Tax Guide-2019 Contents

AUDIT ● OUTSOURCING ● CONSULTING ● IFRS

TAX GUIDE-2019 CONTENTS

INTRODUCTION 4

TAX SYSTEM OF THE REPUBLIC OF BELARUS. GENERAL PROVISIONS 5

REPUBLICAN TAXES, FEES (DUTIES) 6

Value added tax (VAT) 6

Excise duties 9

Corporate income tax (CIT) 11

Transfer pricing 12

Tax loss carryforwards 15

The rule of thin capitalization 15

Rules of accrual of depreciation 16

Tax treatment of the income taxation in certain areas of activity 17 Tax treatment of the foreign legal entities operating through permanent establishment 18 Withholding tax of foreign legal entities not operating in Belarus through permanent establishment (WHT) 19

Personal income tax 22

Real estate tax 23

Land tax 26

Ecological tax 27

Tax for the extraction (removal) of natural resources 28

Offshore duty 29

Stamp duty 31

Consular fee 32

State duty 32

Patent fees 33

Utilization fee 34

LOCAL TAXES AND DUTIES 36

Dog ownership tax 36

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Resort duty 36

Duty for packer shippers 37

OBLIGATORY INSURANCE PAYMENTS TO THE SOCIAL PROTECTION FUND AND PENSION FUND. INSURANCE FEES FOR OBLIGATORY INSURANCE AGAINST OCCUPATIONAL DISEASES AND ACCIDENTS AT PRODUCTION FACILITIES 38

SPECIAL TAX REGIMES 39

Simplified tax system 39

Single tax from individual entrepreneurs and other individuals 41

Single tax for producers of agricultural products 43

Tax on gambling business 45

Tax on income from lottery activity 46

Tax on income from organization of electronic interactive games 46 Duty for craft activities 47

Duty for rendering services in the field of rural tourism 47

Single tax on imputed income 48

PREFERENTIAL CLUSTERS 50

Taxation in free economic zones (FEZ) 50

Taxation of Hi-Tech Park residents 51

Taxation of China-Belarus industrial park «Great Stone» 53

Taxation in middle, small towns and in countryside 55

Taxation of retail trade, public catering and household services in countryside and small towns 56

Taxation of subjects of Orsha district of Vitebsk region 58

TREATIES THAT GUARANTEE AVOIDANCE OF DOUBLE TAXATION 60

rates of withholding tax on dividends in treaties that guarantee avoidance of double taxation 61

rates of withholding tax on interest in treaties that guarantee avoidance of double taxation 64

rates of withholding tax on royalty in treaties that guarantee avoidance of double taxation 66

3 INTRODUCTION This Tax Guide provides information about the tax system in Belarus, including some useful notes and tax rates, based on the current tax legislation. The tax information contained in this guide is accurate as at the date of its publication. The guide is intended for general guidance to the tax system of the Republic of Belarus only and does not constitute professional advice. For any specific subject, the reader is encouraged to refer to the appropriate tax consultant. For more information, please contact us at our office. Contact details can be found at the end of this guide.

Baker Tilly Bel LLC trading as Baker Tilly is an independent member of Baker Tilly International. Baker Tilly International Limited is an English company. Baker Tilly International provides no professional services to clients. Each member firm is a separate and independent legal entity, and each describes itself as such. Baker Tilly Bel LLC is not Baker Tilly Inter- national’s agent and does not have the authority to bind Baker Tilly International or act on Baker Tilly International’s behalf. None of Baker Tilly International, Baker Tilly Bel LLC, nor any of the other member firms of Baker Tilly International has any liability for each other’s acts or omissions. The name Baker Tilly and its associated logo is used under licence from Baker Tilly International Limited. 4 Tax guide-2019

TAX SYSTEM OF THE REPUBLIC OF BELARUS. GENERAL PROVISIONS The Tax Code of the Republic of Belarus, which is made up from the General Part and Special Part, is the main document that defines the structure of the tax system in the country. The General Part of the Tax Code, that came into legal force on January 1, 2004, formulates the notions of tax obligation, taxpayers, and an object of taxation. It also contains regulations regarding tax accounting and control, and describes the procedure of appeal against decisions made by tax authorities. The Special Part of the Tax Code, that came into legal force on January 1, 2010, regulates particular taxes and duties, defines taxpayers, objects of taxation, rates, procedure of tax calculation and payments of respective taxes and duties. The new edition of the Tax Code came into legal force in 2019. Tax payments existing in the Republic of Belarus are divided into the following ones based on the territorial feature and the level of the subject that carries out the legal regulation of taxation: 1) republican taxes, fees (duties) include the following: • value added tax; • excise duties; • corporate income tax; • withholding tax on income of foreign legal entities, which do not operate through a permanent establishment in Belarus; • personal income tax; • real estate tax; • land tax; • ecological tax; • tax for the extraction (removal) of natural resources; • offshore duty; • stamp duty; • consular fee; • state duty; • patent fees; • utilization fee. 2) local taxes and duties include the following: • dog ownership tax; • resort duty; • duty for packer shippers. There are also other types of payments: • dues to the Social Protection Fund and Pension Fund; • dues paid by employers for obligatory insurance of employees against professional illnesses and accidents at production facilities. Together with general taxation system, there are specific regimes of taxation, which provide a number of benefits, reduced tax rates, reduced number of taxes and etc.

5 REPUBLICAN TAXES, FEES (DUTIES) Value added tax The value added tax (VAT) is included into the price of products (works, services). Taxpayers: 1. legal entities; 2. individual entrepreneurs: 2.1. in the case of sale of goods (works, services), property rights: 2.1.1. an individual entrepreneur applying the general taxation procedure, if the amount of revenue from the sale of goods (works, services), property rights and income in the form of lease (financial leasing) of property on an accrual basis from the beginning of the year exceeds 420,000 Belarusian rubles, excluding taxes and fees calculated from the revenue; 2.1.2. an individual entrepreneur applying a simplified taxation system, if the amount of revenue from the sale of goods (works, services), property rights and income in the form of lease (financial leasing) of property received from commercial organizations (except for joint stock companies) where he (she), his (her) spouse, parents (adoptive parents), children (adopted children) are the owners of the property, the shareholders on an accrual basis from the beginning of the year exceeds 420,000 Belarusian rubles, excluding taxes and fees calculated from the revenue; 2.1.3. an individual entrepreneur, regardless of the circumstances specified in clauses 2.1.1 and 2.1.2, if he (she) has made a decision to pay VAT and submitted a notification of the decision to the tax authority at the place of registration; 2.2. an individual entrepreneur is recognized as a taxpayer in respect of all objects of taxation before the end of the tax period: 2.2.1. in case of circumstances specified in clauses 2.1.1 and 2.1.2, starting from the month following the month of occurrence of such circumstances; 2.2.2. in case of making a decision on payment of VAT — starting from the month following the month of submission of the notification of the decision; 3. trustees on the turnover of goods (works, services), property rights arising in connection with the trust management of property received in trust management, in the interests of the trustors and (or) beneficiaries; 4. individuals who, in accordance with the Tax Code, customs legislation and/or acts of the President of the Republic of Belarus, are obliged to pay the VAT levied when importing goods into the territory of the Republic of Belarus. Rates: 0% • placed under the customs procedure of export, provided that the actual export of goods outside the territory of the Republic of Belarus is documented; • goods placed under the customs procedure for export and exported (without obligation to re-import them into the territory of Belarus) to the member-states of the Eurasian Econom- ic Union (including goods exported under lease agreements (contracts), loan agreements, agreements (contracts) for manufacture of goods) provided that real export of goods out of the territory of Belarus is documented; • works (services) connected with accompanying, loading, transfer and other similar works (services) directly connected with the selling of exported goods, which are placed under the

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customs procedure of export, as well as goods exported (without obligation to re-import them into the territory of the Republic of Belarus) in the member-states of the Eurasian Economic Union; • exported works on production of goods made from toll raw materials provided that the actual export of such goods outside the territory of the Republic of Belarus is documented; • exported transport services including transit transportation; • repair works (modernization, re-equipment) of aircraft and their engines, units of trains, performed for foreign legal entities or individuals; • goods of own production to a duty-free shop’s owner for the purpose of their subsequent sale in duty-free shops; • goods in retail trade through shops to individuals who do not have permanent residence in a member-state of the Eurasian Economic Union, in case of export of goods by foreign persons outside the customs territory of the Eurasian Economic Union within three months from the date of their purchase. Foreign persons while purchasing goods, value of which according to the payment document confirming the payment of goods, exceeds the amount of 80 Bela- rusian rubles (including VAT) during one day in the payer’s store who concluded a contract for services to return the VAT to foreigners with an organization authorized to refund VAT to foreigners, are entitled to get the refund of the amount of VAT in case of export of such goods from the customs territory of the Eurasian Economic Union within three months from the date of their purchase; • bunker fuel for filling foreign aircrafts carrying out the international flights and (or) the international air carriage; • the services rendered directly at the airports or in the air space of the Republic of Belarus, including air navigation service of the aircrafts carrying out the international flights and (or) the international air carriage according to the list of such services approved by the Council of ministers of the Republic of Belarus; • repair works, maintenance of vehicles registered in foreign states and performed in the territory of the Republic of Belarus by authorized service centers for foreign organizations or individuals, except for citizens of the Republic of Belarus. This provision is applied to activities (services) performed (rendered) from 1 January 2015 to 1 January 2021; • implementation of works (services) performed (rendered) by Belarusian Railways to foreign railway organizations of general use for: provision for use of freight cars, containers, trucks, refrigerated cars; interchange of carriages on the wheel sets of another track; work of loco- motives and locomotive crews. 10% • on sale of goods of Belarusian origin, and in case of import and (or) sale in the territory of the Republic of Belarus of goods produced in the territory of the member-states of the Eurasian Economic Union of crop production (with the exception of floriculture, growth of ornamental plants), wild-growing berries, nuts and other fruits, mushrooms, other wild-growing goods, bee-farming, livestock breeding (with the exception of production of furnace) and fishery; • on import and (or) sale in the territory of the Republic of Belarus, except for foodstuffs and goods for children that are included in the list approved by the President of the Republic of Belarus. 20% • on the sale of goods (works, services) not mentioned above, as well as in case of sale (transfer) of property rights;

7 • on import into the territory of the Republic of Belarus of goods, except for foodstuffs and goods for children that are included in the list approved by the President of the Republic of Belarus; • in other cases of goods disposal subject to goods placed under a customs procedure of duty-free trade in duty free shops; • in case of sale of services in electronic form. 25% • providing telecommunications services. The sum of VAT to be paid to the state budget is defined as the difference between general sum of tax, calculated at the end of the fiscal period and the sums of tax deductions. The calculated sum of VAT is determined on an accrual basis since the beginning of the tax period at the end of each fiscal period. As a rule, VAT deductions are made on an accrual basis within limits of sums of VAT, calculated after realization of the goods (works, services), property rights. The main exception to this rule are the amounts of VAT paid on goods (works, services) subject to taxation at the rate of 0% and 10%.The deduction of such amounts of VAT is made in full regardless of the calculated amount of VAT. Tax period: calendar year Reporting period: calendar month or a calendar quarter by choice of a taxpayer (except for taxpayers selling telecommunication services and Belarusian Railways). Deadline for submitting the tax return: not later than on the 20th date of the month, following the expired reporting period. Payment deadline: not later than on the 22nd day of the month, following the expired reporting period. Electronic invoice invoice is mandatory for all payers of VAT (there are cases when an electronic invoice is not filled) and serves as the basis for the payments settlement of VAT, including a basis to deduct amounts of VAT by the buyer. Electronic document management of electronic invoices between buyers and sellers is performed using the Portal of electronic invoices. The electronic invoice is filled by the payer directly on the Portal or uploaded as an Xml file prepared in the payer’s accounting system. The value of goods (works, services), property rights and the amount of VAT in the electronic invoice are indicated in the national currency of the Republic of Belarus. On January 1, 2018 an obligation was introduced for foreign legal entities to calculate and pay VAT when selling services in an electronic form to individuals, including entrepreneurs, if the Republic of Belarus is the place of implementation of such services. Services in electronic form include: • provision of the right to use software (including online games), databases, updates and up- grades and additional functionalities in particular, by granting remote access, e-books and other e-publications, information and educational materials, images, music with or without lyrics and audio-visual content through the Internet, including by providing access to watch or listen through the Internet; • provision of advertising services on the Internet, in particular, by using web-based software and databases and the provision of advertising space on the Internet; • provision of services for placing offers for the acquisition (sale) of goods (work and services) and property rights on the Internet; • provision services carried out automatically via the Internet when entering data by the purchaser of the services, automated services for data search, selection and sorting upon request, provision of the specified data to users via information and telecommunication networks (including online stock exchange reports, automated online translations);

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• provision of services to search and (or) provide the customer with information about potential buyers; • provision of technical, organizational, informational and other opportunities via the Internet, carried out with the use of IT technologies and web-based platforms, for establishing contacts and concluding transactions between sellers and buyers (including the provision of a web-based online trading facility, where potential buyers offer their price through an automated procedure and the parties are notified of a sale by an automatically generated message) • provision and/or maintenance of a commercial or personal presence on the Internet, electronic resource support (such as website and/or web page support), securing access to web- sites/web pages for other web users and the provision of facilities that allow users to modify such resources, providing information network administration services; • data storage and processing where a person who provided data has Internet access to the data; • online provision of computing capacity for the purpose of placing information in an information system; • provision of domain names and hosting services; • provision of access to Internet search engines; • web-based statistics management; • services for organizing and/or conducting online gambling. The following supplies are specifically excluded from the list of electronic services: • the sale of goods (works, services) ordered over the Internet where the delivery is made without the use of Internet; • the sale or transfer of rights to use software (including online games) or databases on tangible media; • the provision of consulting services via e-mail; • the provision of Internet access. A foreign legal entity rendering or going to render services in an electronic form, the place of which realization is the Republic of Belarus, to individuals acquiring such services in the Republic of Belarus and to perform settlements directly with individuals for services rendered or rendering or going to render re-selling of such services to individuals acquiring services in the Republic of Belarus, must register with Belarusian tax authorities. Tax registration of these foreign legal entities is made by submitting an application to the inspection of the Ministry of Taxes and Duties of the Republic of Belarus in Minsk. The VAT tax period for foreign legal entities is a calendar quarter. Foreign legal entities rendering services in an electronic form shall submit to the inspection of the Ministry of Taxes and Duties of the Republic of Belarus in Minsk through a personal account of the payer in electronic form not later than the 20th day of the month following the expired tax period a tax return (calculation) on VAT in the form of an electronic document or information on the turnover for the sale of services and the calculated amount of VAT payable.

Excise duties Excise duties are used for the following types of goods: 1. spirit; 2. alcoholic beverages; 9 3. low-alcohol beverages with a volume of ethyl alcohol exceeding 1.2% and less than 7% (low-alcohol natural beverages, other low-alcohol beverages), wines with a volume of ethyl alcohol ranging from 1.2% to 7%; 4. beer, beer cocktail; 5. ciders; 6. food alcohol-containing products in the form of solutions, emulsions, suspensions produced with the use of ethyl alcohol; 7. non-food alcohol-containing production in the form of solutions, emulsions, suspensions, produced with the use of ethyl alcohol from all types of raw materials, other alcohol-containing products; 8. tobacco; 9. gasoline; 10. diesel; 11. diesel fuel with fatty acid methyl esters; 12. boat fuel; 13. liquefied hydrocarbon gas and natural compressed fuel gas, used as automotive fuel; 14. engine oils, including oils (liquids) intended for flushing (cleaning from deposits) of oil systems of internal combustion engines. Taxpayers: 1. legal entities: 1.1. engaged in the production of excisable goods from any type of raw materials (tolling or own) and (or) using excisable goods; 1.2. engaged in contract production of tobacco products; 1.3. importing excisable goods into the territory of the Republic of Belarus under comission, assignment and other similar civil-law contracts; 1.4. selling excisable goods imported into the territory of the Republic of Belarus under commission, assignment and other similar civil law contracts; 1.5. selling (transmitting) liquefied hydrocarbon gas and compressed natural fuel gas for refueling vehicles (including own vehicles) through filling stations, as well as using fuel-dispensing equipment; 1.6. that allowed the use (sale, transfer) of diesel fuel purchased (received) for the production of diesel fuel with methyl esters of fatty acids not for its intended purpose; 1.7. that allowed the use (sale, transfer) for purposes other than those for which it was intended: ethyl raw alcohol from food raw materials purchased (received) for production of ethyl distilled alcohol; ethyl distilled alcohol from raw materials purchased (received) for production of alcoholic beverages, vinegar and soft drinks; alcohol purchased (received) for the production of medicines, veterinary drugs; alcohol-containing products with a volume fraction of ethyl alcohol of 7% or more purchased (received) for the production of soft drinks; 2. individual entrepreneurs: 2.1. engaged in the production of excisable goods from any type of raw materials (tolling or own) and (or) using excisable goods; 2.2. importing excisable goods into the territory of the Republic of Belarus under comission, assignment and other similar civil-law contracts; 2.3. selling excisable goods imported into the territory of the Republic of Belarus under commission, assignment and other similar civil law contracts; 10 Tax guide-2019

2.4. selling (transmitting) liquefied hydrocarbon gas and compressed natural fuel gas for refueling vehicles (including own vehicles) through filling stations, as well as using fuel-dispensing equipment; 2.5. allowed the use (sale, transfer) of dietary fuel purchased (received) for the production of diesel fuel with methyl esters of fatty acids not for its intended purpose 3. individuals who, in accordance with the Tax Code and (or) customs legislation, are obliged to pay excise duties collected when importing goods into the territory of the Republic of Belarus. Rates: can be set in absolute amounts on a physical unit of measurement of the goods (fixed (specific) rates) or in percentage points from the cost of goods (advalorem rates) (Annex 1 to Tax Code). Tax period: calendar month. Deadline for submitting the tax return: monthly not later than on the 20th day of the month following the expired tax period. Payment deadline: no later than on the 22nd day of the month following the expired tax period.

