Belarus Tax: Understanding The Unique System

The taxation system in Belarus features 28 taxes and duties, but only four are paid for regular activities: value-added tax, income tax, real estate tax, land tax, and payments to the Social Security Fund. The system is two-tiered, with taxes divided into national and local categories. National taxes include personal income tax, tax on income from foreign companies without a local office, and tax on the extraction of natural resources. Local taxes include a tax on dogs, a resort fee, and a harvesting fee. Belarus also offers special tax regimes, such as a single tax for individual entrepreneurs and a tax on income from online games. The country has implemented 68 international double taxation treaties to streamline and simplify its tax legislation.

National and local taxes

The Republic of Belarus has a two-tiered tax system, with taxes divided into national and local categories. There are 28 taxes and duties in total, but only four are paid for regular activities: value-added tax, income tax, real estate tax, land tax, and payments to the Social Security Fund.

National Taxes

National taxes include:

• Income tax on foreign companies without an office in Belarus
• Personal income tax
• Tax on the extraction of natural resources
• Customs duties, charges, and payments on personal-use goods
• Ad placement fee

Local Taxes

Local taxes include:

• Tax on dogs
• Resort fee
• Harvesting fee

Special Tax Regimes

Belarus also has several special tax regimes, including:

• Simplified taxation system
• Single tax for individual entrepreneurs and other individuals
• Single tax for producers of agricultural products
• Tax on income from lottery activities and online games
• Fee for craft activities
• Fee for agro-ecotourism
• Self-employment tax

Value-added tax

The following items are exempt from VAT: financial services; insurance services; educational services; cultural services; housing services; medical services; and certain medical equipment, prosthetics, and devices for disabled persons. A reduced rate of 10% applies to sales of crops (except flowers and ornamental plants), sales of store cattle, sales of fish and hive products produced in Belarus, and sales or imports of goods for children and food products as per a list established by the Belarusian President. Sales or imports of medicines and medical devices into Belarus are also subject to the reduced rate. Telecommunications services are taxed at a higher rate of 25%, while exported goods and related services are zero-rated.

VAT may be deductible if the purchase of goods and services is used to produce or sell goods and services that are exempt from VAT.

Income tax

The taxation system in Belarus features 28 taxes and duties, but only four are paid for regular activities: value-added tax, income tax, real estate tax, and land tax. Income tax in Belarus is a flat rate of 13% on an individual's worldwide income. If an individual is a non-resident of Belarus, they are only taxed on income sourced from within the country. An individual is considered a resident if they are physically present in the country for more than 183 days in a calendar year.

In addition to the standard tax deductions, there are social, property, and professional tax deductions, which are granted to taxpayers only upon the submission of their tax returns at the end of the tax period. Taxable income includes all income regardless of source, such as income from employment, property, services, or other benefits in-kind, as well as income to which the taxpayer has the right of disposal, less allowable deductions and exemptions. Capital gains are taxed as ordinary income.

For foreign companies that are not engaged in business activities in Belarus through a permanent establishment, there are additional income tax rates for certain types of income. These include charges for transportation or freight, demurrage charges or other charges arising in connection with international transportation, as well as charges for transport forwarding services. Income from debt obligations of any kind, including income from credits, loans, securities, and income from the use of temporarily idle funds in bank accounts in Belarus, is also taxed.

Belarus also has a single tax for individual entrepreneurs and other individuals, as well as a tax on income from lottery activities and online games.

Tax on foreign companies

The taxation system in Belarus is divided into national and local taxes. Foreign companies that do not have an office in the Republic of Belarus are subject to the national tax on income.

The standard corporate tax rate for companies is 20%. Effective 1 January 2024, a higher tax rate of 25% applies to resident companies and the Belarus permanent establishments of foreign companies if the total tax base for the year exceeds BYN 25 million. The 25% rate applies to the total taxable profit of the year, but only in respect of transactions otherwise subject to the standard 20% tax rate.

Other corporate tax rates include:

• A corporate tax rate of 25% applies to banks and insurance companies, microfinance organizations, and companies deriving profits from foreign exchange transactions.
• A corporate tax rate of 30% applies to cellular mobile telecommunications operators and commercial microfinance organizations in respect of profits received from microfinance activities effective from 1 January 2023 until 1 January 2025.
• A corporate tax rate of 50% applies to companies that transport oil and oil products through pipelines in Belarus.
• A corporate tax rate of 10% applies to income from high-tech products.
• A corporate tax rate of 5% applies to profits from the sale of self-produced food products for young children.

Foreign companies not engaged in activity in Belarus through a permanent establishment are subject to income tax on the following:

• Charges for transportation or freight, demurrage charges or other charges arising in connection with international transportation, as well as charges for transport forwarding services.
• Incomes from debt obligations of any kind, including incomes on credits, loans, income from securities, and income from the use of temporarily idle funds in bank accounts in the Republic of Belarus.
• Royalty, income from licenses, and other income according to the list determined by law.

Social security contributions

Social Insurance

Social insurance in Belarus covers employed and self-employed persons permanently residing in the country, including specific categories such as priests, employees of religious organisations, members of cooperatives, and farmers. The self-employed contribute a percentage of their declared income, while employers typically contribute a percentage of their gross payroll. Social insurance covers areas such as sickness, maternity, funeral grants, unemployment, and family allowances. For example, in the event of sickness, social insurance provides benefits covering a percentage of the insured person's average daily earnings.

Pension Insurance

Pension insurance in Belarus is divided into old-age retirement pensions, disability pensions, and survivor pensions (in the event of a wage-earner's death). The retirement age and length of service requirements for receiving an old-age pension increase annually by six months. For disability pensions, the degree of disability is assessed by expert medical rehabilitation commissions. The survivor pension is provided to eligible survivors, including spouses, children, siblings, and parents, among others.

The average labour (insurance) retirement pension in Belarus accounts for 40% of the average wage in the economic sector, and these pensions are adjusted whenever there is an increase in the average wage.

Frequently asked questions