Changes to the tax code – Taxation
On January 1, 2022, changes to the Tax Code entered into force. The tax legislation will be amended in several stages:
- Since January 1, 2022
- Since July 1, 2022
- Since January 1, 2023
These changes are among the most significant in recent years. We present to your attention some of them:
1) Amendments relating to individual entrepreneurs.
Individual entrepreneurs have the right to apply for the following tax regimes:
Individual entrepreneurs who paid a flat tax in 2021 will be able to apply it in 2022, with the exception, for example, of distance selling goods classified in certain groups of goods (e.g. food and non-food products).
For reference! the flat tax rates are fixed in appendix no. 24 of the tax code. For example, the flat tax rate for rental, rental of residential premises, etc. in 2021 in Minsk was 37 BYN, in 2022 it will be 148 BYN; retail trade in non-food goods, excluding equipment, – 121 BYN, will become – 484 BYN.
- simplified system of taxation without VAT (hereinafter referred to as SST);
Since 2022, it has been established that individual contractors providing services can only apply SST in limited cases under the law. For example, tourist activities; health care activities; catering service; activities in the field of computer programming. Therefore, individual entrepreneurs providing other types of services (e.g. advertising services, consultancy services, rental of goods) are not entitled to apply SST and are required to pay tax on the income. If the individual contractor performs work, the SST can be applied without restriction.
Thus, on January 1, 2022, the rate rose to 6%, 16% on non-operating income. STS tariffs with VAT have been removed. At the same time, when importing goods into the territory of Belarus, the payment of import VAT was preserved.
- the general tax system in the form of payment of income tax.
The general rate is 16%. Income tax can be paid by an individual entrepreneur engaged in any type of activity, regardless of the ability to apply SST and flat tax.
For reference: From January 1, 2023, individual entrepreneurs will be prohibited from applying the SST and paying a one-time tax. Sole proprietors can only pay income tax.
From 2023, a new tax will appear – a tax on professional income, which will be paid by natural persons carrying out activities according to the list established by the Cabinet of Ministers.
The prices will be:
10% – with respect to income from the sale of goods (works, services), property rights;
20% – against income over 60,000 BYN in a calendar year and received from Belarusian organizations and (or) Belarusian individual entrepreneurs.
2) New obligations of foreign online stores in Belarus, for example, Wildberries, Lamoda, Ozon, Aliexpress, Amazon) to pay VAT when organizing distance selling of goods in Belarus.
For reference: The electronic distance sale of goods is understood as a sale that simultaneously fulfills two conditions:
- The ordering and payment of the goods is carried out via the service on the site;
- The delivery is made by a company that negotiates on the site.
A foreign online store will, for example, need to be registered with the tax authorities in Belarus; submitting a tax declaration to the Belarusian tax authority or information on the turnover from the sale of goods and the calculated amount of VAT; pay VAT quarterly, as a rule, at the rate of 20% of the value of all goods sold by distance e-commerce, including VAT. At the same time, tax registration is carried out when the turnover from the electronic distance selling of goods for the current calendar year exceeds the equivalent of 10,000 euros (excluding VAT).
3) Control of transfer prices for credits and loans, transactions with securities is introduced. Consequently, interest on loans granted to related parties
Thus, for example, interest on borrowings between interdependent entities is now monitored as being in line with market rates.
4) Local executive and administrative bodies have the right to increase the rate of income tax by 2%.
However, the criteria for this selection will be determined by the authorities themselves. No such decision has been taken so far.
5) Commercial organizations are now required to compile information on beneficial owners.
Thus, from January 1, 2022, any business organization is required to compile information about the real owners of the enterprise for the past year no later than December 31 of each year (Article 20 of the Belarusian Tax Code), which includes:
- surname, first name and patronymic (if applicable);
- Country of Residence;
- original owner status date;
- the reasons for the occurrence of such a status.
For reference: An individual is considered the beneficial owner if he or she has the right, directly or through interdependent persons, to exercise decisive influence over the management of the organization or its business activities, to influence the following decisions :
- realization of the right of ownership of the property;
- the right to appoint the single executive body of the organization, or to form a collegial executive body or a board of directors (supervisory board) of the organization, or to exercise decisive influence over the formation of its composition ;
- have a direct or indirect participation in the authorized capital of the organization in an amount that allows you to influence the decisions it makes on the implementation of entrepreneurial activities.
The changes have affected all spheres of life, both for legal persons and for individuals.
Payments for which contributions to the Social Welfare Fund and Belgosstrakh are not charged.
Decree of the Cabinet of Ministers of Belarus No. 115 of 01/25/1999 changed the list of payments for which contributions to the Social Protection Fund and Belgosstrakh are not charged.
For example, contributions are not charged for amounts of employer funds directed (reimbursed) for the following purposes:
- provide workers with bottled water, personal protective equipment, rinsing and neutralizing agents, therapeutic and preventive nutrition, milk or equivalent food products, antiseptic and disinfectant drugs, food;
- purchase of flowers;
- payment for transport services for the transport of employees to and from the place of work, as well as the transport of employees for the performance of their duties;
- compensation of expenses for the acquisition of pedagogical and methodological literature to pedagogical workers;
- organize presentations, meetings, seminars, professional skills competitions, birthdays, banquets, cultural or representative events related to the activities carried out by the employer (except rewarding employees in kind and (or) in cash for their participation in such events, as well as the payment of remuneration to persons involved in such events on the basis of civil law contracts).
This change will reduce the burden on the accounting departments of business entities by unifying the approaches to calculating compulsory insurance contributions to the budget of the state non-budgetary social protection fund (SPF) and income tax.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.