Corporate income tax (CIT) Objects of taxation: gross profit as well as dividends and similar incomes, gained by Belarusian legal entities. Gross profit for Belarusian legal entities is the sum of profit from realization of goods (works, services), property rights and non-realization incomes, decreased by the sum of non-realization expenses. Taxation expenses include: • production costs and sale of goods (works, services), property rights; • rationed costs. Production costs and sale of goods (works, services) are determined on the basis of financial statements and are reflected in that tax period which they refer to (the accruals concept), irrespective of time (term) of payment (advance or subsequent). Thus interest on credits, loans (except for interest on the credits, loans which are part of the investment asset cost according to the legislation), are considered in accounting as production costs and sale of goods (works, services) Proceeds from the sale of goods are determined on the basis of transaction price and the tax authorities have the right to calculate CIT on the basis of market price (see the transfer pricing). Rates: 25% • income of commercial legal entities included in the register of microfinance organizations, received from regular granting of microloans to individuals on the security of movable property intended for personal, family or household use; • income of banks and insurance companies. 12% • on dividends and equivalent income accrued by Belarusian companies (any income accrued by a unitary enterprise to the owner of its property — a legal entity of the Republic of Belarus); • on dividends from sources outside the Republic of Belarus; • on the income of founders (participants, shareholders) in the form of exchange rate differenc- es arising from the revaluation of accounts receivable from settlements with foreign organizations on the dividends due from them.

11 10% • income of science and technology parks, technology transfer centres, residents of science and technology parks (except for CIT calculated, withheld and transferred in the performance of the duties of a tax agent); • income received from the sale of goods of own production included in the list of high-tech goods (except for cases when the share of revenue received from the sale of such goods exceeds 50% of the total revenue received from the sale of goods (works, services), property rights, including income from the lease (financial lease) of property). 6% • on dividends, if within 3 previous calendar years the income was not distributed among the participants (shareholders) of the Belarusian organization — residents of the Republic of Belarus. 0% • on dividends, if during the previous 5 calendar years the income was not distributed among the participants (shareholders) of the Belarusian legal entities — residents of the Republic of Belarus. 18% • on the other objects not listed above. Tax period: calendar year. Reporting period: calendar quarter (in case of CIT on dividends — calendar month). Deadline for submitting the tax return: the tax return for CIT for the expired reporting period shall be submitted to the tax authorities not later than the 20th date following the expired reporting period, regardless of the presence or absence of objects of taxation; a tax return on the results of the tax period with the tax bodies not later than 20 March, of the year, following the expired tax period. CIT for the reporting period shall be calculated cumulatively from the beginning of the tax period as the product of the tax base reduced by the amount of tax relief, as well as the amount of losses carried by the profit of the reporting period and tax rate. Payment deadline: during the tax period based on the results of the expired reporting period no later than the 22nd date following the expired reporting period. Payment for the fourth quarter of the tax period is made not later than December 22 of this period in the amount of 2/3 of the amount of tax calculated on the basis of the amount of tax for the third quarter of the tax period, with subsequent recalculation as a whole for the tax period and the calculation of the amount of tax to the additional payment or reduction not later than March 22 of the year following the expired tax period.

Transfer pricing Controllability of transfer pricing by tax authorities is provided in Chapter 11 of the Tax Code. Tax authorities have the right to control the accuracy of the definition of a tax base on CIT comparing the prices level applied by the payer in controlled transactions with the level of market prices for identical goods (works, services). Transactions subject to control of compliance with market prices include the following transactions: 1) foreign trade transaction with an interdependent person (including transactions on sale or purchase of goods (works, services), property rights with an offshore zone resident, as well as an aggregate of transactions made with the participation (through intermediary) of a third party). A third party in the aggregate of transactions with goods (works, services) is a party: • that is not interdependent in relation to the parties to the transaction;

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• that does not perform any additional functions in the aggregate of transactions, except for the organization of sale (resale) of goods (works, services) by one party to another party recognized as interdependent to this party; • that does not use any assets to organize the sale (resale) of goods (works, services) by one party to another party, which is recognized as interdependent to this party. 2) a transaction on sale or purchase of goods (works, services), property rights made with a interdependent party — tax resident of the Republic of Belarus, who does not calculate and pay CIT (exempt from CIT) in the calendar year in which the transaction is made. Such parties include: • residents of free economic zones; • payers applying special taxation regimes; • payers operating in the territories defined by the legislation, residents of the Hi-Tech Park, the Augustov Canal Special Tourist and Recreational Park, and the China-Belarus Industrial Park «Great Stone». 3) a transaction made with an interdependent party, with a payer applying special tax regimes, for sale or acquisition of: • real estate (part of it), including transactions as a result of which the transfer of the object of shared construction to the shareholder of the object of shared construction, the owner of housing bonds of residential and (or) non-residential premises takes place; • housing bonds in the process of their circulation (except for the operations of issuers with bonds of their own issue), made after the state registration of the creation of the object of construction. Transactions as a result of which an individual acquired a residential property in which he or she permanently resided for at least 5 years shall not be subject to control of compliance with market prices. 4) foreign trade transaction on sale or purchase of strategic goods according to the list determined by the Council of Ministers of the Republic of Belarus. The control criterion is also the transaction price (the amount of transaction prices) determined with one counterparty in a calendar year. As a general rule, this transaction price (the sum of transaction prices) should exceed (excluding VAT and excise taxes): 400,000 Belarusian rubles — for legal entities not included in the list of large payers; 2 000,000 Belarusian rubles — for legal entities included in the list of large payers. For transactions involving the sale or purchase of goods (work, services) and property rights with an offshore resident, the transaction price (the sum of the transaction prices) must exceed 400,000 Belarusian rubles (excluding VAT and excise duties). For foreign trade transactions involving the sale or acquisition of strategic goods according to the list determined by the Council of Ministers of the Republic of Belarus, the transaction price (the sum of transaction prices) should exceed 2,000,000 Belarusian rubles (excluding VAT and excise duties). Thus, starting from 2019, a 20 percent deviation from market prices is excluded, the amount thresh- old for classifying transactions as controlled is increased, as well as, starting from 2019, the list of controlled transactions excludes transactions for the sale or acquisition of real estate (part of it), the transfer of an object of shared construction to a shareholder, the owner of housing bonds — residential and (or) non-residential premises, if the transactions are made with an independent party. The legislation defines the list of transactions, which do not get under the tax control and the price of the transaction is recognized a market one. In particular, the taxation basis of transactions with goods is not subject to tax adjustment when the price of goods (works, services):

13 • the transaction was made on the exchange and its price was formed on the basis of the results of exchange trades conducted in accordance with the legislation; • the transaction price is determined in the course of bidding conducted during the auction in accordance with the legislation; • the payer has made a transaction the price (tariff) of which is regulated by the President of the Republic of Belarus, state bodies (organizations) regulating prices (tariffs); • the property was sold in accordance with the legislation regulating the relations on pledge of property; • the price is determined in accordance with the pricing agreement; • transactions on sale or purchase of goods (works, services), property rights, if the price (value) of the transaction is determined by an international treaty of the Republic of Belarus; • alienation of immovable property previously pledged to the bank in order to ensure its claims on repayment of accounts payable; • transactions with securities, financial instruments of futures transactions traded on the or- ganized securities market, except for transactions concluded with an interdependent party, with a payer applying special tax regimes. Control over prices compliance is performed by the tax authority concerning CIT through: • in-house audit; • audit excluding in-house audit. The payer is obliged to provide information on the transaction to be controlled during the tax period by entering information on each such transaction into the electronic invoice and sending it via the Portal of electronic invoices. In order to confirm compliance with market prices, the payer may submit: • economic justification of the applied price; • documentation confirming the economic feasibility of the applied price — for large transactions; • other information confirming that commercial and (or) financial conditions of the transaction made correspond to those that took place in comparable transactions. Documentation confirming the economic feasibility of the applied price is prepared: 1) mandatorily: • in case of a foreign trade transaction with an interdependent party made by a payer included in the list of large payers; • in case of a foreign trade transaction involving the sale or acquisition of strategic goods according to the list determined by the Council of Ministers of the Republic of Belarus; 2) at the request of the tax authority during the audit. The economic justification and documentation shall be submitted in the form established by the Min- istry of Taxes and Duties of the Republic of Belarus for each analyzed transaction (group of analyzed uniform transactions) and shall contain the established information. Payers included in the list of large payers and (or) those who have made analyzed transactions in the amount of more than 2,000,000 Belarusian rubles (excluding VAT and excise duties) have the right to apply to the Ministry of Taxes and Duties of the Republic of Belarus with a request to conclude an pricing agreement. Methods provided to define the market prices: • comparable uncontrolled price method; 14 Tax guide-2019

• resale price method; • cost-plus method; • net-margin method; • profit split method.

Tax loss carryforwards Since 2012 Belarusian legal entities have the right to reduce tax base by the sum of loss (amount of losses) following the results of the previous tax period (the previous tax periods), i.e. to carry out Tax loss carryforwards on the profit of the current tax period. The loss is determined by the rules of the Tax Code. Belarusian legal entities have the right to carry forward a loss on profit of the current tax period within 10 years following that tax period when this loss is incurred. The loss not carried forward to the next year, can be carried forward entirely or partially to any of the next 9 years left. If a Belarusian legal entities suffers losses in more than one tax period, carryforwards of such tax losses on profit of the current tax period are made in that sequence in which they are incurred.

The rule of thin capitalization The idea of thin capitalization (Article 172 of Tax Code) is a peculiarity of attributing the controlled debt to the expenses decreasing the taxation basis of the CIT: sums of expenses (expenditures) related to the controlled debt are considered during the calculation of a CIT of the Belarusian legal entities in the amount calculated using a multiplying factor. A basic condition for the application of thin capitalization rule (the controlled debt) is the subject structure, to which one is owed. Controlled debt should occur: • to the founder (participant) owning directly or indirectly at least 20% of shares (stakes, shares in the authorized capital) of this legal entity (the share of indirect participation of one legal entity in the other is defined as the product of shares of direct participation of each previous legal entity in each subsequent organization); • to the interdependent person of the founder (participant) of the Belarusian legal entity (interdependent persons are defined in Article 20 of the Tax Code); • to the other person to whom the founder (participant) of the Belarusian legal entitity or its interdependent person guaranteed (undertook) to repay the debt of the Belarusian legal entitity on works (services). The controlled debt includes the aggregate of the following amounts of indebtedness to all the abovementioned parties for the following types of works (services): • borrowings and loans (except for commercial loans) without taking into account the amount of interest payable thereon; • engineering services, marketing services, consulting services, services for the provision of information, management services, intermediary services, recruitment services, providing personnel to carry out activities in the Republic of Belarus, remuneration for the transfer (provision ) of property rights in respect of industrial property rights; • penalties (fines), amounts to be paid as a result of application of other responsibility measures, including as a result of damages for breach of contractual obligations.

15 The limit value of sums of costs is subject to determination, if on the last day of the tax period the Belarusian legal entitity has a controlled debt, the amount of which is more than 3 or more times (for the Belarusian organization producing excisable goods in the tax period — more than 1 time) exceeds the amount of its equity capital. The limit values of the sums of costs are calculated by dividing the sums of expenses and non-sale expenses. Capitalization ratio is the quotient obtained by dividing the amount of controlled debt to all the above parties in the tax period to the amount of equity capital - for Belarusian companies producing excisable goods. For the other Belarusian legal entities, this total should be divided by 3. Equity capital of a Belarusian legal entities means the difference between the sum of assets and the sum of all liabilities without taking into account the sum of taxes and duties, mandatory insurance contributions to the budget of the state non-budgetary fund of social protection of the population of the Republic of Belarus, as well as the sum of taxes, fees (duties) and penalties for which deferred payment and (or) installment of payments, the sum of budget loans have been granted. If the amount of equity capital is negative or equal to 0, the Belarusian organization is not entitled to take into account the costs and non-operating expenses on the controlled debt when determining the tax base for CIT.

Rules of accrual of depreciation Organizations are permitted to apply various amortization methods: • straight-line depreciation method; • declining (a direct method of the sum of numbers of years, an inverse method of the sum of numbers of years); • productive depreciation method. Using a straight-line method, the annual (monthly) amount of depreciation is defined by means of multiplication of depreciable cost by the calculated annual (monthly) norm of depreciation amount or division of depreciable cost by the established standard service life (useful service) in years (months). The declining method consists in irregular (on an annual basis) accrual of depreciation by the organization during the useful service of article of fixed assets, intangible assets. The declining method is not applied to the accrual of depreciation for: • buildings, constructions, except for antennas and runways; • machines, equipment and transport vehicles with standard service life under 3 years, cars (except company cars, special purpose vehicles and taxis); • the equipment of the civilian aviation, whose useful service is defined proceeding from endur- ance; • the unique equipment intended for testing and production of pilot batches; • interior design items, including office furniture; • items for rest, leisure and entertainment; • trade names, trademarks. The productive depreciation method of accrual of depreciation of the article of fixed assets or intangible assets consists in accrual of depreciation by the legal entity on the basis of article depreciable value and the ratio of natural indices of merchandise (work, services), turned out (delivered) in the current period, to the article assets.

16 Tax guide-2019

Applying the specified methods, one uses a standard service life of fixed assets which is established by the decree of the Ministry of Economic Affairs of the Republic of Belarus from 30 September, 2011 № 161 «About establishment of standard service life of fixed assets and some resolutions of the Min- istry of Economic Affairs of the Republic of Belarus which became invalid» and specifies service life of the fixed asserts depending on their groups and types.

Tax treatment of the income taxation in certain areas of activity The specifics of income taxation mainly result from the peculiarities of income and cost determination. Thus, the Tax Code provides for additional regulation of banking, insurance and securities operations. When determining gross income of banks, income and expenses from operations between branches that fulfill tax liabilities of these banks, as well as income and expenses from activities outside the Re- public of Belarus, including activities in which the bank is registered as a taxpayer of a foreign country, are taken into account. When determining the income of banks, insurance organizations from the sale of goods (works, services), property rights, and non-sale income, additional sources are included as compared with the general provisions. When determining gross income from operations with securities (except for placement of issuable securities and issue of promissory notes): • the income of the payer upon the sale of securities or their disposal on other grounds established by the legislation, as well as upon their redemption, shall be taken into account (accepted) based on the selling price of the securities; • expenses of the payer on the sale of securities, as well as on their redemption, are determined on the basis of the depreciated (without taking into account impairment) value of securities as of the date of their sale or redemption or purchase price; expenses on the sale of securities, including the amounts of VAT credited to them. The tax legislation also provides for certain peculiarities of determining gross income of non-profit legal entities, simple partnerships, participants of trust management agreements and some other categories of payers. When determining the gross income of a simple partnership, the contributions of the partners in the partnership are not taken into account. CIT exemption does not apply to the taxation of the income of a simple partnership. When determining the gross income of the partners of a simple partnership (except for contributions in the form of professional and other knowledge, skills and abilities, as well as good will and business relations), no account is taken of the income received by these partners when returning their contributions to the partnership, as well as when distributing the income of the simple partnership that re- mains after taxation. Losses of a partnership are not taken into account when determining the gross income of its participants. A participant of a simple partnership, which is recognized as a payer in respect of the income of this partnership, keeps separate accounting of proceeds from the sale of goods (works, services), property rights and non-sale income, as well as costs associated with the activities of this partnership. The amounts of proceeds from the sale of goods (works, services), property rights and non-sale income, as well as costs associated with the activities of this partnership, are not taken into account by such a participant in determining the gross income, in which he is recognized as an independent payer.

