Monetary unds received rom individuals who are

    not individual entrepreneurs totaling BYR 26.5 mln

    (approximately USD 3,300) rom any source within the

    tax period as a result o git and immovable property

    under a rental contract

    Income received by way o inheritance

    Income rom the state securities o Belarus and bonds

    issued by banks

    Income in the orm o interest received on bank

    accounts and deposits with a bank situated in BelarusIt is the responsibility o the individual to declare his/her

    income and to pay PIT to the authorities.

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    28

    Deloitte tax consulting

    services cover all o the tax

    matters that aect companiesand individuals, irrespective

    o their size or sphere

    o activity.

    Tax returns

    Individuals must calculate their PIT liability and le

    a tax return/declaration in the prescribed ormat i the

    ollowing applies:

    Income has been received rom other individuals who

    are not approved tax agents

    Income has been received by the tax resident rom

    sources based abroad

    Other income withholding o PIT which is not charged

    by the tax agents; and income received in certain other

    cases.

    Filing procedures

    An individual who must le a tax return/declaration

    is required to do so no later than 1 March o the

    ollowing tax year. The tax return should be submitted

    to the local tax authorities. In the tax return, the

    taxpayer must report all income received in the taxable

    year and speciy every item, source, amount and date.

    Standard, social and property deductions may be made

    either by the employer (during the tax period) or bythe tax authorities (at the time o ling the tax return).

    Taxable income is taxed at the rates listed above.

    Belarusian tax liabilities are payable by 15 May o the

    year ollowing the tax year. Any overpaid tax may

    be reimbursed (although this is dicult and time-

    consuming in practice) or credited against any uture

    tax liability, but only with regard to amounts overpaid

    during the previous three years.

    Elimination o double taxation

    Belarus has signed a number o bilateral double tax

    treaties, which, under certain conditions, enable

    individuals to avoid taxation o the same income under

    the tax systems o two or more countries by way

    o application o tax exemption in one o the countries

    or through a reduction in the tax rate.

    Thereore, according to national legislation, personal

    income taxes paid in oreign countries may be credited

    against Belarusian PIT, provided that the documents

    conrming the amount o taxes paid into oreign

    budgets are shown to the Belarusian authorities.

    In other words, a taxpayer may avoid double taxation

    without needing to ollow the application procedure

    or international tax treaties. Proper allowance must

    be made or the act that the amounts o tax paid

    into a oreign budget cannot exceed the amount

    o tax calculated rom the income in accordance with

    Belarusian legislation.

    Penalties

    Individuals who ail to submit tax returns on time, pay

    taxes, or who avoid the payment o taxes, are subject

    to administrative and criminal liabilities.

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    Belarus business and investment guide 29

    Customs issues

    Import duties

    Eective rom 1 January 2010, the rates o import

    customs duties are set in accordance with the Unied

    Customs Tari o the Customs Union o the Republic

    o Belarus, the Republic o Kazakhstan and the Russian

    Federation. The most commonly applied customs duties

    rates are ad valorem, and are calculated as a percentage

    o the customs value o the goods. In addition, customs

    duties may be set at xed rates per unit o measurement

    o goods (specic rates). A combination o both

    methods is also allowed (combined rates).

    Import customs duty rates depend on the classication

    o the imported goods under the Unied Trade

    Classication o Foreign Economic Activities o the

    Customs Union. However, customs duty rates may

    vary depending on the country o origin o the

    goods and on certain other actors. For example,

    with respect to goods originating rom developing

    countries (Customs Union users o the Unied System

    o Customs Preerences), the import customs duty rateapplied is 75% o the usual import customs duty rate

    in accordance with the Unied Customs Tari. The list

    o countries using the Unied System o Customs Union

    Tari Preerences and the list o goods originating

    rom developing or least-developed countries that are

    granted tari preerences when imported into member

    countries unied customs territory are determined

    by the Customs Union Commission.

    On 1 July 2010, the unied customs territory with Russia

    and Kazakhstan was created. A unied economic area

    is in eect rom 1 January 2012.

    Export duties

    A limited number o goods, e.g. uels and marine

    products, are subject to export duties upon their

    exportation outside the borders o the Eurasian

    Economic Community.

    Special customs procedures

    The Customs Code o the Customs Union provides or

    17 customs procedures.

    A number o special customs procedures grant either ull

    or partial relie rom customs duties. For example, ull

    relie may be granted or goods that are imported into

    the Customs Territory or processing and subsequent

    re-export (Processing in the Customs Territory). Import

    duties are not payable unless the conditions o this

    procedure are violated.

