Accounting and tax

Depending on our Client’s requirements, Healy Consultants Group PLC will be happy to provide full accounting support, or one-off accounting advice, for a Belarus company. There are two main taxation systems in the country:

• General taxation

  1. During incorporation, our Client’s company is registered under the general taxation system by default;
  2. Corporate income tax (CIT) of 18% is payable on the company’s total net income. Value added tax (VAT) is levied at 20%;
  3. The tax year is the calendar year, and tax returns should be submitted quarterly by the 20^th of the month following the reporting quarter;
  4. In the general taxation system, there are i) no restrictions on the type of activity carried out by the company and ii) no limits on the number of employees;
  5. The general taxation system is ideal for wholesale and retail trade, and services with a high proportion of expenses, because tax is paid on income, not revenue.
  6. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

• Simplified taxation

  1. Depending on the size and annual turnover of a company, two simplified tax systems apply in Belarus:
     

     Tax information	System 1	System 2
     Tax rate	5%	3%
     Does the entity pay VAT?	No	Yes
     Annual revenue not exceeding	BYN1,404,286 (€523,000)	BYN2,046, 668 (€763,000)
     Number of employees not exceeding	50	100

  2. Features of the simplified taxation system include: i) simple tax filing procedure ii) the company can opt whether to pay VAT iii) exemption from some additional taxes. In addition, in this system micro organisation have no accounting obligations and need not prepare financial statements. Instead, they can use simplified accounting reporting;
  3. If our Client opts for the simplified taxation system, an application must be lodged within 20 days of company incorporation. Should this cut-off be missed, switching to the simplified taxation system can only be done from the next calendar year;
  4. The simplified taxation regime is not available for activities including i) gambling ii) currency exchange iii) financial services iv) insurance brokerage and v) activities related to digital signs (tokens) etc.
  5. Some type of business activity and taxpayers are subject to special taxation regimes such as i) insurance; ii) banking institutions; iii) gambling; iv) income of non-residents;
  6. The simplified taxation system is ideal for small businesses which have low operational costs.

• Corporate Income Tax (CIT)

  1. Standard CIT is 18%, payable on net profit. The CIT rate for banks and insurance companies is 25%;
  2. There is no separate capital gains tax, and to encourage entrepreneurs the government has created an effective tax rate for smaller businesses of 8%;
  3. Up to 5% of tax paid on profits can be reduced by off-setting capital investment;
  4. The standard VAT rate levied on provision of goods and services in Belarus is 20%, with a reduced rate of between 0% and 10% for some business activities;
  5. VAT returns must be filled quarterly by the 20^th of the month following the filing quarter.

• Withholding Tax and Tax Treaties

  1. Withholding tax is levied on i) dividends paid to non-residents at the rate of 12% ii) royalties paid to non-resident companies at the rate of 15% iii) interest paid to non-residents at the rate of 10% and iv) technical services fees paid to non-resident companies at the rate of 15%. All these rates may be reduced under a tax treaty;
  2. Real property tax is imposed on the value of buildings and construction, as well as car parking spaces owned by a taxpayer at the rate of 1% of the depreciated value of the building.

• Other tax considerations

  1. Capital losses can be carried forward for up to 10 years in Belarus;
  2. Regardless of the taxation system chosen, the following taxes and mandatory payments apply: i) income tax at a rate of 13%; ii) contribution to the Pension Fund at a rate of 1% iii) employee social security contributions at the rate of 34% and iv) social insurance fund contribution at the rate of 0.6%;
  3. Tax incentives are available for legal entities registered within the six Free Economic Zones in Belarus. These include: i) tax exemption on profit derived from sale of own-produced goods for five years ii) real estate and land tax exemption for three years iii) 50% VAT discount iv) no customs duties and taxes on imported equipment and goods to be used within the FEZ;
  4. Belarus has concluded income tax treaties with 70 countries including Bahrain, the UAE, Germany, Switzerland, Ukraine and Hong Kong;
  5. Healy Consultants Group PLC will assist our Clients i) document and implement accounting procedures ii) implement financial accounting software iii) prepare financial accounting records and iv) prepare forecasts, budgets and perform sensitivity analysis;
  6. It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile; and that they fulfill those obligations annually. Let us know if you need Healy Consultants Group PLC’s assistance to clarify your annual reporting obligations.