17 Tax treatment of the foreign legal entities operating through permanent establishment Under tax law, the notion of permanent establishment is not connected in any way with the foreign representation organization in a civil sense: the creation of a permanent establishment (in a tax sense) does not require neither the existence of provision on establishment, nor accreditation. The presence of a permanent establishment in the territory of the Republic of Belarus causes the obligation to pay CIT in the territory of the Republic of Belarus from all the revenues that are associated with the activity of the permanent establishment of the foreign legal entity. The permanent establishment of the foreign legal entity, that is located in the territory of the Repub- lic of Belarus is considered: 1) a fixed place of business through which the foreign legal entity entirely or partially does business or another activity in the territory of the Republic of Belarus, except for storage, demonstration or supply of goods of own production; purchase of goods (works, services), property rights for a foreign organization; collection or distribution of information for a foreign legal entity; performance of other types of activities, if the activity is generally of a preparatory or auxiliary nature; 2) an organization or an individual, who carries out activity on behalf of the foreign legal entity and (or) in its interests and (or) has or exercises powers of the foreign legal entity to conclude contracts or agree on their essential terms. If the foreign legal entity carries out works and (or) renders services in the territory of the Republic of Belarus, a place of work performance, rendering services of the foreign legal entity is qualified as permanent establishment provided that the specified activity is carried out within 180 days continuously or in total within any 12-month period beginning or finished during the correspondent tax period. A construction plant, site of operation or assembly unit are qualified as permanent establishment of the foreign legal entity from the beginning of its existence if such site or object exists in the territory of the Republic of Belarus during the period exceeding one hundred and eighty days in any 12-month period, beginning or terminated in the corresponding tax period. However if provisions of international treaties of the Republic of Belarus establish other norms, than those provided by the Tax Code, the standards of the international treaty are applied if otherwise isn’t prescribed by international law. A construction site of new objects, reconstruction (rejuvenation), enhancement, technical re-equipment and (or) repair of existing objects of real estate (except for air and sea crafts, inland vessels and space objects), and also a site and (or) installation, repair, reconstruction (rejuvenation), enhancement and (or) technical re-equipment of constructions, cars and the equipment whose functioning demands rigid fastening on the pining belong to a building site, site of operation or assembly yard of the foreign organization in the territory of the Republic of Belarus. If a foreign legal entity carries out the design of an object outside the Republic of Belarus, the period of performance of such works and the income from their performance are not included, respectively, in the period of existence of a permanent establishment of such a foreign legal entity in the Republic of Belarus and in the income from the performance of activities through it. CIT of the foreign organization legal entity in the territory of the Republic of Belarus through permanent establishment is calculated directly by the payer. The tax return (calculation) on the CIT shall be submitted to the tax authority at the place of location of the permanent establishment of the foreign legal entity, as well as to the tax authority at each place of business through the permanent establishment (without duplication of participation in the determination of income for taxation purposes). A foreign legal entity that opened a permanent establishment no later than March 20 of the year following the expired tax period shall submit to the tax authority a copy of the written report on the

18 Tax guide-2019 activity of the permanent establishment of the foreign legal entity. Costs, non-operating expenses of a foreign legal entity which carries out activities in the territory of the Republic of Belarus through a permanent establishment, except for expenses (non-operating expenses) incurred in the Republic of Belarus, also include the costs (non-operating expenses) incurred outside the Republic of Belarus, which in accordance with the laws of the foreign state are taken into account in it for profits taxation purposes and are directly related to the implementation of the activities by the foreign legal entity in the territory of the Republic of Belarus through a permanent establishment, including executive and general administrative expenses. Foreign costs should be confirmed by a conclusion of an audit organization (an auditor) of a foreign state, documented with the requirements provided for in the Tax Code.

Witholding tax of foreign legal entities not operating in Belarus through permanent establishment (WHT) Payers: foreign legal entities and international organizations not operating in Belarus through the permanent establishment, but getting certain kinds of the income from sources in the Republic of Belarus are recognized as taxpayers of the WHT. Objects of taxation — the following income received by taxpayer from sources in Belarus: 1) conveyance fee, freight, demurrage and other payments arising from the transportation in connection with the implementation of international traffic (except for the carriage of passengers in international traffic, carriage fees, freight, dispatch, demurrage arising in connection with the international carriage of goods by sea), as well as payments for the provision of freight forwarding services (except for services in the field of freight forwarding activities in the organization of international transport of goods by sea); 2) incomings from any kind of bonds irrespectively of the way of execution, including: • interest on credits and loans; • income from securities, whose issue terms are intended to gain profits in the form of interest (discount); • income from the use of temporary available funds in bank accounts in Belarus; 3) royalty; 4) dividends and similar income; 5) income from the sale of goods in the territory of the Republic of Belarus under the contracts of agency, commission and other similar civil-law contracts; 6) income from organizing and holding cultural and entertainment events in the territory of the Re- public of Belarus and (or) participation in them, as well as from the work of amusement attractions and zoos on the territory of the Republic of Belarus; 7) income in the form of penalties (fines) and other types of sanctions for breach of contract; 8) income from implementation of research, development work, development of design and technological documentation for the prototype (experimental batch) of products, from the manufacture and testing of prototypes (experimental batch) products, pre-project work and project work (preparation of feasibility studies, engineering efforts and other similar works); 9) income from warranties and/or surety; 10) income from the provision of disk space and/or a communication channel for placing information on the server and services for its maintenance; 19 11) income from the sale of: • real estate situated in Belarus; • enterprise (or part thereof) as a property complex located in the territory of Belarus, owner of which is a foreign legal entity; • securities in the territory of Belarus (except for stocks) and/or their redemption; • shares in the authorized fund (stocks) of legal entities in Belarus, or their parts; 12) income from performing works and rendering services: • consulting, accounting, auditing, marketing, legal, engineering; • real estate trust (which is situated in the territory of Belarus); • courier; • mediation; • management; • recruitment and/or selection of personnel, as well as providing personnel to carry out activities in Belarus; • in education; • training; • storage of property; • insurance; • advertising (except for income paid to foreign legal entities associated with the participation of Belarusian legal entities and Belarusian entrepreneurs in trade fairs in foreign countries, irrespective of, whether the income payment is made directly by the participant of the exhibi- tions and fairs or through other legal entity or by the individual entrepreneur); • installation, commissioning, testing, maintenance, measurement, testing lines, machinery, equipment, devices, appliances, buildings and intangible assets in the territory of Belarus (except for income derived from training, consultation and/or such services, which are indis- pensable for the foreign trade contract for their purchase in property (for temporary use)); • maintenance and protection of freights (excluding revenues from services on obligatory maintenance and protection of freights, stipulated by the legislation of the state through whose territory the freight is being moved, rendered by the foreign state legal entities, the legislation of which establishes requirements for such obligatory maintenance and protection); 13) income from real estate situated in the territory of Belarus, handed into trust; 14) income from the data processing and hosting (data processing: web-hosting (including the storage and management of web-sites); processing of the data provided by the client and preparation of specialized statements based on the data; data input and processing including database management; data storage; access to databases; provision of advertising space on the Internet), as well as income from web-portals activity for web-sites operation using search systems to create and maintain broad databases of Internet addresses and support in a format that provides easy search of data. Tax base: total sum of income. For certain types of income the costs proved by documents are allowed to be deducted. Rates: 0% in terms of income:

20 Tax guide-2019

• from debt obligations under credits granted, loans to the Republic of Belarus or the Govern- ment of the Republic of Belarus, as well as to residents of the Republic of Belarus under state guarantees; • from debt obligations under credits and loans granted to Belarusian legal entities at the expense of funds received from placement of bonds issued by foreign legal entities for the purpose of sending such funds to Belarusian legal entities in the form of credits and loans; • from debt obligations under bonds issued by Belarusian legal entities from April 1, 2008 to January 1, 2015 and from July 1, 2015, as well as from their disposal and/or redemption; • from debt obligations under bonds of Development Bank of the Republic of Belarus placed outside the Republic of Belarus, as well as from their alienation and (or) their redemption; • from debt obligations on government securities of the Republic of Belarus, securities of the National Bank of the Republic of Belarus, bonds of local executive and administrative bodies, as well as from their alienation and/or redemption; • in the form of compensations (cost recovery), commissions, payment of which to foreign banks is stipulated by agreements on granting credits and loans to the Republic of Belarus or the Government of the Republic of Belarus, as well as to residents of the Republic of Belarus under state guarantees; to Belarusian legal entities at the expense of funds received from placement of bonds issued by foreign legal entities for the purpose of sending such funds to Belarusian legal entities in the form of credits and loans; • from performing work (rendering services) related to: • the issue, placement, circulation, and redemption of government long-term bonds of the Republic of Belarus that are government debt obligations that form the external government debt, bonds of local executive and administrative bodies, and bonds of Belarusian legal entities, as well as bonds of Development Bank of the Republic of Belarus, taking into account the rights to such bonds; • representation of the interests of the Republic of Belarus in pre-trial settlement of disputes in international arbitration and foreign judicial bodies on disputes between foreign legal entities (foreign citizens) and the Republic of Belarus; • from leasing maritime vessels to merchant shipping entities of the Republic of Bela- rus for the purpose of operating such vessels; • from providing merchant shipping entities of the Republic of Belarus with services to train their employees in the field of ship operation 5% • on dividends, if the source of such income is a HTP resident (see section «Taxation of HTP residents») 6% • payment for transportation, freight, demurrage and other payments arising in the course of transportation in connection with international transportation (except for transportation of passengers in international transportation, transportation fees, freight, dispatches, demurrage arising in connection with the international transportation of goods by sea); • payments for the provision of freight forwarding services (except for services in the field of freight forwarding in the organization of international cargo transportation by sea) 10% • income from debt obligations (except for those for which the 0% rate is set), including: • income from loans and borrowings; 21 • income from securities, the terms of issue of which provide for the receipt of income in the form of interest (discount); • income from the use of temporarily available funds in bank accounts of the Republic of Belarus 12% • on dividends; • income from the alienation of shares (units, shares) in the charter capital of legal entities located in Belarus or a part thereof 15% • for other types of income, according to the list established by the Tax Code Tax period: the quarter, when the date of the obligation to pay income tax becomes due. Deadline for submitting the tax return: not later than the 20th day of the month following the expired tax period, to the tax authority at the place of registration of the tax agent. Payment deadline: not later than on the 22nd of the month following the expired tax period. Application of double taxation treaties is possible in this sphere. In the implementation of double taxation treaties the foreign legal entity’s status of the actual income owner is controlled, i.e. whether the legal entity is a direct beneficiary of such income, whether it is entitled to use and (or) dispose this income independently.

Personal income tax Taxpayers: individuals. Objects of taxation — income received by taxpayers: 1) from sources in the Republic of Belarus and (or) from sources outside the Republic of Belarus — for individuals recognized as tax residents of the Republic of Belarus (tax residents of the Republic of Belarus are individuals who actually stayed in the territory of the Republic of Belarus for more than 183 days in a calendar year. Individuals who actually stayed outside the territory of the Re- public of Belarus for 183 days or more in a calendar year are not recognized as tax residents of the Republic of Belarus); 2) from sources outside the Republic of Belarus — for individuals not recognized as tax residents of the Republic of Belarus. Rates: 16% • income received by individual entrepreneurs, notaries, lawyers from entrepreneurial and notary activity, and individual advocacy; • income calculated in accordance with the legislation by the tax authority on the basis of the excess of expenses over income; • income received by individuals carrying out entrepreneurial activities without state registration in violation of the requirements of legislative acts, from the implementation of such activities 9% • income of individuals (except for employees engaged in maintenance and security of buildings, premises, land plots) from residents of the Hi-Tech Park under employment agreements (contracts); 22 Tax guide-2019

• income of Hi-Tech Park residents — individual entrepreneurs who are payers of personal income tax; • dividend income received from a Hi-Tech Park resident by a participant (shareholder) in the Hi-Tech Park resident; • income of individuals received under employment contracts from a joint company and (or) residents of the China-Belarus industrial park «Great Stone» until 1 January 2027 6% • income in the form of dividends, provided that during the previous 3 calendar years the profit was not distributed among the participants (shareholders) of the Belarusian legal entity —residents of the Republic of Belarus 4% • income in the form of winnings (returned bets) received by individuals from the organizers of gambling — legal entities of the Republic of Belarus 0% • income in the form of dividends, provided that during the previous 5 calendar years the profit was not distributed among the participants (shareholders) of the Belarusian legal entity — residents of the Republic of Belarus 13% • in other cases not listed above Legal entities that employ citizens under labor or civil law contracts perform the duties of tax agents to withhold tax on the income of citizens and transfer them to the budget. The most common type of income of citizens, paid by the legal entity, will be remuneration for the performance of labor or other duties, including monetary remuneration and allowances. Tax agents are obliged to withhold the calculated amount of personal income tax directly from the income of the payer when they are actually paid. The tax agent withholds the calculated amount of personal income tax from the payer at the expense of any funds paid by the tax agent to the payer when the indicated funds are actually paid to the payer or on his behalf to third parties. The legislation provides for various deductions that reduce the taxable income of citizens. Tax period: calendar year. Reporting period: quarter, 6 months, 9 months of the calendar year and calendar year (for individual entrepreneurs (notaries, lawyers)).

Real estate tax Taxpayers: legal entities and individuals, including individuals registered as individual entrepreneurs, taking into account the peculiarities established by the Tax Code. Objects of taxation: 1) from taxpayers — legal entities: • permanent structures (buildings, constructions), their parts being the property or being in economic management or in operational management of legal entities; • permanent structures (buildings, constructions) and their parts located in the territory of the Republic of Belarus and leased out by legal entities as financial leasing in accordance with the 23 legislation, if these objects are not on the balance sheet of the legal entities-lessors under the terms of the financial leasing agreement; • permanent structures (buildings, constructions), their parts located in the territory of the Re- public of Belarus and leased out by the legal entities (financial lease), other compensatory or gratuitous use by individuals (both recognized as tax residents of the Republic of Belarus and not recognized as tax residents of the Republic of Belarus); • permanent structures (buildings, constructions), their parts located on the territory of the Republic of Belarus and leased by legal entities (financial lease), other compensated or gratuitous use from foreign legal entities not operating in the territory of the Republic of Belarus through a permanent establishment; • registered (accounting or accounting in the book of income and expenditures of legal entities and individual entrepreneurs applying a simplified taxation system) permanent structures (buildings, constractions), their parts, creation, modification or appearance, transfer of property rights before the state registration of their creation, change or occurrence, transfer to them of property rights, economic management or operational management for which are subject to state registration of management or operational management; • permanent structures (buildings, constructions), their parts that are in state ownership, received for free use by joint stock companies established in the process of transformation of leased, collective, state, state unitary enterprises 2) from taxpayers — individuals: • permanent structures (buildings, constructions), their parts belonging to individuals on the basis of the right of ownership or accepted by inheritance, shares in the right of ownership or shares in the inheritance to the specified property; • construction-in-progress of permanent structures; • permanent structures (buildings, constructions), parts thereof, taken by an individual acting as an individual entrepreneur at the time of signing the contract as a financial lease (leasing), defined in accordance with the legislation as a financial lease, from the organization, if under the terms of the contract of financial lease (leasing), these objects are not on the balance sheet of the legal entity-lessor; • single-apartment residential buildings or apartments taken by an individual who does not act as an individual entrepreneur at the time of signing the agreement, for financial lease under a financial lease agreement providing for the redemption of the leased item. The tax base is determined by legal entities on the basis of the availability of the following as at Jan- uary 1 of a calendar year: • permanent structures (buildings, constructions), their parts accounted for in the accounting as part of fixed assets and profitable investments in tangible assets (accounted for in the book of income and expenses of organizations and individual entrepreneurs applying the simplified taxation system, according to the rules established for fixed assets on the balance sheet, profitable investments in tangible assets) at their residual value; • other permanent structures (buildings, constructions), their parts at their cost, reflected in the accounting (in the book of income and expenses of organizations and individual entrepreneurs applying the simplified taxation system). Rates: 1) for taxpayers — legal entities: 0,1% • in respect of permanent structures (buildings, constructions), their parts for garage coop- 24 Tax guide-2019

eratives and cooperatives operating parking lots, horticultural partnerships, housing and construction cooperatives, consumer cooperatives, owner’s associations created to service residential buildings, in the part belonging to citizens — members of cooperatives, partnerships 0,2% • in respect of permanent structures (buildings, constructions) and their parts completed after January 1, 2019 by the payers within the second year (12 months) from the date of acceptance of such permanent structures (buildings, constructions) and their parts for operation 0,4% • in respect of permanent structures (buildings, constructions) and their parts completed after January 1, 2019 by the payers within the 3rd year (12 months) from the date of acceptance of such permanent structures (buildings, constructions) and their parts for operation 0,6% • in respect of permanent structures (buildings, constructions) and their parts completed after January 1, 2019 by the payers within the 4th year (12 months) from the date of acceptance of such permanent structures (buildings, constructions) and their parts for operation 0,8% • in respect of permanent structures (buildings, constructions) completed by payers after Jan- uary 1, 2019, their parts within the 5th year (12 months) from the date of acceptance of such permanent structures (buildings, constructions), their parts in operation 1% • in respect of permanent structures (buildings, constructions), their parts not specified above 2) for taxpayers — individuals: 0,2% • in respect of residential premises in multi-apartment or blocked residential buildings for payers — individuals who have two or more residential premises in multi-apartment and (or) blocked residential buildings on the basis of the right of ownership, accepted by inheritance, share in the ownership right or share in the inheritance of the indicated property 0,1% • in respect of other objects of taxation Local Councils of Deputies have the right to increase (decrease) real estate tax rates for certain categories of taxpayers: for 2019 — by no more than 2,5 times for 2020 and beyond — no more than doubled. Tax period: calendar year. Deadline for submitting the tax return: not later than March 20th of the year. Payment deadline: 1) for taxpayers — legal entities: at their choice once a year in the amount of annual tax amount not later than March 22 of the tax period or quarterly not later than the 22nd of the third month of each quarter in the amount of 1/4 of the annual tax amount; 2) for taxpayers — individuals: annually not later than November 15 (based on notification of the tax authority).

