Personal taxation in Minsk
Effective personal income tax rate
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Individuals are taxed on their worldwide income. Nonresidents are taxed only on Belarus-source income.
An individual is resident in Belarus if he/she is physically present in the country for more than 183 days in a calendar year.
Joint returns may not be filed; each taxpayer must file a separate return.
A flat rate of 13% applies, with a 9% rate applying to employment income received by qualifying employees of companies in high-technology parks.
Deductions and allowances
Standard tax deductions are granted to the taxpayer, his/her spouse and minor children. In addition to standard tax deductions, there are social, property and professional tax deductions, which are granted to taxpayers only upon the submission of their tax returns at the end of the tax period.
Taxable income includes all income regardless of source, such as income from employment, income from property, services or other benefits in-kind and income to which the taxpayer has the right of disposal, less allowable deductions and exemptions.
Capital gains are taxed as ordinary income.
Other taxes on individuals
Real property tax
The annual real estate tax rate ranges from 0.1% to 0.2% of the value of the property.
An amount equal to 1% of an employee’s wages is withheld by the employer for the benefit of the Social Security Fund. Self-employed individuals also are required to contribute to the fund.
Compliance for individuals
Companies are required to disclose information about affiliated parties and transactions with these parties in their financial statements.
Wire transfers or noncash settlements with companies registered in offshore zones or having bank accounts in offshore zones are subject to an offshore duty at a rate of 15%. Banks are prohibited from making money transfers to nonresidents unless the offshore duty has been paid.
The thin capitalization rules apply to loan agreements (controlled debt), as well as expenses, such as fees paid for engineering, marketing, consulting, information and management services and fees for the transfer (assignment) of property rights in respect of industrial property and costs incurred on the acquisition of rights to use trademarks and service marks. From 2016, the rules also apply to intermediary services, services for searching and (or) recruitment, hiring staff and secondment to Belarus. The debt-to- equity ratio is 1:1 (previously 3:1). Interest/expenses exceeding the maximum amount of interest/expenses calculated under thin capitalization rules are not deductible for profits tax purposes.
Corporate taxation in Minsk
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Residents are taxed on worldwide income. Foreign-source income derived by residents is subject to corporate tax in the same way as Belarus-source income. Nonresidents are taxed only on Belarus-source income.
Taxation of dividends
Dividends received by a Belarus resident company from another Belarus company or from a nonresident company are subject to profits tax at a rate of 12%.
A company is considered a tax resident if it is registered as a legal entity in Belarus.
Losses may be carried forward for 10 years, subject to certain restrictions. The carryback of losses is not permitted.
Taxable profits may be reduced by amounts directed for building and (or) reconstruction of sport venues or donated to enterprises, institutions and other organizations involved in public health or education, social service, culture and sports and that are registered with and funded by the state, up to a maximum of 10% of taxable profits. Enterprises whose total workforce is comprised of more than 50% disabled persons are exempt from profits tax.
Foreign tax credit
Tax withheld in a foreign country from income derived by a Belarus resident may be credited against Belarus tax on the same income provided the foreign tax authorities confirm the payment. The credit is limited to the amount of Belarus tax payable on such income.
Profits tax is levied on taxable profits, which are total profits from the sale of products, goods and other assets (including fixed assets, commodity stocks, intangibles and securities), the provision of services, interest income and income from non-sales operations, less expenses incurred in connection with these operations.
No separate capital gains tax is imposed. Gains derived from the sale of property and the sale of shares of Belarus companies are taxable under the general profits tax rules. Foreign companies not operating through a permanent establishment are subject to withholding tax on gains derived from the sale of shares, bonds and other securities, income from the sale of real estate situated in Belarus and certain other transactions.
Other taxes on corporations
Real property tax
Tax is imposed on the value of buildings and construction, as well as car parking spaces, owned or in the possession of a taxpayer, at a rate of 1% of the depreciated value of the building, construction or parking space.
Legal entities are subject to an environmental tax.
Compliance for corporations
Consolidated returns are not permitted; each company must file its own return.
Penalties apply for late filing or failure to pay tax. Interest charges accrue for each day a tax deficiency is overdue.
Filing and payment
Tax on employment income is withheld by the employer and remitted to the budget on a monthly basis. If an individual receives income from abroad, he/she must file an annual tax return before 1 March and pay the tax by 15 May of the year following the tax year.
The calendar year is used, even if the taxpayer has operated for less than 12 months in the calendar year.
Other taxation in Minsk
Value added tax
Filing and payment
The VAT return is due by the 20th day of the following month or by the 20th day of the month following the reporting quarter. The tax is calculated based on the amount of tax accumulated from the beginning of the year.
The standard VAT rate is 20%, with a reduced rate of 10%. The export of goods and related services, including the loading, shipment and trans-shipment of exports, are subject to a 0% VAT.
VAT is levied on the supply of most goods and services in Belarus, and on most imports into the country.
There is no special registration for VAT purposes. A taxpayer in Belarus registers for purposes of all taxes and duties.
Penalties are imposed for failure to file a tax return and failure to pay tax. The penalties are equal to 10% and 20% of the tax due, respectively. Interest is imposed for late payment.
A monthly tax return generally must be submitted by the 20th day of the following month. Quarterly tax returns must be submitted by the 20th day of the month following the reporting quarter. For corporate income tax, a tax return for the reporting year must be submitted by 20 March of the year following the reporting year.
Foreign exchange control
Restrictions are imposed on the export of capital. Repatriation payments may be made only in the currency of the main payments under a contract unless the contract provides otherwise. Both residents and nonresidents may hold bank accounts in any currency. The national bank permits advance payments under import contracts.
Accounting principles/financial statements
Belarusian banks and public interest entities are required to prepare financial statements under both national standards and IFRS (public interest entities, starting from the 2016 financial year). Other organizations apply Belarusian reporting standards. Financial statements must be prepared annually.
Principal business entities
These are the joint stock company (public/private), limited liability company and representative office of a foreign company.
Dividends paid to a nonresident company from Belarus sources are subject to a 12% withholding tax unless the rate is reduced under a tax treaty.
Technical service fees
Certain types of service fees paid to a nonresident company are subject to a 15% withholding tax, unless the rate is reduced under a tax treaty.
Interest paid to a nonresident company is subject to a 10% withholding tax, unless the rate is reduced under a tax treaty.
Royalties paid to a nonresident company are subject to a 15% withholding tax, unless the rate is reduced under a tax treaty.
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