    A similar procedure may also be applied to goods that

    are exported rom the Customs Territory or processing

    and subsequently re-imported. Under this procedure

    (Processing outside o the Customs Territory), relie

    is granted or goods placed under the procedure o issue

    or domestic consumption. Import duties are, thereore,

    calculated based only on the value which has been

    added to the goods outside the Customs Territory (i.e.

    the processing element.)

    Goods may also be registered under the temporary

    import (allowance) procedure.

    As the name suggests, this allows or either ull or partial

    relie rom import duties and taxes or goods that are

    temporarily imported into the territory o the Customs

    Union. Henceorth, non-tari regulation measures

    do not apply to these goods.

    Certain goods may not, however, be eligible to be

    listed under the temporary import procedure. Once the

    specied time limit (typically two years) has expired,the goods must either be exported rom the customs

    territory or placed under a dierent customs procedure.

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    Currency control issues

    Currency control

    Both residents and non-residents o Belarus are

    permitted to have oreign currency and ruble accounts

    with authorized banks.

    The Currency Control Law separates transactions

    involving oreign currency and securities in oreign

    currency into two groups:

    Current currency transactions, which have ewer

    restrictions

    Currency transactions associated with the movement

    o capital, which may require permission rom the

    National Bank o Belarus (the NBRB)

    The eective legislation provides a closed list

    o current currency transactions:

    Settlements related to exported and/or imported goods

    (except or monetary unds, securities and real estate),

    proprietary inormation, exclusive rights to the results

    o intellectual activity, work or services

    Settlements related to leasing out property or acquiringproperty under lease

    Transer and receipt o d ividends and other investment

    income

    Non-trading operations:

    Transers and receipt o unds or the payment

    o wages and salaries, stipends, pensions, alimony,

    state benets, allowances and compensation, as well

    as disbursements or damages

    Transers o unds or the purpose o reimbursing

    expenses in connection with employee business trips

    abroad

    Transers and receipt o inherited unds and unds

    received rom selling inherited property Transers and receipt o unds related to the death

    o citizens, including transportation and other burial

    expenses

    Receipt o monetary compensation or the victims

    o political repression, as well as members o their

    amilies and their heirs

    Payment o unds in order to maintain Belarusian

    diplomatic missions and consular institutions abroad

    Receipt o unds by judicial and arbitration

    authorities, including notaries, investigation and other

    law enorcement agencies in connection with the

    above authorities

    Receipt o unds in connection with court rulings

    and other procedural documents

    Transer o membership ees to public, religious

    or international organizations as well as other

    obligatory payments or participation in international

    organizations

    Transer and receipt o Belarusian rubles, oreign

    currency, transer and receipt o other oreign

    currencies under git contracts, including donations,

    in compliance with Belarusian legislation

    Residents taking currency valuables received rom

    non-residents into custody Payment o taxes and other compulsory payments

    envisaged by the legislation o Belarus or other

    countries

    Transers o unds or duties and other payments

    to patent authorities

    Transers and receipt o unds in connection with

    participating in conerences, seminars, sporting

    events, exhibitions and airs

    Repayment o unds transerred due to an error

    Other transactions listed by the President o Belarus

    or, upon the Presidents initiative, by the Belarusian

    Council o Ministers, including those envisaged

    by international treaties ratied by Belarus

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    Belarus business and investment guide 31

    Currency transactions associated with the

    movement o capital

    Currency transactions associated with the movement

    o capital include currency transactions between

    residents and non-residents, other than those classied

    as current currency transactions.

    Residents may perorm currency transactions associated

    with the movement o capital on the basis o the

    National Banks permits, except as otherwise expressly

    stipulated by legislation. The transactions below require

    permits:

    Acquisition o shares to be d istributed among the

    ounders, and acquisition o a share in the statutory

    und or in a non-residents property

    Acquisition o securities rom non-residents, as issued

    by non-residents, except or the acquisition o shares

    to be distributed among the ounders

    Acquisition o property outside o Belarus and treated

    as real estate under Belarusian legislation

    Placing money in a non-residential bank accountor transerring money to non-residents (other than

    to non-resident banks) under a trust management

    contract

    Extension o loans

    Settlements relating to the liabilities o subjects/

    residents o currency transactions (other than banks)

    to non-residents under suretyship or guarantee

    agreements concluded between them

    Receipt o credit and/or loans or a period o over 180

    days, providing that at least one o the conditions below

    is met:

    The interest rate or a credit and/or a loan exceeds

    the limit set by the Board o Directors o the NationalBank (14% per annum or currency transactions

    in USD and EUR and the renancing rate o the

    relevant central or national bank, eective as o the

    date o receiving a credit and/or loan by the currency

    transaction subject-resident, increased by 5%)

    The interest rate or a credit and/or loan in case

    o a delay in the repayment o a credit and/or a loan

    (in the amount o the increase in the interest or the

    delay in repayment o the credit and/or loan) and the

    penalty amount in total exceed 0.01% or each day

    o delay (3.65% per annum). To work out this rate, the

    penalty amount should be expressed as a percentage

    i it is expressed as a xed amount in the contract.