25 Land tax Taxpayers: legal entities and individuals, including individuals registered as individual entrepreneurs, taking into account the peculiarities established by the Tax Code. Objects of taxation — land plots located on the territory of the Republic of Belarus: • belonging to legal entities under the right of ownership, permanent or temporary use; • belonging to individuals under the right of ownership, lifetime inheritable possession or temporary use as well as inherited; • other land plots in respect of which, in accordance with the legislation, taxpayers have the right to use; • provided for temporary use and not returned in due time in accordance with the legislation, illegally occupied. Tax period: calendar year. Taxable amount of land tax is generally defined in the amount of cadastre value of a land plot. Rates: depend on the purpose of the land plot and are set by the Tax Code. Local Councils of Deputies have the right to increase (decrease) land tax rates for certain categories of taxpayers: for 2019 — no more than 2,5 times for 2020 and beyond — no more than doubled. The rates of land tax on actual functional use shall be applied to land plots provided for temporary use and not returned in due time in accordance with the legislation and occupied by unauthorized persons. Payment of the land tax does not legitimize unauthorized land plot. Deadline for submitting the tax return by taxpayers-legal entities: • as a general rule, submit a tax return (calculation) on land tax annually no later than February 20 of the current year, based on the presence on January 1 of the calendar year of objects of land tax; • legal entities having a land plot provided for temporary use and not returned in due time in accordance with the legislation, illegally occupied, submit a tax declaration (calculation) on the land tax not later than the 20th of the month following the month from which the land plots were used in violation of the established procedure; • in case of making a decision by an authorized state body which is the basis for the emergence or transfer of the right to a land plot; in case of occurrence of objects of taxation by land tax; in case of recognition of land tax payers of certain legal entities, including budget ones, and (or) in case of loss of the right to apply the land tax privilege in the current tax period (except for occurrence of the given circumstances in December of the current tax period) by the organizations, the tax declaration (calculation) on the land tax is submitted or the corresponding changes and additions are made to the tax declaration (calculation) on the land tax not later than the 20th day of the month following the month in which the authorized state body adopted a decision that is the basis for the emergence or transfer of the right to a land plot; the object of taxation with land tax arose; the legal entity, including the budget one, is recognized as a payer of the land tax and (or) loss of the right to apply the land tax privilege. Payment deadline: 1) Land tax is paid by legal entities: • as a general rule, at the legal entity’s discretion without changes during the tax period once a year, in the amount of the calculated amount for a year — not later than on February, 22 of the

26 Tax guide-2019

running year, or every quarter not later than on the 22th of the second month of each quarter — in the amount of one-fourth of the annual amount of land tax; • on agricultural land — at the legal entity’s discretion without changes in the tax period once a year, in the amount of the calculated amount for a year not later than on April, 15 of the current year, or not later than on April 15, July 15, September 15, November 15 — at the rate of 1/4 of the annual amount of the land tax; • in case of adoption by the authorized state body of the decision, which is the basis for the emergence or transfer of the right to a land plot; in case of occurrence of objects of taxation by the land tax; in case of recognition of the payers of the land tax of the separate legal entities, including budgetary, and (or) in case of loss of the right to application of the privilege on the land tax in November of the current tax period the payment of the land tax is made not later than December 22 of the current tax period; • in case of adoption by the authorized state body of a decision which is the basis for the emergence or transfer of the right to a land plot; in case of occurrence of objects of taxation by land tax; in case of recognition of certain legal entities, including budget ones, as land taxpayers and (or) in case of loss of the right to apply the land tax privilege in the current tax period (except for occurrence of such circumstances in November and December of the current tax period) the land tax payment is made not later than the date corresponding to the nearest legally established term of payment after submission of the tax declaration (calculation) on land tax or making amendments and additions to the tax return (calculation) on land tax; • for land plots provided for temporary use and not returned in due time in accordance with legislation, illegally occupied, the land tax shall be paid not later than the date corresponding to the nearest legally established deadline for payment after the deadline for submission of the tax return (calculation) on land tax. 2) Land tax is paid by individuals: • on the basis of the notification of the tax authority of the established form, which is given annually to the taxpayer; • annually not later than November 15 — for the current tax period. In case of delivery of the notification by the tax authorities after the expiration of the specified term of payment, the tax shall be paid not later than 30 calendar days from the date of delivery of the notification to the taxpayer; • within 30 calendar days from the date of delivery of the notification to the taxpayer upon filing for tax payment: • for previous tax periods; • for the land plots provided for temporary use and not returned in due time in accordance with legislation, which are illegally occupied. Land tax on rented land plots is levied in the amount, defined by legislation, according to the procedure similar to the calculation of the land tax.

Ecological tax Taxpayers: legal entities and individual entrepreneurs. Objects of taxation: 1) emissions of pollutants into the air specified in the permits for emissions of pollutants into the air or complex environmental permits;

27 2) wastewater discharge into the environment on the basis of special water use permits or complex environmental permits; 3) storage of production wastes; 4) waste burial. Rates: installed in Belarusian rubles to the volumes of discharge/emission/storage/burying of substances (Annexes 7—9 to the Tax Code). Decreasing coefficients may be applied to the rates. Tax period: calendar quarter. Deadline for submitting the tax return: quarterly, no later than the 20th of the month following the expired tax period. Payment deadline: quarterly not later than on the 22nd of the month following the expired tax period. The amount of the ecological tax may be calculated on the basis of the established annual volumes of emissions of polluting substances in the open air, disposal of sewage, storage specified in pollution permits in the open air, special water use, storage or in integrated permits (further — annual volume), and the corresponding rates of ecological tax. In this case, the tax declarations (calculations) are submitted: • not later than April 20 of the calendar year on the basis of the established annual volume, and the payment of ecological tax is made at the taxpayer’s choice once a year in the amount of the calculated amount for the year not later than April 22 of the calendar year or quarterly not later than the 22nd of the month following the reporting quarter, at the rate of 1/4 of the calculated amount of ecological tax. • not later than February 20 of the year following the expired year, on the basis of actual annual emissions of pollutants into the air, wastewater discharges, storage and disposal of waste and not later than February 22 of the year following the expired year, make an additional payment of ecological tax. In case when the specified volumes do not exceed the established annual volumes, the overpaid amounts of the ecological tax are subject to offset or return to taxpayers.

Tax for the extraction (removal) of natural resources The tax base is defined as the actual volume of extracted (removed) natural resources. A list of such natural resources is determined by the Tax Code and includes extraction of: 1) sand used as a moulding sand for the production of glass, porcelain and earthenware products, refractory materials, cement; 2) sand-gravel mixtures; 3) building and facing stone; 4) surface and underground water; 5) mineral waters, mineralized industrial waters; 6) sand: 7) clay, sand clay, clay loam and bergmeal; 8) bentonitic clay; 9) potassium salt (in terms of potassium oxide) and halite;

28 Tax guide-2019

10) oil and gas condensate; 11) chalk-stone, malm, limestone and dolomite; 12) plaster-stone (anhydrite); 13) ironstone; 14) peat with humidity of 40%; 15) sapropel with humidity of 60%; 16) bog oak; 17) amber; 18) gold; 19) grapevine snail; 20) chironomid larvae; 21) green frog (pond, edible, lake); 22) adder; 23) brown coal (in terms of standard fuel); 24) oil shale (in terms of standard fuel); 25) long-clawed (narrow-clawed) crayfish. Tax rates: established in Belarusian rubles to the volume of extraction (removal) of natural resources except for potassium salt and oil (Annexes 10, 11 to the Tax Code). Tax period: calendar quarter (in respect of oil and potassium salts — calendar month). Deadline for submitting the tax return: not later than the 20th of the month following the expired tax period. Payment deadline: every quarter not later than on the 22th of the month, following the expired tax period. The amount of the tax for the extraction (removal) of natural resources, except for the tax regarding oil and potassium salt, may be calculated by taxpayers on the basis of the annual volumes of the extraction (removal) of natural resources fixed in the documents on the basis of which they are extracted (removed) and corresponding tax rates. In this case, the tax returns (calculations) must be submitted not later than on April 20 of the calendar year, proceeding from the annual volumes of the extraction (removal) of natural resources fixed in the documents on the basis of which they are extracted. The tax is paid at the end of the tax period, not later than on the 22th of the month, following the accounting quarter, in the amount of 1/4 of the calculated tax amount for the extraction (removal) of natural resources. At the end of the year, based on the actual volume of extraction (removal) of natural resources, recalculation of the amount of tax that shall be paid is hold and the tax returns (calculations) are to be submitted not later than on 20 February, following the expired year.

Offshore duty Taxpayers: Belarusian legal entities and Belarusian individual entrepreneurs. The activities listed below are subject to offshore duty: 1) in the event when a resident of the Republic of Belarus transfers monetary funds to a non-resident of the Republic of Belarus registered in the offshore zone, to a third party under the obligation owed to that non-resident or into the account opened in the offshore zone;

29 2) when non-monetary obligations owed to a resident of the Republic of Belarus registered in the offshore zone are performed, except as a non-resident of the Republic of Belarus fulfills cross liabilities by transferring money into an account of a resident of the Republic of Belarus; 3) when a resident of the Republic of Belarus and a non-resident of the Republic of Belarus registered in the offshore zone are involved in the assignment of rights and obligations regulated by the Be- larusian legislation. Not subject to offshore taxation: 1) transfer of funds by state authorities in accordance with the obligations of the Republic of Bela- rus to international organizations under international agreements, as well as to STANDARD AND POOR’S FINANCIAL SERVICES LLC (Delaware, the United States of America); to BLOOMBERG FI- NANCE L.P. (Delaware, the United States of America); 2) performance of obligations in kind to a non-resident of the Republic of Belarus and transfer of obligations in connection with a change of parties in the obligation between a resident of the Re- public of Belarus and a non-resident of the Republic of Belarus registered in an offshore zone for obligations for which the transfer of funds is not subject to an offshore levy. The list of offshore zones was approved by the Edict of the President of the Republic of Belarus dated 25.05.2006 No. 353 and includes: the Principality of Andorra, Antigua and Barbuda, the Commonwealth of the Bahamas, Barbados, Belize, the Nation of Brunei, the Republic of Vanuatu, Anguilla, Bermuda, the British Virgin Islands, Montserrat, Gibraltar, the British Indian Ocean Territory (the Chagos Islands), South Georgia and the South Sandwich Islands, the Turks and Caicos Islands, the Cayman Islands, Grenada, the Republic of Djibouti, the Dominican Republic, the Macao Special Administrative Region of the People’s Republic of China, the Republic of Costa Rica, the Cook Islands (New Zealand), Niue (New Zealand), the Republic of Liberia, the Principality of Liechtenstein, the Republic of Mauritius, the Federal Territory of Labuan, Malaysia, the Republic of the Maldives, the Republic of the Marshall Islands, the Republic of Nauru, the Republic of Panama, Madeira (the Portuguese Republic), the Principality of Monaco, the Independent State of Samoa, the Republic of Seychelles, the Federation of Saint Christopher and Nevis, Saint Lucia, Saint Vincent and the Grenadines, the Kingdom of Tonga, the Virgin Islands (the United States of Amer- ica), Puerto Rico (the United States of America), Wyoming (the United States of America), Delaware (the United States of America), Kerguelen Island, French Polynesia, the Republic of the Fiji Islands, Jamaica, the Republic of Montenegro, Aruba, Curacao, Bonaire, Saba, Sint Eustatius, Sint Maarten. The tax base of offshore duty is determined relying on the following aspects: • in the event of monetary fund transfer, the amount of money transferred is taken into account; • when either non-monetary obligations are performed or the assignment of property rights and obligations regulated by the legislation takes place, the contract price conditioning those obligations is of importance; • if a non-monetary obligation is fulfilled in stages, the tax base is determined on the basis of the amount of the obligation performed by a resident of the Republic of Belarus; • in case of transfer of property rights and (or) obligations in connection with the change of persons in the obligation, the tax base is determined on the basis of the transferred volume of property rights and (or) obligations. Rate: 15%. The amount of the offshore duty is calculated as multiplying the tax base by the offshore duty rate. Under the tax legislation of the Republic of Belarus, monetary fund transfer is exempt from taxation if the money received by residents of the Republic of Belarus is paid back to non-residents of the Republic of Belarus as sums of credits and loans, interest on them. Tax exemption is also applied in

30 Tax guide-2019 respect of contracts of carriage by sea and shipping contracts covering international delivery by sea, as well as transfer of funds by state organizations subordinate to the Government of the Republic of Belarus in accordance with the obligations of the Republic of Belarus to international organizations under international treaties and in some other cases. Tax period of offshore duty: calendar month. Payment deadline: prior to monetary fund transfer in the Belarusian rubles at the official exchange rate set by the National Bank of the Republic of Belarus on the date of the transfer. When either non-monetary obligations are performed or the assignment of rights and obligations regulated by the Belarusian legislation takes place, off-shore duty is paid on the day following that performance or assignment in Belarusian rubles at the official exchange rate set by the National Bank of the Republic of Belarus on the date of that performance or assignment. Deadline for submitting the tax return: not later than on the 20 of the month following the expired tax period. Offshore duty amounts are included by residents of the Republic of Belarus in the costs of production and sale of goods (works, services), property rights, taken into account in taxation.

Stamp duty Taxpayers: legal entities and individuals. Objects of taxation: 1) transfer and receipt of promissory notes and bills of exchange, their copies and copies of bills of exchange in order to change the right of ownership or other rights in rem, including the issue, en- dorsement, avaliability of promissory notes and bills of exchange, their copies and copies of bills of exchange; 2) submission for payment of a promissory note made (issued), endorsed or avalised in the Republic of Belarus, its copy and a copy of the bill of exchange, information about which is not submitted to the Republican Unitary Enterprise «Republican Central Securities Depository». Tax base: a promissory note amount within the limits of which the payer is responsible for the bill of exchange, and in case of submission for payment of the bill of exchange stipulated by the Edict of the President of the Republic of Belarus No. 69 «On the use of promissory notes» dated February 17, 2015, its copy and copy of the bill of exchange — as the amount submitted for payment. If it is impossible to determine the amount of the bill of exchange within the limits of which the payer is responsible for the bill of exchange, the tax base is determined from the largest amount indicated in the bill of exchange. Rates: 15% • transfer to international organizations, foreign state bodies and legal entities, foreign citizens and stateless persons and receipt from them of promissory notes and bill of exchange 20% • at issuing copies of promissory notes and bills of exchange, copies of bills of exchange 25% • in respect of a promissory note or bill of exchange drawn up (issued), endorsed or avalised in the Republic of Belarus, a copy thereof and a copy of a bill of exchange, the information on which is not submitted to the Republican Unitary Enterprise «Republican Central Securities Depository» 0,1%

31 • in other, unspecified cases The amount of stamp duty is calculated as multiplying the tax base by the stamp duty rate. Payment deadline: not later than on the business day following the day of issue, avaliability or submission for payment, transfer and receipt of promissory notes and bills of exchange, their copies and copies of bills of exchange. Stamp duty amounts are included by legal entities in the costs of production and sale of goods (works, services), property rights, and by individual entrepreneurs in the expenses taken into account when calculating personal income tax.

Consular fee Taxpayers: legal entities and individuals who apply for legally significant actions, including granting certain rights or issuing certain documents, to diplomatic missions and consular offices of the Re- public of Belarus, as well as to the main consular office and consular posts of the Ministry of Foreign Affairs of the Republic of Belarus in the territory of the Republic of Belarus. Objects of taxation: 1) consideration of applications of foreign citizens and stateless persons for issuance of visas of the Republic of Belarus; 2) consideration of applications for execution of documents for departure from the Republic of Bela- rus and (or) entry to the Republic of Belarus; 3) consular registration; 4) consideration of applications on the issues of citizenship of the Republic of Belarus, registration of permanent residence outside the Republic of Belarus to citizens of the Republic of Belarus who left the Republic of Belarus for temporary stay outside the Republic of Belarus, registration of permanent residence in the Republic of Belarus to foreign citizens and stateless persons; 5) performing actions related to the registration of civil status acts; 6) performing notarial acts; 7) legalization of documents; 8) apostille; 9) request for documents; 10) issuance of certificates. Rates: set in accordance with Annex 12 to the Tax Code. Payment deadline: prior to consular action. Non-payment of the consular fee is the basis for refusal to perform the actions, which are recognized by the objects of taxation of the consular fee. The amounts of the consular fee are included by legal entities in the costs of production and sale of goods (works, services), property rights, and by individual entrepreneurs in the costs taken into account when calculating income tax from individuals.

