2018 tax law changes

Edict No. 29 “On taxation” (hereinafter — the Edict) was signed on January 29, 2018. The Edict has indexed BYN tax rates and personal income tax withholdings and remissions. Also, the following major alterations have been introduced.

1.    Higher STS limits for individual entrepreneurs and business entities

Normally, limits applying to the Simplified Taxation System (STS) are indexed in the beginning of each calendar year. The Edict has determined the following limits applying to gross receipts of STS users:

Taxpayer

2017 limitBYN

2018  limit, BYN

business entities

1 542 600

1 851 100

individual entrepreneurs

168 900

202 700







In order to apply for the STS in 2019, taxpayers will also have to comply with higher limits of gross receipts in first 9 months of 2018 as prescribed by the Edict:

Taxpayer

2017 limitBYN

2018  limit, BYN

business entities

1 159 800

1 391 800

individual entrepreneurs

126 700

152 000







Thus, the Edict has increased gross receipts limits applying to the STS by 16 to 20 % on average.

2.    Modified deadlines for submitting electronic Portal invoices

According to the Edict, taxpayers will make and submit their invoices to the Portal on or before the 20th day of the month following the month of transaction, with regard to all transactions where invoices are not required to be delivered to customers according to article 106-1 of the Tax Code of the Republic of Belarus, including:

- in imports of goods into the territory of the Republic of Belarus;

- in acquisitions of goods/works/services or proprietary rights in the Republic of Belarus from foreign entities not having a permanent establishment in the Republic of Belarus and not registered with the tax authorities of the Republic of Belarus.

Thus, deadlines for Portal filing have been increased for the mentioned transactions.

3.   Taxes may be paid by third parties

The Edict allows a third party to pay taxes/duties/charges in 2018 on behalf of the actual taxpayer, provided such third party will not be entitled to demand restitution/offset of such taxes/duties/charges. That is, the Edict directly allows a third party to fulfill taxpayer’s obligations. Hence, in case of any tax arrears, this problem may be solved by a related party, which will avert administrative responsibility and penalties. 

4.   Bigger incomelevel subject to 13% income tax rate

The Edict prescribes bigger income levels from renting living/non-living premises and vehicle spaces by Belarusian individuals which are subject to 13% income tax rate.

According to art. 179 of the Tax Code of the Republic of Belarus, living/non-living premises and vehicle spaces rented by individuals are subject to fixed tax rates according to a particular premise/space. However, incomes exceeding a gross income limit in a calendar year are subject to 13% tax rate, and therewith income tax paid at a respective fixed rate will be counted against the amount of the 13% gross income tax.

The gross income limit was determined as 5,555 BYN in 2017. However, according to the Edict, as from 2018, such limit for the 13% tax rate will amount to 6,116 BYN.

5.    Unilateralprocedureforprimary accounting documents

As from 2018, primary accounting documents supporting business transactions may be compiled under a unilateral procedure, in cases specified by the Ministry of Finance of the Republic of Belarus.

Up to now, provisions for a unilateral procedure for primary accounting documents were only determined by Resolution No. 58 of the Ministry of Finance of the Republic of Belarus “On some issues of compiling primary accounting documents” dated 21.12.2015 which allows such procedure only subject to a standard form contract executed between the customer and the contractor. If the Ministry of Finance adopts any new provisions for a unilateral procedure for primary accounting documents, this will not contradict the tax legislation.

All mentioned modifications apply to business relations started on or after January 1, 2018. Please keep in mind that Tax Code amendments discussed in the 3rd quarter of 2017 will be refined and, most likely, adopted in 2019. Due to this, it is advisable for all market participants to check out the main tendencies to be expected in 2019. Thus, the year 2019 will see a major Tax Code modification.