    Apart rom the interest rate or a credit and/

    or a loan, the agreement between a currency

    transaction subject or resident (except or a bank)

    and a non-resident (except or a non-resident bank)

    provides or additional payments, except or the

    interest rate on delays in repaying a credit and/or

    a loan (in the amount o the increase in the interest

    or the delay in repayment o a credit and/or loan

    as well as payments related to paying the penalty)

    A credit and/or a loan is used to ulll a residents/

    borrowers monetary obligations not through their

    bank account Obligations related to the repayment o a credit

    and/or a loan are not ullled through the borrowers

    account

    A creditor or a lender is registered with the state

    register o the country (in the country) in which

    a preerential tax regime applies and/or which

    permits the non-disclosure o inormation on nancial

    transactions (oshore zones)

    Settlements relating to the obligations o a currency

    transaction subject/resident (except or a bank) and to a

    non-resident based on a duly concluded agreement

    on the assignment o a debt or claim

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    The law On currency regulation and currency control

    contains a list o currency transactions related to the

    movement o capital that do not require permission

    rom the National Bank.

    Banks and customs authorities are responsible or

    controlling the correct and timely payment o costs

    and the receipt o goods or services under export and

    import contracts, regardless o the currency used in the

    settlement.

    Obligatory conversion o export revenue

    Belarusian legal entities are currently required to convert

    30% o their oreign currency export revenue into

    Belarusian rubles by selling through authorized banks

    within seven working days o receipt.

    Purchase o oreign currency

    Currency transaction subjects may purchase oreign

    currency, on the ollowing conditions:

    Currency transaction subjects/residents may only

    purchase oreign currency on the exchange market

    via a designated bank (i.e. the bank with which

    the residents in question have opened an account

    specically intended or the receipt o oreign currency

    purchased on the Belarusian internal exchange market,

    or any other account whatsoever specically opened

    in order to make bank transer transactions related

    to purchasing, selling or converting oreign currency)

    Currency transaction subjects/residents may purchase

    oreign currency on the o-exchange market:

    in the amount o not more than one lot established

    or the exchange market, o one o the oreign

    currency or each contract (transaction) per day

    As there is instability in the Belarusian currency

    market, the National Bank may introduce limitations

    on purchases o oreign currency or the settlement

    o import contracts.

    Deloitte oers a wide range o services

    and is able to deploy experienced

    proessionals with extensive knowledge

    and specialized skills to work or clientsacross a wide range o sectors.

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    Belarus business and investment guide 33

    Payments or imports

    Please note that the NBRB currently prohibits

    advance payments under oreign economic contracts

    involving import transactions. This prohibition applies

    to Belarusian rubles as well as to oreign currency.

    An exception is made or importers acquiring raw

    materials under the terms o an advance payment

    or the urther production o export-oriented goods.

    Eective rom 15 January 2009, these importers are only

    entitled to make advance payments using their own

    export proceeds in oreign currency. Advance payments

    may also be made to the non-residents registered in the

    Russian Federation and Kazakhstan; rom loans (credits),

    received rom non-residents. The advance payments

    to the non-residents may also be made by importers

    at the expense o the hard currency received ater

    15.11.2008 as capital contributions, oreign aid,

    dividends and other income rom investments, interest

    on loans to non-residents and bank deposits and debt

    instruments.

    In other cases, advance payments made to a

    non-resident rom a Belarusian bank account may only

    be perormed i the importer has permission rom the

    NBRB. In order to obtain permission rom the NBRB,

    an importer should submit an application orm rom

    the Belarusian Council o Ministers and a copy o the

    oreign trade contract. The NBRB is entitled to request

    additional documents related to the transaction.

    Enorcement o currency regulations

    Belarusian legislation provides or penalties or any

    breach o currency regulations, both or the individual

    carrying out the transaction and the Belarusian bankthat, as a currency control agent, is obliged to ensure

    compliance with legislation. The range o penalties

    includes the ollowing:

    Penalties up to a maximum o 100% o the value o the

    transaction in question

    Invalidation o any licenses or permits previously

    issued by the currency control authorities to both the

    participant and the bank involved

    Currency control measures include the ollowing:

    Settlements relating to transaction