State duty Taxpayers — legal entities and individuals that:

32 Tax guide-2019

• apply for legally significant actions, including granting certain rights or issuing certain documents, to specially authorized state bodies, other authorized organizations, to officials; • are defendants (debtors) in courts, if the court ruling is not in their favor, and the plaintiff (re- coverer) is exempt from state duty in accordance with the Tax Code or acts of the President of the Republic of Belarus. Objects of taxation (the exhaustive list is fixed in Art. 284 of the Tax Code): 1) consideration by the courts of claims and other statements, complaints, petitions, etc; 2) notarial and other actions performed by an authorized official of the local executive and administrative body; 3) performing actions related to the registration of civil status acts; 4) state registration of commercial and non-commercial legal entities, changes and (or) additions made to their charters; 5) state registration of the issue (additional issue) of equity securities, amendments to the State Reg- ister of Securities, issuance of a duplicate certificate of state registration; 6) state registration of a sea vessel, mixed (river-sea) navigation vessel, inland navigation vessel, state registration of the ownership right to a vessel under construction or to a share in it, state registration of changes in information, including mortgages, subject to entering into the State Register of Sea Vessels of the Republic of Belarus, the State Register of Ships of the Republic of Belarus or the ship’s book, issue of a duplicate of the document confirming the fact of state registration of a vessel; 7) state registration of civil aircraft, civil aviation aerodrome, certification in civil aviation; 8) issuance of a driver’s license for the right to drive a motor vehicle of the relevant category, subcat- egory (hereinafter — the driver’s license), its duplicate, exchange of a driver’s license, as well as a driver’s license of the Ministry of Internal Affairs of the USSR, a temporary permit for the right to drive a motor vehicle; 9) registration as a resident of a free economic zone; 10) issuance of a permit to open a representative office of a foreign legal entities in the Republic of Belarus, extension of the term of validity of such permit; 11) issuance (registration) of the license for export and (or) import of goods, issuance of its duplicate; 12) other. Rates: set in accordance with Annexes 13-22 to the Tax Code. Payment deadline: when applying for legally significant / notarized actions. State duty amounts are included by legal entities in the costs of production and sale of goods (works, services), property rights, and by individual entrepreneurs in the costs taken into account when calculating income tax from individuals.

Patent fees Taxpayers — legal entities and individuals who apply to the National Center of Intellectual Property for legally significant actions in accordance with the established procedure. Objects of taxation — legally significant actions related to: 1) legal protection of inventions, utility models, industrial designs, plant varieties, trademarks and service marks, appellations of origin of goods, topologies of integrated circuits;

33 2) activities of patent attorneys (filing an application for attestation of a candidate for a patent attorney; conducting a qualification exam; registering a patent attorney and issuing a certificate of registration as a patent attorney, etc.). Rates: set in accordance with Annex 23 to the Tax Code. Patent fees are paid by transfer of money to the current (settlement) account of the National Center of Intellectual Property with their subsequent crediting to the republican budget. The document confirming the day and the fact of payment of the patent fee is a payment instruction (a copy thereof) with the bank’s record of execution. The document confirming the payment of the patent fee shall be submitted to the National Center of Intellectual Property when applying for a legally significant action, unless another term is established by the legislation. The amounts of patent fees are included by legal entities in the costs of production and sale of goods (works, services), property rights, and by individual entrepreneurs in the expenses taken into account when calculating the personal income tax.

Utilization fee Taxpayers — legal entities and individuals, including individual entrepreneurs, including these individuals applying special tax regimes. The object of taxation — is a vehicle: 1) produced (manufactured) in the territory of the Republic of Belarus and alienated or used by the producer (manufacturer) for its own needs; 2) completed in the territory of the Republic of Belarus on the basis of the chassis provided by the customer, if as a result of such completion the producer (manufacturer) has assigned an identifi- cation number (VIN) to the vehicle completed by the manufacturer in accordance with the procedure established by the legislation; 3) imported into the Republic of Belarus as goods for personal use, released into free circulation; 4) imported into the Republic of Belarus and placed under the customs procedure of release for domestic consumption; 5) imported to the Republic of Belarus from the territories of the member states of the Eurasian Eco- nomic Union and subject to state registration in the territory of the Republic of Belarus in accordance with the legislation of the Republic of Belarus. Types and categories of vehicles that are subject to the utilization fee are determined by the Decree of the Council of Ministers of the Republic of Belarus of 27.02.2014 № 172 «On measures to implement the Decree of the President of the Republic of Belarus of February 4, 2014 № 64». Tax base: a unit of a vehicle recognized as an object of taxation as a utilization fee. Rates: established by the Decree of the Council of Ministers of the Republic of Belarus of 27.02.2014 № 172 «On measures to implement the Decree of the President of the Republic of Belarus of Febru- ary 4, 2014 № 64». Tax period: the quarter in which the obligation to pay the disposal fee arises. The date of accrual of the obligation to pay the utilization fee is determined as the day of the tax period on which the payer has a utilization fee. The amount of the utilization fee paid:

34 Tax guide-2019

• is to be attributed to the increase in the value of the vehicle when the payer who imported (produced, manufactured) the vehicle to the accounting (when accepted by an individual entrepreneur to accounting) as a fixed asset; • is included in the expenses for the production and sale of goods (works, services), property rights, taken into account in taxation, the costs taken into account by individual entrepreneurs in calculating income tax from individuals when accepted for accounting (when an individual entrepreneur for accounting) in other cases; • shall be included in the expenses related to the acquisition of property disposed of on a compensation basis when a natural person who has paid the utilization fee is provided with a property tax deduction for personal income tax.

35 LOCAL TAXES AND DUTIES Dog ownership tax Taxpayers — individuals. Object of taxation: ownership of dogs aged 3 months and older. Tax base: number of dogs aged 3 months and older by the 1st day of the first month of the tax period. Rates are set for the tax period in the amount: 1.5 basic unit • for breeds of dogs included in the list of potentially dangerous breeds of dogs (Resolution of the Ministry of Agriculture and Food of the Republic of Belarus No. 40 dd. 12.12.2001 «On some issues of breeding, keeping, importing into the Republic of Belarus, as well as training of owners of potentially dangerous breeds of dogs») 0.3 base units • in other cases. Minsk City Council of Deputies, local Councils of Deputies of the basic territorial level have the right to reduce (by no more than 2 times) the rates of dog ownership tax. Tax period: calendar quarter. Payment of the dog ownership tax is made by taxpayers by making the sums of the tax to the organizations which are carrying out operation of a housing fund and (or) rendering housing and communal services, simultaneously with payment of a payment for use of premises (payments for housing and communal services). The tax declaration (calculation) on the dog ownership tax is not submitted.

Resort duty Payers — individuals, except for: • persons referred for recuperation and sanatorium-resort treatment free of charge from the state social insurance funds and the national budget in accordance with the legislative acts; • persons referred to health-improvement and sanatorium-resort treatment within the framework of compulsory insurance payments against industrial accidents and occupational diseases (including accompanying persons); • children sent to health-improvement (sports and health-improvement) camps by way of vouchers, the cost of which is reduced at the expense of the state social insurance or the national budget. Object of taxation: residence (not less than 24 hours) of an individual in the relevant administrative and territorial units of the Republic of Belarus: 1) sanatorium-resort organizations; 2) preventive clinics, health centers (complexes), educational and health centers, health camps, sports and health camps, rest houses (bases), boarding houses. Tax base: the cost of the voucher to the sanatorium-resort or health-improving organization, and if the voucher is not registered — as the cost of accommodation services, as well as the cost of food services, medical and health-improving services.

36 Tax guide-2019

When determining the tax base of the resort duty does not take into account the cost of paid services provided to individuals when visiting a health resort or recovery organization without accommodation. In cases where the turnover of sales of health resort and (or) recovery services is subject to VAT, the tax base of the resort duty is determined on the basis of the cost of these services, including VAT. Rates: set depending on the type of sanatorium or health resort organization and can not exceed 5%. In the absence of a decision of the Minsk City Council of Deputies, local Councils of Deputies of the basic territorial level, which establishes the rate of the resort duty on the territory of the district (settlement), the rate is considered equal to 0. Tax period: calendar quarter. The payment of the resort duty is made by the taxpayers by paying the amount of the duty to the sanatorium-resort or health-improving organizations, which accept the amounts of the resort duty and transfer them to the budget not later than the 22nd of the month following the expired tax period. The tax return (calculation) on the resort duty is not submitted.

Duty for packer shippers Taxpayers — legal entities and individual entrepreneurs. Objects of taxation: commercial harvesting (purchase) of wild plants (their parts), mushrooms, technical and medicinal raw materials of plant origin for the purpose of their industrial processing or sale, except for their harvesting, when the taxpayer paid the fee for the secondary forest use or applied the exemption from the specified fee. Tax base: cost of harvesting (purchase) volume determined on the basis of harvesting (purchase) prices. Rates: set at a rate not exceeding 5%. Tax period: calendar quarter. Deadline for submitting a tax return: quarterly no later than the 20th of the month following the expired tax period. Payment deadline: quarterly not later than the 22nd of the month following the expired tax period. Amounts of duty for packer shippers are included by legal entities in the costs of production and sale of goods (works, services), property rights, and by individual entrepreneurs in the costs taken into account when calculating income tax from individuals.

37 OBLIGATORY INSURANCE PAYMENTS TO THE SO- CIAL PROTECTION FUND AND PENSION FUND. INSURANCE FEES FOR OBLIGATORY INSURANCE AGAINST OCCUPATIONAL DISEASES AND ACCI- DENTS AT PRODUCTION FACILITIES The objects for the calculation — all monetary and/or natural payments, calculated in favor of working citizens on the basis of all grounds, irrespectively of the sources of financing (hereinafter — payments), including remuneration under civil-law contracts except for those provided for by a list of payments, which are not subject to insurance fees to the Fund, approved by the Council of Ministers of the Republic of Belarus. Payments cannot exceed the amount of five average wages in the Republic of Belarus for the month, preceding the month for which obligatory insurance payments are paid. The amounts of obligatory insurance payments: 28% • retirement, disability and breadwinner insurance contributions (pension insurance) 6% • insurance contributions for temporary incapacity for work, pregnancy and childbirth, childbirth, care of a child under the age of 3, provision of 1 day off work per month to the mother (father, guardian, trustee), raising a disabled child under the age of 18 years, death of the insured or a member of his family (social insurance) for employers, individuals who pay the mandatory insurance contributions independently, Belgosstrakh (for persons who are addi- tionally paid up to the average monthly wage) Payments of obligatory insurance fees to the Social Protection Fund and Pension Fund are made by payers by a single payment. Since 2016, foreign citizens and stateless persons working in the Republic of Belarus, including representative offices of foreign legal entities operating in the territory of the Republic of Belarus, or being individual entrepreneurs, are also subject to obligatory state social insurance under the conditions established by the law for citizens of the Republic of Belarus. By 2016, foreign citizens and stateless persons had an opportunity to choose whether they participated in the legal relationships of state social insurance. These citizens had to inform the employer about their wish to participate in the state social insurance system of the Republic of Belarus in writing by submitting an application. Insurance payments of obligatory insurance against occupational diseases and accidents at production facilities are calculated on the basis of payments that are subject to the obligatory insurance for natural persons under labor and civil-law contracts. The insurance rate is established in the amount of 0,6% for all legal entities (except for the state-fi- nanced ones) with the possibility of benefits, discounts (increases) used along with the established rate.

38 Tax guide-2019

SPECIAL TAX REGIMES Belarusian legislation provides the following special tax regimes: • simplified tax system; • single tax from individual entrepreneurs and other individuals; • single tax for producers of agricultural products; • tax on gambling business; • tax on income from lottery activity; • tax on income from organization of electronic interactive games; • duty for craft activities; • duty for rendering the service in the field of rural tourism; • single tax on imputed income.

Simplified tax system The scope of the system is activity of small enterprises with the level of income no higher than the size, stated by the legislation. Small enterprises have the right to use the simplified tax system (STS), while respecting the following criteria simultaneously: 1) the number of employees on average should be not more than 100 people; 2) the amount of gross proceeds on an accrual basis for the first 9 months should not be more than 1 465 565 Belarusian rubles, 315 000 Belarusian rubles — for individual entrepreneurs. Taxpayers: 1) organizations that are legal entities of the Republic of Belarus; 2) individual entrepreneurs; 3) notaries engaged in notarial activity in a notary office, advocates. The following are not allowed to apply the STS: 1) legal entities and individual entrepreneurs: • production of excisable goods (alcohol, tobacco production and others); • selling (agency, commission and consignment contracts and other similar civil contracts) jewelry and other household articles made of precious metals and precious stones; • selling property rights to means of identities of civil turnover participants, goods, works or services (trade names, trademarks and service marks, geographical instructions, etc.); • being residents of the free economic zones, the special tourist and recreation park «Augustov Canal», the Hi-Tech Park, the China-Belarus industrial park «Great Stone»; • renting out (renting financial lease), other compensated or uncompensated use of capital constructions (buildings, facilities), its parts, that are not in its right of property (common property), economic management, operational management; • who are parties to a simple partnership agreement (joint venture agreement); • carrying out operations (activities) with digital signs (tokens) on their acquisition (production, receipt), alienation (transfer, placement, use), other than alienation (acquisition) of digital signs (tokens) for Belarusian rubles, foreign currency, electronic money and their exchange for other digital signs (tokens) 39 2) legal entities that perform: • lottery activity (lottery organizers); • activities for the organization and holding of interactive electronic games; • real estate activity; • insurance business (insurance organizations (insurers)), intermediary activity in insurance (insurance brokers, insurance agents); • banking (banks); • gambling activity 3) legal entities that are: • professional securities market participants; • members of the holding company; • microfinance organizations; • investment funds, specialized depositaries of the investment fund, managing organizations of the investment fund; • payers of a single tax for producers of agricultural products or single tax on imputed income; 4) unitary enterprises (except for unitary enterprises of the republican state social associations), which property owner is a legal entity, the Republic of Belarus or its administrative and territorial unit; 5) commercial legal entities, more than 25% of which shares (stakes in the statutory fund) belongs to one or in the aggregate to several other organizations, and commercial organizations more than 25 percent of which shares (stakes in the statutory fund) belongs (including in the aggregate) to the Republic of Belarus and (or) its administrative and territorial unit (administrative and territorial units). Legal entities and individual entrepreneurs are obliged to move to the general system of taxation in case of exceeding gross proceeds on an accrual basis during the calendar year 1 949 208 and 420 000 Belarusian rubles respectively and (or) the number of employees more than 100. The tax under the STS replaces the following for legal entities: • CIT (except for CIT calculated, withheld and transferred to the budget when performing the duties of a tax agent). The general procedure for the calculation and payment of CIT in respect of dividends, as well as income equivalent to dividends, of a participant (shareholder) of the legal entity in cash or in kind in the event of liquidation of the legal entity, in case of withdrawal (exclusion) of the participant from the legal entity in an amount exceeding the amount of his contribution (contribution) to the authorized capital or actually produced (paid) by the participant (shareholder) of the costs of acquisition of a share in the authorized capital (units, shares) of the legal entity, etc., shall be preserved; the difference taken into account in determining gross profit; profit from the sale (redemption) of securities; profit from the alienation of a share (part of a share) in the authorized capital (unit (part of a unit)) of the legal entity; profit from the sale of the enterprise as a property complex. • VAT on sales of goods (works, services) and property rights, provided that the number and amount of revenue are observed; • real estate tax (if the area of permanent structures (buildings, constructions), their parts does not exceed 1000 square meters); • ecological tax (except for the ecological tax for burial of industrial wastes in case of acquisition of the right of ownership of industrial wastes on the basis of the transaction on alienation of wastes or performance of other actions testifying to the handling of wastes in ownership in other way, with the purpose of further burial); 40 Tax guide-2019

• duty for packer shippers. The application of the STS does not exempt from payment: • VAT levied on goods imported into Belarus; • VAT on goods (works, services) and property rights sold in Belarus by foreign legal entities that do not operate in Belarus through a permanent establishment and are not registered with the Belarusian tax authorities; • VAT on sales of goods (works, services) and property rights arising for a trustee in connection with trust management of property under a property trust management agreement in the interests of the principal (beneficiary). Restrictions on the use of the STS have been established for certain types of activities. Tax base of the tax under the STS is the proceeds from the sale of goods (works, services), property rights as well as non-operating income. Tax rates for the STS: 5% • for legal entities and individual entrepreneurs, which do not pay VAT. This rate can be applied and VAT can be not paid by individual entrepreneurs and legal entities having not more than 50 employees in case their gross profit doesn’t exceed 1 337 415 Belarusian rubles 3% • for legal entities and individual entrepreneurs, which do pay VAT 16% • for the legal entities and individual entrepreneurs in respect of such non-operating income as the cost of gratuitously received goods (works, services), property rights and other assets, amounts of money donated Businessmen with less than 15 people and a gross revenue up to 738 000 Belarusian rubles, paying tax in accordance with the STS are exempt from accounting recording and reporting and make recording in the book (ledger) of incomes and expenses of legal entities and individual entrepreneurs, using the STS. Tax period: calendar year. Reporting period: • calendar month — for businessmen applying the STS with monthly payment of VAT; • calendar quarter — for businessmen applying the STS without payment of VAT or with quarterly payment of VAT. Deadline for submitting the tax return: not later than the 20th of the month following the expired reporting period. Payment deadline: not later than the 22th day of the month following the expired tax period.

