Belarus Tax & Business Guide - Deloitte

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Basic facts
Population 9.8m Inflation 11.5% (2005)*
Main languages Belarusian, Russian GDP per head US$1,767*
Currency Rouble (BYR) GDP growth 8.0% (2005)*
Economic communities Commonwealth of Independent States
GDP sources 11.1% agriculture, 36.4% industry, 52.5% services
*Economist Intelligence Unit.
Political environment

Belarus is a presidential republic. The president is head of state.

Alyaksandar Lukashenka has served as president since 1994, under a new constitution adopted in March 1994. He won re-election in September 2001 with a majority of the popular vote. The next presidential election is scheduled for March 19th 2006.
Foreign trade and investment
Exports US$16.1bn (2005)* Imports US$16.9bn (2005)*
*Economist Intelligence Unit.

Major exports: Machinery and equipment, mineral products, and chemicals and rubber.

Main export markets: Russia.

BelarusÌs foreign trade is focused on the Commonwealth of Independent States (CIS). Russia is of paramount importance as a ready market for Belarusian goods, primarily machinery and equipment, as well as textiles and foodstuffs. It is also a major source of industrial sector inputs, mainly raw materials such as fuel, metals and chemicals.

Foreign investment is low owing to a challenging business environment.
Business and financing
Business forms Joint-stock company (open or closed), limited liability company

The Belarusian Foreign Investment Promotion Agency (BEFPA) is a useful resource in areas such as business legislation and the search for local partners.
Labour environment
Unemployment rate 1.7% (2005)* Minimum wage BYR 750 (hourly)
*Economist Intelligence Unit.

Subsidised production and strong import demand from Russia have helped to keep real wages and incomes rising for Belarusian workers.

Strikes are rare.
Taxation
Corporate tax
Standard rate 24% (30% for insurance companies)

Resident companies are taxed on their worldwide income; non-resident companies are taxed only on Belarusian-source income. Companies registered under the law of Belarus are resident for tax purposes. Business profits, including capital gains, are subject to the corporate profits tax, charged at a rate of 24%. There is also a corporate income tax that applies to dividend distributions, banks and insurance companies, and transactions in securities. The rate is 30% for insurance companies and 40% for transactions in securities. As from January 1st 2006, banks are subject to the general corporate profits tax at the 24% rate, rather than the corporate income tax.
Individual tax
Progressive rates rising to 30%

Residents are taxed on their worldwide income; non-residents are taxed only on Belarusian-source income. An individual is resident if permanently residing in Belarus or if present in the country for more than 183 days in a year. Aggregate income, including business income, is subject to income tax at progressive rates from 9% to 30%. Dividends are taxed by a 15% final withholding tax.
Capital gains
Generally taxed as income

Capital gains are taxed as income, except where a company has foreign-source capital gains on securities, which are subject to corporate income tax at 40%.
Indirect tax
Standard rate 18% Other rates 10%

Value-added tax (VAT) applies to most transactions at the standard rate of 18%. A lower rate of 10% applies to supplies of certain foodstuffs and agricultural products; and services of repairs, hairdressing and laundries. Exemptions from VAT include banking and financial services, insurance, educational services and legal services supplied to individuals. Registration is compulsory for businesses.
Tax administration and compliance
Tax year Calendar year

Companies must make monthly advance payments of the corporate profits tax and, if applicable, the corporate income tax, based on the submission of monthly returns. The tax year for individuals is the calendar year. Tax is deducted at source from employment income. Individuals receiving income other than employment income must submit a tax return by March 1st following the year-end.
Additional tax information
Withholding taxes Dividends 15%, Interest 10%, Royalties 15%. These rates may be reduced by provisions of an applicable tax treaty.
Tax treaties Belarus has concluded treaties with more than 40 countries and continues to apply some treaties of the former Soviet Union.
Dividends Dividends are subject to corporate income tax at a rate of 30%. Dividend distributions are taxed by a final withholding tax of 15%.
Revenue protection There is no transfer-pricing, thin-capitalisation or CFC legislation. However, an offshore duty of 15% is levied on transactions with companies registered in a tax haven and on deposits in a bank located in a tax haven.
Groups There is no provision for group taxation.
Incentives High-tech companies; free economic zones.
Other taxes Corporate property tax, Customs and excise duties, Environmental tax, Land tax, Natural resources tax, Real estate tax, Contributions to the housing, employment and R&D fund and agricultural producers.