Tax System
The basis of tax system is the Law “On Taxes and Dues Levied to the Budget of the Republic of Belarus” and special acts of tax legislation connected with types of taxes.
The Belarusian tax system includes taxes and dues levied over the Republic on the whole and in particular localities. 65% of tax structure consists mainly (60-65%) of indirect taxes (value added tax, excises, turnover taxes, sales tax etc.)
The work to conclude definite bilateral agreements, instead of the former Soviet agreement available for all countries, to avoid double taxation and prevent tax evasion in relation to income and property taxes is carried out. By the present days, Belarus has concluded and enacted such agreements with 44 countries of the world among of which are the largest European States, the USA, Japan and other countries.
The Republic of Belarus applies a zero VAT rate for export of Belarusian goods and services as it follows the principle of product destination country in foreign trade when levies indirect taxes (VAT and excises). The same principle is currently applied with all CIS countries except for the Russian Federation. In the field of mutual trade with Russia, with the frameworks of an Agreement on establishing Union State, Belarus sticks to the principle of product origin country.
2008 saw the following priorities emerge in tax sphere: simplification of tax system with a view to lessen tax burden on the economy, improvement of tax legislation and unification thereof with the Russian one, improvement of tax administration.
In 2009, these approaches will be implemented in the following specific directions:
• Rate reduction for the following dues to the state budget: fee to the national fund in support of agricultural products and foodstuffs and agrarian science – from 2% to 1%; motor vehicle purchase tax – from 5% to 3%; and local tax on services – from 10% to 5%;
• Setting a flat rate of the local tax on retail sale of locally made and imported goods at 5%;
• Exemption of the active part of main production assets from the real estate tax, leaving buildings and structures only as taxable.
Essential novelties are introduced in taxing personal incomes. Thus, starting January 1, 2009, a switchover was made from a complex progressive rate to the uniform (flat) rate at the level of 12%. At the same time, to level up the taxation terms of all population groups with varying incomes, the standard tax deduction was increased up to 250,000 roubles.
The mechanism of collection and payment of the main levied taxes and dues (VAT, profit and income tax, and ecological tax) is in the process of perfection.
New impetus to the development of small and medium-sized businesses was given by adoption of the Decree of the President of the Republic of Belarus of January 3, 2009, "On Adding and
Amending the Decree of the President of the Republic of Belarus of March 9, 2007, No. 119", which still further improved all the aspects of the simplified taxation system.
In particular: tax rates in the simplified taxation system were dropped; the gross revenue criteria enabling the use of this system were essentially expanded; the application area of decreased rates was broadened and now covers the whole rural territory; the quarterly frequency of submitting tax declarations and tax payment was introduced for the taxpayers who use the simplified system without VAT payment; methodology of calculation of entities' average number of personnel was updated; and other elements of the simplified taxation system were made more specific.
As a whole, this year there are plans to reduce the tax burden on the economy by 1.3% of the GDP. The economic entities will have additional 2 billion roubles at their disposal. It is planned to drop the tax burden by additional 1.1% of the GDP in 2010.