Single tax from individual enterpreneurs and other individuals Taxpayers: 1) individual entrepreneurs;

41 2) individuals not involved in entrepreneurial activities; 3) individuals not registered as individual entrepreneurs (such taxpayers include individuals engaged in activities that are recognized as subject to this tax for taxpayers — individual entrepreneurs). The following do not have the right to use this tax regime: 1) persons carrying out activities within the framework of a simple partnership agreement (joint activity); 2) persons carrying out activities on sale of goods (works, services) to consumers on the basis of commission, assignment and other similar civil-law contracts; 3) persons engaged in retail trade in goods (except for cases specified in the Tax Code). Objects of taxation: 1. for taxpayers — individual entrepreneurs: 1.1. provision of services to consumers (performance of works), including in case of their payment for the consumer by legal entities and individual entrepreneurs (car maintenance and repair, motorcycle maintenance and repair; repair of personal and household items, clothing production, footwear production, production of finished textiles, except for clothes, carpets, laundry, dry cleaning and dyeing of textiles and furs; provision of services by hairdressers and beauty salons; taxi activities, activities of other land passenger transport not included in other groups, activities of passenger river transport, activities of cargo river transport, activities of cargo motor transport; medical, including dental, practice, other health care activities; provision of short-term accommodation; other types of services and works); 1.2. retail trade of goods related to the following groups of goods: bread and bakery products, milk and dairy products; vegetables, fruits, berries, watermelons, melons, grapes; other foodstuffs (except for beer, beer cocktails, alcoholic beverages); motor vehicles; leather clothes, carpets, complex household appliances (except for electric refrigerators and freezers, washing machines); other non-food products (except for jewelry and other household goods made of precious metals and precious stones, specific goods, tobacco products), oil products through gas stations, securities, newspapers and magazines, all types of fur and furniture, Electric fridges of household and freezers, washing machines of household, television receivers of color and black-and-white images, computers of household personal computers, laptops, their components and units, electronic books, tablet computers, mobile phones, spare parts for cars); 1.3. public catering through mini-cafes, summer and seasonal cafes (except for sale of alcoholic beverages, beer, beer cocktails and tobacco products). 2. for taxpayers — individuals not involved in entrepreneurial activities, except for foreign citizens and stateless persons temporarily staying and temporarily residing in the Republic of Belarus: 2.1. sale of goods (works, services) to consumers in the course of the following types of activities: sale of products of floriculture, ornamental plants, their seeds and seedlings, animals (except for kittens and puppies) made by these individuals of bakery and confectionery products, finished culi- nary products at trading places and (or) in other established places; sale of kittens and puppies on condition of keeping pets (cats, dogs); video recording of events; activity of actors, dancers, musi- cians, performers of conversational genre acting individually, provision of services by entertainer; activity on copying, preparation of documents and other specialized office activity; translation and interpretation services; activities related to birthday greetings, New Year and other holidays, regardless of where they are held; mowing of grass on lawns, cleaning of green areas from leaves, mowed grass and garbage; musical and entertainment services for weddings, anniversaries and other celebrations; other activities (Article 337 of the TC); 2.2. provision of residential premises, garden cottages, summer residences for short-term residence belonging to an individual on the basis of the ownership right of the individual. 42 Tax guide-2019

3. for taxpayers — individuals not involved in entrepreneurial activities, who are foreign citizens and stateless persons temporarily staying and temporarily residing in the Republic of Belarus: one-time sale (not more than 5 days in a calendar month) at trading places and (or) in other established places of works of painting, graphics, sculpture, handicrafts, products of plant growing and beekeeping (is carried out under special permissions). Payment of the single tax from individual entrepreneurs and other individuals replaces the following: • payment of personal income tax on income received by individuals in the course of carrying out the types of activities recognized as the object of single tax; • VAT on sales of goods (works, services) and property rights in Belarus (VAT levied when importing goods into the territory of the Republic of Belarus is payable); • ecological tax; • tax on the extraction (removal) of natural resources; • local taxes and duties paid in the course of carrying out activities that are recognized as the object of taxation as a single tax. Payment of the single tax is a mandatory tax regime for individuals who are involved in activities that are subject to the single tax. Individual entrepreneurs have the right to apply a different taxation procedure in respect of such activities, as provided by the Tax Code. However, if an individual entrepreneur has paid a single tax for the reporting period of the current tax period, he must apply the procedure of taxation with a single tax before the end of the tax period. Tax base: 1) is determined by taxpayers — individual entrepreneurs based on the types of activities and (or) the number of retail facilities, trading places, public catering facilities, servicing facilities, gross proceeds, as well as the duration of the reporting period; 2) for taxpayers — individuals — is determined on the basis of the types of activities performed and (or) the number of rooms rented out in the living quarters, the number of garden houses, cottages provided for short-term residence, as well as the duration of the period of activity. Rates: set in a fixed amount in Belarusian rubles, depending on the type and place of activity, the amount varies from 9 to 438 Belarusian rubles (Annex 24 to the Tax Code). Tax period: calendar year. Reporting period: calendar quarter, when the activities are performed. Payment deadlines: 1) taxpayers-individual entrepreneurs — as a general rule, monthly, but not later than the 1st day of the reporting month; 2) taxpayers-individual entrepreneurs, whose reporting period is a calendar quarter — monthly not later than the 1st day of each month of the reporting period in the amount of 1/3 of the amount of a single tax calculated for the calendar quarter; 3) taxpayers-individuals who are not involved in entrepreneurial activity — not later than the day preceding the day of the beginning of the activity recognized as the object of taxation as a single tax.

Single tax for producers of agricultural products Taxpayers: legal entities of the Republic of Belarus that have switched to the single tax for producers of agricultural products or that have begun to apply it:

43 1) legal entities engaged in the production (production and processing) of agricultural products and (or) primary processing of flax; 2) legal entities in terms of activities of their branches that fulfill the tax obligations of the legal entity, if these branches produce (produce and process) agricultural products and (or) primary processing of flax. The following have the right to apply the single tax for producers of agricultural products: • legal entities which, in the previous calendar year, earned at least 50% of its total revenue from the sale of its agricultural products, primary flax processing products and sales of products made by this organization from its agricultural products in the part attributable to such agricultural products; • legal entities in the part of the branch activity, which for the previous calendar year has the amount of revenue from the sale of agricultural products produced by it, products of primary flax processing and revenue from the sale of products manufactured by this branch from the agricultural products produced by it, in the part attributable to such agricultural products, is not less than 50% of the total revenue of the branch. Legal entities that have no right to apply the single tax for producers of agricultural production: • legal entities — taxpayers using the STS; • residents of the free economic zones, the special tourist and recreational park «August Chan- nel», the Hi-Tech Park, the China-Belarus industrial park «Great Stone»; • the legal entities during the period of application of the single tax on imputed income and up to the end of the calendar year in which its use is dismissed. Object of taxation: gross proceeds. Rate: 1% of gross proceeds, unless otherwise provided by the Tax Code. The single tax for producers of agricultural products replaces the following for taxpayers: • CIT (except for CIT calculated, withheld and transferred to the budget when performing the duties of a tax agent). The general procedure for the calculation and payment of CIT in respect of dividends, as well as income equivalent to dividends, of a participant (shareholder) of the legal entity in cash or in kind in the event of liquidation of the legal entity, in case of withdrawal (exclusion) of the participant from the legal entity in an amount exceeding the amount of his contribution to the authorized capital or actually produced (paid) by the participant (shareholder) of the costs of acquisition of a share in the authorized capital (units, shares) of the legal entity, etc., shall be preserved; the difference taken into account in determining gross profit; profit from the sale (redemption) of securities; profit from the alienation of a share (part of a share) in the authorized capital (unit (part of a unit)) of the legal entity; profit from the sale of the enterprise as a property complex. • real estate tax; • land tax and rent for land plots owned by the state and owned by lessors of which are rural, settlement, district, Minsk city and city (cities of regional subordination) executive committees, administrations of free economic zones. The general procedure for calculating and paying land tax with regard to certain land plots shall be preserved. • ecological tax, except for the ecological tax for burial of production wastes in case of acquisition of the right of ownership for production wastes on the basis of the transaction on alienation of wastes or performance of other actions confirming the circulation of wastes into the ownership by other means, with the purpose of further burial. Thus, calculation and payment of the ecological tax are made concerning the wastes got by the specified ways;

44 Tax guide-2019

• duty for packer shippers. Tax period: calendar year. Reporting period: • calendar month — for legal entities that pay VAT on a monthly basis; • calendar quarter — for legal entities that pay VAT on a quarterly basis. Deadline for submitting the tax return: not later than the 20th of the month following the expired reporting period. Payment deadline: not later than the 22nd of the month following the expired reporting period.

Tax on gambling business Taxpayers — legal entities of the Republic of Belarus. The objects of tax on gambling business: 1) gambling tables; 2) slot machines; 3) totalizator counters; 4) bookmaker office counters; 5) positive difference between the sum of the accepted bets in gamblings and the sum of the paid prizes (the returned not played bets). These objects except positive difference between the sum of the accepted bets in gamblings and the sum of the paid prizes (the returned not played bets) are registered in the tax office until April 1, 2019 in witness thereof a certificate is issued. Starting from April 1, 2019, such objects are subject to registration in a special computerized cash register system, which ensures control over the turnover in the gambling business, before they are used for the organization and (or) gambling. Income received by taxpayers from gambling activities is not subject to taxation: • VAT, except for this tax, levied when importing goods into the territory of the Republic of Be- larus; • CIT. The tax rates on gambling fixed on the unit object of taxation are in the following amounts: 7 140 Belarusian rubles • as for game table 240 Belarusian rubles • as for slot machine 2 250 Belarusian rubles • as for cash sweepstakes 1 500 Belarusian rubles • as for cash bookmaker 4%

45 • in respect of the positive difference between the amount of bets accepted in gambling and the amount of winnings paid (returned bets not played) The amount of tax on gambling business is calculated as the product of the tax base and tax rate determined for corresponding object of taxation for tax on gambling business. Tax period: calendar month. Deadline for submitting the tax return: not later than the 20th day of the month following the expired tax period. Payment deadline: not later than the 22th of the month following the expired tax period.

Tax on income from lottery activity Taxpayers — legal entities, which organize lotteries. Only state, state bodies, local executive committees, state legal entities can be organizers of lotteries in the territory of the Republic of Belarus. Incomes from organizing lotteries and distribution of lottery tickets (accept lottery bets) are not objects of taxation respectively a CIT tax and VAT. Tax base: the difference between the amount of income received from the organization and holding of lotteries and the amount of accrued prize fund of the lottery. Rate: 8% of income from lottery activity per month. Tax period: calendar month. The amount of tax is defined as the product of the tax base and tax rate. Deadline for submitting the tax return: not later than the 20th day of the month following the expired tax period. Payment deadline: not later than the 22th of the month following the expired tax period.

Tax on income from organization of electronic interactive games Payers — legal entities that organize electronic interactive games. Object of taxation: income received from electronic interactive games. Payment of tax on income from organization of electronic interactive games replaces payment of CIT and VAT. Tax base: the difference between the amount of income received from electronic interactive games and the amount of the generated winning fund. When determining the tax base for this tax, the own funds of taxpayers directed by them to increase the winning fund are not taken into account. Rate: 8% of income from organization of electronic interactive games per month. Tax period: calendar month. Deadline for submitting the tax return: not later than the 20th day of the month following the expired tax period. Payment deadline: not later than the 22th of the month following the expired tax period.

46 Tax guide-2019

Duty for craft activities Taxpayers — individuals engaged in craft activities in the order determined by the President of the Republic of Belarus (Edict of the President of the Republic of Belarus of 09.10.2017 № 364 «On the implementation of craft activities by individuals»). Foreign citizens and stateless persons temporarily staying and temporarily residing in the Republic of Belarus are not entitled to carry out craft activities. Object of taxation: implementation of the types of craft activities determined by the President of the Republic of Belarus (manufacturing and repair of saddlery, animal-drawn carts, sleigh and children’s sledges, fishing tackles and fishing devices; production and repair of items and their parts for personal (domestic) needs of citizens from wire, twine, synthetic tape, tin, clay, plant materials of local origin, including wood; production, installation and repair of structures, equipment and accessories for keeping birds, animals, bees; forging; manufacturing of hand knitting products; manufacturing of hand weaving products, as well as products made in patchwork equipment; lace weaving, macrame; yarn manufacturing; hand embroidery; beading; wood, stone, bone, horn, metal, tin, glass, ceramics, plywood; roll wool products; candle making, etc.). The payment of the duty for craft activities replaces the payment of personal income tax and the single tax on the income of individual entrepreneurs and other individuals in terms of income received from craft activities. Rate: 1 base unit per calendar year. The amount of the base unit is determined as of the date of payment of the duty. Tax period: calendar year. Payment deadline: • for the full following calendar year — not later than the 28th day of the last month of the current calendar year; • in other cases — before the beginning of craft activity. In case of non-implementation of the craft activity during the tax period the paid amount of the duty is not subject to refund (offset).

Duty for rendering services in the field of rural tourism Taxpayers — persons carrying out activities in the provision of services in the field of rural tourism in the order determined by the President of the Republic of Belarus (Edict of the President of the Repub- lic of Belarus of 09.10.2017 No. 365 «On the development of agroecotourism»): 1) individuals permanently residing in a single-apartment or block dwelling house, including an apartment in a block dwelling house in rural areas, small urban settlements, producing agricultural products on land plots provided for construction and (or) maintenance of a dwelling house, or conducting personal subsidiary economy on land plots provided for these purposes; 2) agricultural organizations. In this case, agricultural organizations are legal entities whose main activity is the production (cultivation) and (or) processing of agricultural products, the revenue from the sale of which is not less than 50% of the total revenue. Subjects of rural tourism can carry out activities on rendering services in the field of rural tourism provided that the following conditions are met: • availability of free rooms in the agro-ecological estate for accommodation of agroecotourists; • agroecotourism subjects carry out activities on production and (or) processing of agricultural

47 products; • availability of opportunities for acquaintance of agroecotourists with natural and architectural objects, national cultural traditions of the respective area. Object of taxation — rendering of types of activities to provide services in the field of rural tourism: • provision of rooms in the agro-ecological estate for accommodation of agro-ecotourists; • provision of food for agroecotourists (as a rule, with the use of own production); • acquaintance of agroecotourists with natural, agricultural and architectural objects, folk traditions of the respective area, holding sports, physical culture and cultural events; • presentations, anniversaries, banquets; • provision of services of baths, saunas and showers; • animal riding, except for wild, and horseback riding; • provision of equipment for sports and rest; • transportation services for agroecotourists. Payment of the charge for the rendering services in the field of rural tourism: • replaces the payment of income tax from individuals and a single tax from individual entrepreneurs and other individuals in terms of income received by an individual from the implementation of activities to provide services in the field of rural tourism; • replaces the payment of CIT, VAT, single tax for producers of agricultural products and tax under the simplified taxation system in terms of income (profits, revenues) received by the agricultural organization from the implementation of activities to provide services in the field of rural tourism; • does not release the agricultural organization from the duties of a tax agent. Rate: 1 base unit per calendar year. The amount of the base unit is determined as of the date of payment of the duty. Tax period: calendar year. Payment deadline: • for the full following calendar year — not later than the 28th day of the last month of the current calendar year; • in other cases — before the beginning of the activity on rendering services in the field of agroecotourism. In case of termination of the activity on rendering services in the field of rural tourism before the end of the tax period or non-implementation of the activity during the tax period, the paid amount of the fee is not refundable (offset).

Single tax on imputed income Taxpayers — legal entities which are carrying out activity on rendering services in maintenance and (or) repair of motor vehicles and (or) their components, whose staff is not more than 15 people. Object of taxation: income from maintenance and repair services. Tax base: monetary value of the income from rendering services and maintenance. The income sum of imputed income for the tax period and amount of proceeds from sales of services

48 Tax guide-2019 and maintenance for the tax period in the amount of exceeding imputed income for the tax period is relied on in the present chapter. Imputed income for the tax period is calculated as a product of basic rate for one worker per month and the average number of employees of the organization for reporting month. In such event the basic rate for one worker per month is calculated by dividing the maximum base rate of a unified tax for individual entrepreneurs and other individuals, established according to Annex 24 to the Tax Code for the city of Minsk, when carrying out maintenance and repair of cars, maintenance and repair of motorcycles, by a ratio of 0,1. Property cost (including materials, technical liquids, component parts, spare parts), used in the process of rendering these services, except for those belonging to the customer and taken from them for rendering such services released to the proceeds from sales of services and maintenance. Rate: 5%. Tax period: calendar month. Deadline for submitting the tax return: not later than the 20th day of the month following the expired tax period. Payment deadline: not later than the 22th of the month following the expired tax period.

49 PREFERENTIAL CLUSTERS In addition to special tax regimes, taxation for certain categories of taxpayers is defined in the legislation of the Republic of Belarus.