Legal and compliance

• Company regulations

  1. The Ministry of Justice of the Republic of Belarus operates and regulates The United State Register of Legal Entities and Indi-vidual Entrepreneurs portal (USR). USR allows resident and non-resident individuals and companies to view business-specific information about Belarussian companies including: i) company’s legal name and business activity ii) legal registered office address iii) ownership status and iv) current standing status;
  2. The minimum paid up share capital requirements in Belarus are i) US$50 for a limited liability company and ii) US$1,215 for a joint stock company;
  3. A Belarus company requires at least one shareholder and one director;
  4. In accordance with local legislation, each Belarusian entity must convene annually at least one statutory board meeting to approve i) financial statements and all ancillary reports, including directors or management reports (where appropriate) ii) any dividend or profit distribution iii) the re-appointment / re-election of any Directors (where appropriate) iv) the re-appointment of the statutory auditor (where appropriate). If required, Healy Consultants Group will assist our Client prepare a draft board resolution and all ancillary documents to meet statutory board meeting requirements;
  5. All company directors must be Belarussian, Russian, Kazakh or Armenian citizens, or legally allowed to work in Belarus. Foreigners must obtain a work permit before our Firm can appoint them as directors of a Belarussian company. If necessary, Healy Consultants Group PLC can provide our Clients with a passive nominee resident director until a local work permit is obtained, or hire a local individual to assume such a role in the interim;
  6. All business entities must submit annual audited financial statements by 31 March each year;
  7. After registration, all Belarussian companies must appoint a local accountant or accounting firm to discharge accounting and tax obligations in accordance with local accounting standards in Belarus. If required, Healy Consultants Group PLC will assist our Client to discharge local accounting & tax obligations for a monthly professional fee;
  8. Representative Office (RO) activities are governed by the provisions of the power of attorney issued by the parent company. Permission to open an RO is issued for three years initially, with the option to extend for a further three years;
  9. All documents in a foreign language should be translated into Belarusian or Russian, and notarised (or legalized) (apostilled);
  10. The process of deregistering a company is dictated by the Belarus government. The process takes a minimum of six months. Healy Consultants Group PLC’s fee to project manage company de-registration is US$2,950. During this six-month period it is mandatory to maintain a legal registered office.

• Labour regulations

  1. All employee matters are regulated by the Labour Code under the supervision of the Ministry of Labor and Social Protection Republic of Belarus. The main regulatory act governing the employment of foreign citizens in Belarus is the Law of the Republic of Belarus dated December 30, 2010 No. 225-Z on ‘External Labor Migration’;
  2. Each foreign employee must obtain a work permit in Belarus. This permit is issued for one year initially;
  3. An employment contract with a foreign employee cannot exceed the validity period of the work permit;
  4. An employment contract with a local employee can be signed for either a fixed (up to five years), or unlimited, term.
  5. Each Belarussian employer must register an employment contract with the Migration Authority within one month of the date of permit execution. Failure to obtain the appropriate permits for hiring foreigners may result in a penalty of approximately 210 euros;
  6. There is no minimum probation period for local employees;
  7. The minimum monthly salary in Belarus is fixed at US$157 per month;
  8. Employee salaries in Belarus are subject to i) income tax at a rate of 13%; and ii) contribution to the Pension Fund at a rate of 1%;
  9. Under the provision of the Labour Code, the standard work week is: i) 40 hours on average ii) five working days (Monday to Friday), or six days for some industries;
  10. Details of Belarus employment contract dismissal regulations are outlined in Article 42 of the Labour Code.