Taxation in free economic zones (FEZ) Currently in Belarus, there are 6 free economic zones: 1) FEZ «Minsk» 2) FEZ «Brest» 3) FEZ «Gomel-Raton» 4) FEZ «Mogilev» 5) FEZ «Grodnoinvest» 6) FEZ «Vitebsk» In order to become a resident of a FEZ, it is necessary to comply with the following requirements: • place of business — the territory of a FEZ; • conclusion of contract with FEZ administration, concerning the terms of activities within the FEZ; • range of investments not less than 1 000 000 Euros (the volume of investments may be 500 thousand euros, provided that investments are made in this volume within 3 years from the date of signing agreement on the FEZ activity conditions); • creation and (or) the development of the export-oriented production and (or) import substi- tution. Taxation in FEZ involves a list of privileges and benefits (some customs privileges and reduced tax rates). The benefits of this regime are applied by FEZ — residents for the sales: • of goods (works, services) of own production, produced by these residents in the territory of a FEZ for non-residents out of the Republic of Belarus; • outside the territory of the Republic of Belarus to foreign legal entities and (or) individuals of goods of own production produced by them on the territory of FEZ, if such sale is carried out on the basis of commission and agency agreements or other similar civil-law contracts, concluded by these FEZ residents, who are participants of the holding registered in the Republic of Belarus, with a commissioner (attorney), other similar person, who is a participant of the same holding; • of goods, produced by foreign legal residents and (or) individuals under the agreements concluded between them, in the territory of a FEZ, out of the territory of the Republic of Belarus; • of goods (works, services) of own production, produced by them on FEZ territory, to other FEZ residents according to contracts concluded with them. Tax privileges of FEZ residents: • exemption from CIT on income of FEZ residents received from sale of goods (works, services) of own production; • exemption from real estate tax for objects of taxation located in the territory of FEZ, irrespectively of their designated function. The privilege is granted in a quarter, if in the previous 50 Tax guide-2019

quarter a FEZ-resident sold goods (works, services), which are subject to taxation in the FEZ; • exemption from real estate tax for 3 years, calculated starting from the quarter, which is the date of registration of the organization as a FEZ-resident on the objects of taxation of this tax, located on the territory of the respective FEZ, acquired (arisen) in the specified 3 year period, regardless of the direction of their use. The privilege does not apply to the objects of taxation by the real estate tax, taken and (or) leased (transferred) by FEZ-resident for rent (financial (lease)), other compensated or gratuitous use; • exemption from land tax for land plots within the boundaries of FEZ whose use is granted to FEZ-residents for project construction (excluding land plots provided for temporary use and not returned im proper time under the law, squatted) — for the period of design and construction of these projects, but not more than 5 years from the date of this registration; • exemption from land tax for land plots of FEZ-residents regardless of their purpose, located within the FEZ (except for land plots provided for temporary use and not returned in due time in accordance with the legislation, illegally occupied). The privilege is granted, if in the previous quarter a FEZ-resident sold goods (works, services), which are subject to taxation in the FEZ. Custom privileges: a FEZ can be established in the territory of a free customs zone. Goods are placed and used on it without payment of customs duties, taxes, special, antidumping, compensatory duties under the conditions of placement of goods under this customs procedure and their use in accordance with such customs procedure. FEZ-residents are exempt from VAT levied by customs authorities, which are placed by FEZ-residents under the customs procedure of release for domestic consumption of goods produced (received) with the use of foreign goods placed under the local procedure of free customs zone. Taxation peculiarities in FEZ do not apply to: • banks and insurance organizations; • public catering; • activities in the field of gambling business; • activities on organization and holding of electronic interactive games; • operations with securities; • realization of goods (works, services), production (performance, rendering) of which is carried out in full or in part with use of fixed assets being in ownership or other property right of FEZ resident, and (or) labor of FEZ resident’s employees outside its territory.

Taxation of Hi-Tech Park (HTP) residents The HTP was created in order to develop high-tech production in Belarus. The main direction of activity of HTP residents is software programming and development of informational systems. Tax privileges granted to HTP residents: 1) exemption from: • CIT (excluding CIT calculated, withheld and transferred during the performance of the duties of the tax agent); • VAT on turnovers from realization of goods (works, services, property rights) on the territory of the Republic of Belarus (excluding the rent payment from the lease of real estate (part thereof) owned by them on the basis of ownership, economic management, operational management);

51 • land tax on land plots located in the HTP for the period of construction of buildings, designated to business activity of HTP residents, but no longer than for 3 years; • real estate tax on fixed assets and objects of unaccomplished construction of HTP residents, situated in the territory of the HTP (excluding leased fixed assets and objects of unaccomplished construction); • personal income tax on income from the sale of shares in the authorised fund of residents and shares of residents permanently owned by an individual for at least 365 days; • offshore duty in case of payment of dividends / part of the income to founders (shareholders) as well as in case of payments for advertising, marketing, intermediary services. 2) obligatory insurance fees are not charged for income of employees of HTP residents, when it exceeds the amount of a one-month average wage in the Republic of Belarus. 3) individual income, earned during a calendar year under labor contracts, as well as income of individual entrepreneurs by HTP residents, is taxable at a rate of 9% (excluding employees engaged in maintenance and protection of buildings, premises, land); 4) reduced WHT of 5% is applied from dividends of HTP-residents. 5) tax rate on WHT is 0% in relation to incomes from: • alienation of shares (stakes, stocks) of residents; • data processing and information publication activities; • providing space and time for advertising on the Internet; • activities of web portals on the functioning of websites using search engines; • provision of disk space; • debt obligations; • royalty; • intermediary services, etc.; 6) reduced rate of 9% of the CIT in respect of profits from: • alienation of a share (part of a share) by a participant in a authorised fund, a share (part of a share) of the legal entity; • profits from the sale of the enterprise as a property complex; • profit received from the sale (redemption) of securities; • income in the form of interest for the provision of cash in use; • dividends from sources outside the Republic of Belarus, etc. Customs privileges of HTP residents: exemption from custom duties and VAT in case of import of the goods to the custom territory of Bela- rus for the purposes of business activity. In order to use this privilege the residents have to obtain the resolution of the HTP administration about the purposes of usage of these goods. Other benefits and privileges of HTP residents: • residents are entitled to open accounts in banks and other credit and financial organizations outside the Republic of Belarus without the permission of the National Bank with the submission of information on the opening of such accounts to the tax authority at the place of registration and administration of the HTP not later than 30 business days; • residents have the right to buy foreign currency on the domestic foreign exchange market

52 Tax guide-2019

without limiting the purposes of its use; • residents are entitled to conduct, with notice, currency transactions related to the capital movement requiring the approval of the National Bank; • currency received by residents is not subject to mandatory sale; • visa-free entry into the Republic of Belarus for foreign founders (participants) of residents, as well as their foreign employees; • foreign founders (participants) of residents, their foreign employees can stay on the territory of the Republic of Belarus for 180 days during a calendar year; • no special permits for the right to engage in labor activity in the Republic of Belarus with respect to foreign employees of the resident are required; • residents have the right to draft primary accounting documents with non-residents of Belarus solely; • residents are not required to apply to an antimonopoly authority for obtaining the consent for transactions with shares (stakes) in their statutory funds; • the legislative provisions on the procedure for conducting and monitoring foreign trade transactions do not apply to residents.

Taxation of China-Belarus industrial park «Great Stone» The China-Belarus industrial park «Great Stone» was created in accordance with Edict of the Pres- ident of the Republic of Belarus dated June 5, 2012 No 253 for attraction of national and foreign investments for development and organization of high-tech and competitive works in the spheres of electronics, fine chemistry, biotechnology, engineering industry and new materials. The activity of the Park is regulated by the Edict of the President of the Republic of Belarus of June 30, 2014 №326, the Edict of the President of the Republic of Belarus of May 12, 2017 №166 and the Resolution of the Council of Ministers of the Republic of Belarus of August 16, 2012 №756 «On some issues of the China-Belarus industrial park «Great Stone». The Park is a special economic zone within the boundaries, area and in the composition of the lands according to the Annex to the Edict of the President of the Republic of Belarus of 05.06.2012 № 253 with a special legal regime of the special economic zone, the period of validity of which in terms of the special procedure of tax regulation is 50 years. Residents of the Park are legal entities of the Republic of Belarus located on the territory of the Park or created (reorganized) directly in the Park including participation of a foreign investor and imple- menting investment projects that meet simultaneously the following conditions: 1) an investment project shall involve business operation of a legal entity in the Park territory within the key focus areas of the Park — establishment and development of production in the following areas: • electronics and telecommunications, • pharmacists, • fine chemistry, • biotechnology, • mechanical engineering, • new materials,

53 • integrated logistics, • e-commerce, • activities related to the storage and processing of large volumes of data, • social and cultural activities, • research, development and experimental and technological work (hereinafter referred to as R&D); 2) declared investments volume for the investment project implementation should be equivalent to not less than 5 million USD and for the implementation of the investment project of R&D — not less than 500 thousand USD. The declared volume of investments in the implementation of the investment project of the legal entity (except for R&D), applying for its registration as a Park resident, may amount to at least 500 thousand USD, provided that the investment in the specified amount within 3 years from the date of conclusion of the agreement with the administration of the Park on the conditions of activity in the Park. Tax privileges of Park residents: 1) Park residents are exempted from the CIT on income from realization of domestic manufacture goods (works, services), produced in the Park for a period of 10 years from the registration date; 2) Park residents are exempt from real estate tax on the objects of taxation of the Park’s territory for the period of validity of the special legal regime of the Park with regard to the special procedure of tax regulation, regardless of the direction of their use, as well as from land tax for land plots in the Park’s territory; 3) after 10 calendar years following the year of their registration as a Park resident within the next 10 calendar years they pay CIT at the rate reduced to 50%; 4) within 5 calendar years, beginning with the first year when there was a gross profit of Park residents, the 0% rate is applied to the CIT and the WHT dividends and similar income are accrued to their founders (participants, shareholders and owners) by Park residents. 5) prior to January 1, 2027 the rate of WHT on royalties accrued by Park residents to foreign legal entities, not operating through a permanent establishment in Belarus in the form of rewards for information concerning industrial, commercial or scientific experience (including know-how), license fees, patents, drawings, utility model, scheme, formula, design or process, is 5%. 6) up to 2027 individual income, earned under labor contracts, is taxable at a rate of 9%. 7) during the period of validity of the special legal regime of the Park, the turnover of Park residents is exempted from VAT with regard to the special tax regulation procedure: • on the gratuitous transfer of project documentation for the Park’s facilities, unfinished capital construction projects located in the Park’s territory into the ownership of a joint company and (or) Park residents, respectively, in accordance with the procedure established by the legislation of the Republic of Belarus for the construction of buildings and structures in the Park; • for the sale of real estate objects, including land plots located in the Park’s territory, respectively, to Park residents; • from operations on leasing (sublease), financial lease of real estate, including land plots located on the territory of the Park, respectively, to residents of the Park and (or) a joint company. Another preferences and benefits of Park residents: 1) Park residents are exempt from payment of state duty for issuance, renewal of permits for involve- ment of foreign workers into the Republic of Belarus, special permits for work in the Republic of Belarus of foreign citizens and stateless persons, engaged in the construction of the Park, as well as the implementation of investment projects within the boundaries of this Park;

54 Tax guide-2019

2) when carrying out construction activities on the territory of the Park: • as at 1 April 2014, customers of Park facilities are not required to obtain certificates of con- formity or other supporting documents, without which the performance of the customer’s functions is prohibited and (or) leads to administrative liability; • park residents are exempted from compensation for losses of agricultural and (or) forest production caused by withdrawal or temporary occupation of agricultural lands of agricultural purpose and forest lands of the forest fund located within the boundaries of the Park and intended for implementation of investment projects within its boundaries; 3) foreign citizens and stateless persons are exempt from payment of the state duty for issuing temporary residence permits in the Republic of Belarus; 4) obligatory insurance fees are not compounded on income of employees of Park residents (except foreign employees), which exceeds the amount of a one-month average wage in the Republic of Belarus, preceding the month during which compulsory insurance contributions shall be paid; 5) Park residents and their employees who are foreign citizens temporarily residing (staying) in the Republic of Belarus and mobilized for implementation of investment projects in the Park territory, are exempt from the mandatory insurance premiums from payments to their advantage; 6) a visa-free procedure has been established for entry into the Republic of Belarus, departure from the Republic of Belarus of persons attracted by Park residents and investors, by a joint company for the purposes of implementation of investment projects in the Park, as well as the founders, participants, shareholders, property owners (employees of the founders, participants, shareholders, property owners) of Park residents and investors, joint company on the basis of lists; 7) during the period of validity of the special legal regime of the Park with regard to the special procedure of tax regulation, Park residents have the right to deduct the full amount of VAT (except for the amounts of tax not subject to deduction in accordance with the legislation), applied when purchasing in the territory of the Republic of Belarus (paid at the time of import into the territory of the Republic of Belarus) goods (works, services), property rights, used for the development of urban development projects of the Park, construction, equipping of the Park’s facilities, regardless of the VAT amounts calculated from the turnover on the sale of goods (works, services), property rights, but not later than December 31 of the year following the year of putting into operation of the respective Park’s facilities; 8) goods (technological equipment, components and spare parts, raw materials and supplies) imported into the territory of the Republic of Belarus for exclusive use in the territory of the Republic of Belarus for the purpose of implementation of investment projects providing for construction and equipping of the Park’s facilities are exempt from import customs duties (taking into account international obligations of the Republic of Belarus) and VAT charged by customs authorities. Park residents and investors are covered by the guarantees of investor rights and investment protection provided by the legislation of the Republic of Belarus on investments.

Taxation in middle, small towns and in countryside Commercial legal entities and individual entrepreneurs established and carrying out activities for the production of goods (works, services) in the territory of Belarus in middle, small towns and in a countryside (hereinafter – countryside) (excluding commercial legal entities created after August 1, 2016 as a result of reorganization in the form of separation, demerger or merger, as well as commercial legal entities reorganized after this date by merging other legal entities of the Republic of Belarus to them) are subject to the special tax regime. The special regime does not apply to: 55 1) banks, non-bank financial organizations, investment funds, insurance companies, micro finance institutions; 2) professional participants of stock exchange, residents of FEZ and the HTP, the special tourist park «Avgustovsky channel», the China-Belarus industrial park «Great Stone»; 3) business entities, carrying out: • real estate activity; • gambling activity; • lottery activity; • activity in electronic interactive games; • production and sale of excisable goods; • production and sale of jewelry; • production of securities, money, coins, stamps, activities of the particular partnership, etc. Specifics of taxation and other benefits: business entities are — exempt for 7 years from: 1) CIT and personal income tax with regard to the goods of its own production; 2) payments of the state duty for getting licenses; 3) other taxes and duties (except VAT, excises, stamp duty, offshore duty and state duty, patent fee, disposal charge custom duties, land tax, tax for the extraction (removal) of natural resources, ecological tax, taxes that are paid by tax agents), payments into the innovative fund. Specifics of taxation and other benefits for entities, whose branches are established in the territory of a countryside — exemption for 7 years from: 1) CIT, with regard to the profit of its branches from the sale of own production; 2) real estate tax from the value of objects which stay on the balance of the branch set up in a countryside. Preferential taxation does not apply to: 1) individual entrepreneurs paying single tax; 2) legal entities producing the agricultural goods and paying single tax for producers of agriculture goods; 3) business entities using the simplified tax system; 4) organizations providing services in the field of rural tourism and paying duty for rendering services in the field of rural tourism; 5) organizations that use other special tax regimes established by law. Additional advantages is an exemption from import customs duties on some goods imported by commercial organizations as a contribution in kind to the authorized fund from which manufacture not more than 5 years passed and classified according to the Unified Commodity Nomenclature of Foreign Economic Activity of the Eurasian Economic Union in certain commodity items.

Taxation of retail trade, public catering and household services in countryside and small towns In order to create conditions for the development of trade, public catering and household services, the Edict of the President of the Republic of Belarus No. 345 dd. 22.09.2017 was adopted, which estab-

56 Tax guide-2019 lished a preferential tax regime for the period from January 1, 2018 to December 31, 2022 for: 1) individual entrepreneurs and legal entities carrying out activities in countryside: • retail trade, • public catering in catering facilities, • provision of household services (hereinafter - activity in the territory of countryside), 2) individual entrepreneurs and microorganizations carrying out activities on the territory of small towns: • public catering in catering facilities, • provision of household services (hereinafter - activity in the territory of small towns). the countryside territory — is the territory of the Republic of Belarus, with the exception of urban-type settlements and cities, where the average annual population exceeds 2,000 the territory of small towns — is the territory of urban-type settlements and cities with an average annual population of more than 2,000 but not more than 10,000 Edict No. 345 provides for the following benefits: 1) exemption from VAT on the sale of goods (works, services) arising from activities in countryside and from activities in small towns; 2) income from the sale of goods (works, services) received from the activities in these territories shall be taxed at the rate of 6%; 3) income from activities in the above territories reduced by the amount of tax deductions shall be subject to income tax from individuals at the rate of 6%, if the individual entrepreneurs receiving them are the payers of this tax; 4) the rate of the single tax for a month is 1 basic unit for individual entrepreneurs who are payers of this tax and carry out activities in these territories, which is recognized as a single tax object; 5) shall be exempt from real estate tax, land tax, rent for land plots owned by the state: • capital structures (buildings, constructions) located on the territory of countryside, which are commercial objects, public catering objects, objects of household services or parts of which are such objects, and land plots on which these capital structures (buildings, constructions) are located, with legal entities provided that they carry out their activity in the territory of countryside in these capital structures (buildings, constructions) in a calendar month; • capital structures (buildings, constructions) located on the territory of small towns which are public catering objects, public service objects or parts of which are such objects, and land plots on which these capital structures (buildings, constructions) are located, with micro-organizations provided that they carry out their activity in the territory of small towns in these capital structures (buildings, constructions) in a calendar month. Capital structures (buildings, constructions), isolated premises owned by the Republic of Belarus may be alienated to individual entrepreneurs and legal entities on a compensatory basis without holding an auction at market value to carry out activities in countryside and (or) in the territory of small towns. The preferential tax regime does not apply: • retail trade in motor fuel (diesel fuel, motor gasoline, gas used as motor fuel), motor vehicles, self-propelled machines, trailers (semi-trailers, bolster-type trailers), jewelry and other household items made of precious metals and gemstones; • rendering of household services on maintenance and repair of motor vehicles.

57 Taxation of subjects of Orsha district of Vitebsk region The Edict of the President of the Republic of Belarus dd. 31.12.2018 No. 506 was adopted in order to create conditions for the complex social and economic development of Orsha district of Vitebsk region, to improve the quality of life and standard of living of the population, to stimulate entrepre- neurship and investment in the economy of the region, as well as to increase local budget revenues. Edict No. 506 provides the following special taxation conditions for the subjects of Orsha district: 1) the right to apply the STS with calculation and payment of the relevant tax at the rates: 1% — in respect of proceeds from the sale of goods of own production; 2% — with regard to the proceeds from the sale of works (services) of own production. Subjects of Orsha district have the right to apply the STS also in case of sale of jewelry and other household goods, property rights to means of individualization of participants of civil turnover, goods (works, services), transfer for rent or other use of real estate, as well as in case of recognition of subjects of Orsha district as residents of the Republic of parks and FEZ, participants of simple partnership agreement. 2) compulsory insurance contributions for retirement, disability and loss of breadwinner (pension insurance) are paid in the amount of 24%; 3) exemption from paying the state duty for the issuance of special permits for foreign citizens and stateless persons to work in the Republic of Belarus; 4) the right to apply the investment deduction within the following limits: • for buildings, structures and transferable devices used in entrepreneurial activity on the territory of Orsha district and the cost of investments in their reconstruction — not more than 30% of the initial cost (cost of investments in their reconstruction), • for machinery and equipment used in entrepreneurial activities in the Orsha region and the cost of investments in their reconstruction, as well as for vehicles (except for cars (except for special-purpose vehicles) and taxi services) and the cost of investments in their reconstruction — not more than 50% of the initial cost (cost of investments in their reconstruction); 5) exemption from VAT of goods imported by the subjects of Orsha district (legal entities and individual entrepreneurs) and classified in accordance with the Unified Commodity Nomenclature of Foreign Economic Activity of the Eurasian Economic Union in the commodity items listed in para- graph 1 of the Decree of the President of the Republic of Belarus of June 13, 2001 № 16, for which the rate of import customs duty is 0%. In respect of such goods the obligation to pay VAT is subject to execution if within 5 years from the date of their placement under the customs procedure: • transactions providing for the transfer of ownership rights or goods were transferred for use and (or) disposal to persons who are not subjects of Orsha district, or • subjects of Orsha district, which imported goods with the use of relevant privileges, changed their location (residence) in the territory outside Orsha district; 6) subjects of Orsha district, who are customers (developers), have the right to deduct the full amount of VAT on goods (works, services), property rights, used for construction and equipping of facilities in the territory of Orsha district, applied when purchasing goods (works, services) on the territory of the Republic of Belarus or paid when importing them into its territory. Other privileges for the subjects of Orsha district: 1) they are not subject to the provisions of Edict of the President of the Republic of Belarus No. 178 dated March 27, 2008 on the terms and procedure of completion of foreign trade operations. Completion of each foreign trade operation is ensured by means and within the terms stipulated by the foreign trade agreement; 58 Tax guide-2019

2) they shall be exempt from compensation for losses of agricultural and (or) forestry production caused by withdrawal (temporary occupation) of agricultural lands and (or) lands of the forest fund located within the boundaries of Orsha district, from compensation payments for the value of the removed objects of flora growing in settlements of Orsha district for implementation of projects on creation (expansion) of production of goods (works, services); 3) when developing project documentation for the construction of facilities in Orsha district, it is allowed to apply construction and technical standards established in the European Union, the Eurasian Economic Union and China, with state expertise of project documentation without its adaptation to the standards in force in the Republic of Belarus; 4) the purchaser of unfinished capital structure for the purposes of completing its construction, land plots shall be provided without holding an auction on the basis of real rights stipulated by the legislation on protection and use of lands; 5) the amount of annual rent for land plots located within the borders of Orsha district and rented out for construction and (or) maintenance of industrial, transport, communication, energy facilities is determined based on the cadastral value of these plots with the application of the coefficient 0.0025; 6) it is not allowed to carry out random inspections of subjects of Orsha district, representative offices of foreign organizations with the location in the territory of Orsha district, as well as persons registered in the inspection of the Ministry of Taxes and Levies of Orsha district, carrying out craft activities, activities in the field of agroecotourism on the territory of Orsha district. During this period, unscheduled inspections may be carried out on certain grounds, etc. The above rules are in force until 31 December 2023, except for the application of the investment deduction, which is valid until 31 December 2021.

59 TREATIES THAT GUARANTEE AVOIDANCE OF DOUBLE TAXATION In order to avoid double taxation the Republic of Belarus signed a vast number of bilateral treaties with other states. Currently there are 69 such treaties with different countries*:

Austria Cyprus Singapore Azerbaijan China Syria Armenia North Korea Slovakia Bangladesh South Korea Slovenia Bahrain Kirgizstan USA Belgium Kuwait Tajikistan Bulgaria Laos Thailand Great Britain Latvia Turkmenistan Hong Kong Lebanon Turkey Hungary Lithuania Uzbekistan Venezuela Macedonia Ukraine Vietnam Malaysia Finland Denmark Moldova France Ecuador Mongolia Germany Egypt Netherlands Croatia Israel United Arab Emirates Czech Republic India Oman Switzerland Iran Pakistan Sweden Ireland Poland Sri Lanka Spain Russia Estonia Italy Romania Ecuador Kazakhstan Saudi Arabia South African Republic Qatar Serbia Japan

* — means that an interest beneficiary shall be a true owner of interest so that rules on place of payment and tax rate stipulated by the corresponding treaty can be applied.

60 Tax guide-2019 rates of withholding tax on dividends in treaties that guarantee avoidance of double taxation

Types of international treaties № that guarantee avoidance of States Tax rates Conditions of tax rate application double taxation

Austria* Belgium* With a not less than 25% share Up to 5% Hungary* in the authorized fund Venezuela* Italy* Korea* Macedonia* Serbia* Finland* Croatia* Up to 15% In all other cases Switzerland* SAR*

With a not less than 25% share in the Up to 5% authorized fund Ecuador*

Up to 15% In all other cases

Rate of tax levied in the state that is a location of a With a beneficial owner’s control of not less Up to 5% dividend payer is differentiated than 10% of a company 1 depending on many factors Spain** and can be more or less than 12% rate, provided for by the Up to 10% In all other cases Belarusian legislation

With a not less than 30% share Up to 10% in the authorized fund Armenia* Up to 15% In all other cases

India* With a not less than 25% share Up to 10% Iran* in the authorized fund Pakistan* Slovakia* Turkey* Up to 15% In all other cases

With a not less than 200 000 Euros share in Up to 5% the authorized fund

With a not less than 25% share Cyprus* Up to 10% in the authorized fund

Up to 15% In all other cases

61 With a not less than 25% share in the Up to 5% authorized fund

Up to 15% In all other cases

Netherlands* Only in state that is location With a share of not less than 50% with a of dividend cost of not less than 250 000 Euros beneficiary

With a not less than 100 000 USD share in Up to 5% United Arab the authorized fund Emirates* Up to 10% In all other cases

With a not less than 30% share in the Up to 10% authorized fund Poland* Up to 15% In all other cases

With a share of not less than 20% with a Up to 5% cost of not less than 81 806.70 Euros Germany* Rate of tax levied in the Up to 15% In all other cases state that is a location of a dividend payer is differentiated depending on many factors and can be more or less than 12% rate, provided for by the With 100% share in the authorized fund, Belarusian legislation but only with regard to profit, from which dividends are paid, that is received from Only in the state industrial or manufacturing activity, or rural, that is a location forest and fish industry or tourism (including of a dividend restaurants and hotels). However, such beneficiary Sweden* exemption is not applied, when profit, from which dividends are paid, is exempted from tax in another state

With a not less than 30% share in the Up to 5% authorized fund Up to 10% In all other cases

Paid from income received directly or indirectly from real estate by the investment Up to 15% company, which distributes most of this Great Britain* income annually and whose income from such real estate is exempt from taxation

Up to 5% In all other cases

* — means that an interest beneficiary shall be a true owner of interest so that rules on place of payment and tax rate stipulated by the corresponding treaty can be applied. 62 Tax guide-2019

Bahrain* Qatar* Kuwait* Rate of tax levied in the state Oman* 2 that is the location of a dividend Up to 5% Saudi Arabia* payer, shall not exceed 5% Singapore* Slovenia* Hong Kong*

Rate of tax levied in the state 3 that is the location of a dividend Lebanon* Up to 7,5% payer, shall not exceed 7.5%

Bulgaria* Israel* China* DPRK* Latvia* Rate of tax levied in the state Lithuania* 4 that is the location of a dividend Up to 10% Mongolia* payer, shall not exceed 10% Romania* Thailand* Czech Republic* Estonia* Azerbaijan* Vietnam* Denmark Egypt* Kazakhstan* Rate of tax levied in the Kirgizstan* state that is the location of Malaysia a dividend payer, shall not 5 Moldova* Up to 15% exceed 15%, that is more than Russia tax rate of 12%, provided for by Syria* Belarusian legislation Tajikistan* Turkmenistan* Uzbekistan* Ukraine* Japan*

Tax is paid only in the state 6 that is the location of a France Up to 15% dividend payer

With a not less than 25% share in the Up to 5% Rate of tax levied in the authorized fund state that is the location of a dividend payer is differentiated 7 depending on many factors Ireland* and cannot be more than 12% provided for by the Belarusian Up to 10% In all other cases legislation

** — means the Convention has not entered into force, since there is no written notification of the completion of the procedures necessary for its entry into force. 63 Rates of withholding tax on interest in treaties that guarantee avoidance of double taxation

Types of international treaties № that guarantee avoidance of States Tax rates Conditions of tax rate application double taxation

Tax rate Is defined in accordance with the Tax is paid only in the state of legislation of the state 1 the permanent location of an Denmark of the permanent interest beneficiary location of an interest beneficiary

For any type of loan provided by Up to 5% the bank Switzerland* Rate of tax levied in the state that is the location of Up to 8% In all other cases interest payer is differentiated 2 depending on many factors and cannot be more than 10% If an interest beneficiary is a bank provided for by the Belarusian Up to 5% or any financial institution that is legislation a resident of SAR SAR*

Up to 10% In all other cases

Austria* Bahrain* Hungary* Venezuela* Iran* Spain** Qatar* Cyprus* Kuwait* Lebanon* Rate of tax levied in the state Netherlands* that is the location of an 3 UAE* Up to 5% interest payer, shall not exceed Oman* 5% Saudi Arabia* Singapore* Slovenia* Finland* Germany* Sweden* Czech Republic* Ireland* Hong Kong* Great Britain*

64 Tax guide-2019

Rate of tax levied in the state that Laos* 4 is the location of an interest payer, Serbia* Up to 8% shall not exceed 8% Italy*

Azerbaijan* Armenia* Belgium* Bulgaria* Vietnam* Egypt* Israel* India* Kazakhstan* China* DPRK* Korea* Kyrgyzstan* Latvia* Lithuania* Macedonia* Rate of tax levied in the state that Moldova* 5 is the location of an interest payer, Mongolia* Up to 10% shall not exceed 10% Pakistan* Poland* Russia* Romania* Slovakia* Syria* Tajikistan* Thailand* Turkmenistan* Turkey* Uzbekistan* Ukraine* Croatia* Sri Lanka* Ecuador* Estonia* Japan*

Rate of tax levied in the state that 6 is the location of an interest payer, Malaysia* Up to 15% shall not exceed 15%

Except for interest on bank credits and loans and interest on commercial Tax is paid only in the state that 7 France Up to 10% loans, that are taxed in the state that is is the location of an interest payer the location of an interest beneficiary with tax rates provided for in this state

* — means that an interest beneficiary shall be a true owner of interest so that rules on place of payment and tax rate stipulated by the corresponding treaty can be applied ** — means the Convention has not entered into force, since there is no written notification of the completion of the procedures necessary for its entry into force

65 Rates of withholding tax on royalty in treaties that guarantee avoidance of double taxation

Types of international treaties that guarantee № States Tax rates Conditions of tax rate application avoidance of double taxation

Denmark Tax is paid only in the Poland* 1 state that is the location France of a royalty beneficiary USA

When exercising or granting a right to use any copyright on a product of science, any software, Up to 5% trademark or for using or granting a right to use all Venezuela* types of equipment and vehicles

10% In all other cases

3% For the use or granting of the right to use aircraft Hong Kong* 5% In all other cases

Rate of tax levied in the When granting or exercising any copyright on a state that is the location product of literature, science and art (except for of a royalty payer is Up to 5% video films) or when using or granting a right to use differentiated depending industrial, commercial or scientific equipment or 2 Israel* on many factors and vehicles cannot be more than 15% rate, provided for by the Belarusian legislation Up to 10% In all other cases

When exercising or granting a right to use any patent, trademark, blueprint or model, plan, secret formulae or process, or copyright on science product, or for Up to 10% using or granting a right to use industrial, trade or science equipment, or for information on industrial, trade or science experience Malaysia*

When using or granting a right to use cinematographic films or tapes for radio Up to 15% broadcasting or television, any copyright on a product of literature or art

66 Tax guide-2019

When exercising or granting a right to use any patent, trademark, blueprint or model, plan, Up to 3% secret formulae or process, or copyright on science product, or for information on industrial, trade or science experience

Netherlands* When exercising or granting a right to use any Up to 5% industrial, trade or science equipment, including road vehicles

When using or granting a right to use cinematographic films or tapes for radio Up to 10% broadcasting and television, any copyright on a product of literature, science or art

Rate of tax levied in When exercising or granting a right to use any the state that is the copyright on products of science, any patent, location of a royalty trademark, blueprint or model, plan, secret payer is differentiated Up to 5% formulae or process, or for using or granting a 2 depending on many right to use industrial, trade or science equipment, factors and cannot be or for information on industrial, trade or science experience more than 15% rate, UAE* provided for by the Belarusian legislation

When using or granting a right to use cinematographic films or tapes for radio Up to 10% broadcasting and television, any copyright on a product of literature or art

When exercising or granting a right to use any copyright on products of literature, science and Up to 5% art, including video films or films or tapes and other means of image or sound transition

Slovakia*

When exercising or granting a right to use any patent, trademark, blueprint or model, plan, Up to 10% secret formulae or process, or for information on industrial, trade or science experience or vehicles

67 When exercising or granting a right to use copyright on a product of science, patent, Up to 3% trademark, design or model, plan, secret formulae or process, or for information on industrial, trade or science experience

Germany*

When exercising or granting a right to use copyright on products of literature or art, Up to 5% including video films and films or tapes for radio broadcasting and television, or for usage of any types of equipment and vehicles

When exercising or granting a right to use any patent, secret formulae or process, or Up to 3% for information on industrial, trade or science experience

Rate of tax levied in the state that is the Switzerland* location of a royalty When using or granting a right to use any payer is differentiated Up to 5% industrial, trade or science equipment, including 2 depending on many vehicles factors and cannot be more than 15% rate, provided for by the Belarusian legislation Up to 10% In all other cases

When exercising or granting a right to use any patent, secret formulae or process, or Up to 3% for information on industrial, trade or science experience

Sweden* When using or granting a right to use any Up to 5% industrial, trade or science equipment

Up to 10% In all other cases

When using or granting a right to use any Up to 5% industrial, trade or science equipment, including vehicles SAR*

Up to 10% In all other cases

68 Tax guide-2019

When exercising or granting a right to use Only in state any copyright on products of literature, art of location or science, including cinematographic films of royalty and films or tapes for radio broadcasting or beneficiary Rate of tax levied in the television state that is the location of a royalty payer is differentiated 2 depending on many factors Japan* and cannot be more than When exercising or granting a right to use any 15% rate, provided for by the patent, trademark, blueprint or model, plan, Belarusian legislation secret formulae or process, or for granting Up to 10% a right to use industrial, trade or science equipment, or for information on industrial, trade or science experience

Austria* Bahrain* Belgium* Hungary* Iran* Spain** Qatar* Rate of tax levied in the state Cyprus* 3 that is the location of a royalty Up to 5% Korea* payer cannot be more than 5% Laos* Lebanon* Ireland* Singapore* Slovenia* Finland* Great Britain*

Rate of tax levied in the state 4 that is the location of a royalty Italy* Up to 6% payer cannot be more than 6%

Azerbaijan* Armenia* Bangladesh* Bulgaria* China* DPRK* Kuwait* Latvia* Lithuania* Rate of tax levied in the state Macedonia* that is the location of a royalty 5 Mongolia* Up to 10% payer cannot be more than Oman* 10% Russia* Turkey* Croatia* Czech Republic* Sri Lanka* Estonia* Ecuador* Serbia* Saudi Arabia*

69 Vietnam* Egypt* India* Kazakhstan* China* Rate of tax levied in the state Kirgizstan* that is the location of a royalty Moldova* payer cannot be more than 6 Pakistan* Up to 15% 15% that is equal to the sum Romania* that is payable under the law Tajikistan* of the Republic of Belarus Thailand* Turkmenistan* Uzbekistan* Ukraine*

Rate of tax levied in the state that is the location of a royalty 7 Syria* Up to 18% payer cannot be more than 18%

* — means that a royalty beneficiary shall be a true owner of royalty so that rules on place of payment and tax rate stipulated by the corresponding treaty can be applied

** — means the Convention has not entered into force, since there is no written notification of the completion of the procedures necessary for its entry into force

70 Tax guide-2019

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71 Contacts 10-4 Surazhskaya str. Minsk, 220007, Belarus T: +375 (17) 394 95 03 F: +375 (17) 394 77 40