Taxes, dividends, salary costs in Belarus
In the Republic of Belarus there are two main taxation systems for Belarusian companies, which are called the general and simplified taxation system. A simplified system of taxation, in turn, is without value added tax (VAT) or with VAT.
1. Simplified system of taxation
At the initial stage of work, most Belarusian companies apply a simplified taxation system. After the creation of the company, the director has a month to inform tax office that the company will apply the simplified tax system, otherwise the general taxation system will be applied by default. Allocate a simplified system without or with the use of VAT. Let's consider each of them separately.
1.a. Simplified taxation system without value added tax
Simplified taxation system without VAT. It is right to apply companies only with the number of employees to 50 people and revenue for the calendar year at approximately 527 thousand euros. Then such an organization pays 5% tax on revenue. It is also worth noting that under such a system the director can himself keep accounting records, since it does not cause any significant difficulties.
1.b. Simplified taxation system with value added tax
Simplified taxation system with VAT. It is right to apply companies only with the number of employees up to 100 people and revenue for the calendar year approximately in the amount of 768 thousand euros. Then such organization pays 3% tax on revenue and value added tax - VAT, the rate of which is 20% of the turnover for the sale of goods, works or services inside the country or imports; 0% when exporting goods, works or services. It is worth paying attention to the fact that VAT can be taken into account when purchasing goods, works or services from other economic entities that use VAT or are deducted from the state budget to the full extent, without the need to purchase goods, works or services. We emphasize that the simplified taxation system with VAT is advantageous for export. The majority of Belarusian IT companies working for exporting services and investing in revenue limits for the year (768 thousand euros per year) apply a simplified taxation system with VAT. The director should also contact the accountant for advice on the calculation and registration of VAT.
2. The general system of taxation
If the Belarusian company has not chosen a simplified taxation system for one reason or another, it applies a general taxation system that includes the following parameters:
- Income tax, the rate of 18% of the taxable profit; with such a system you need a good accountant to correctly determine the costs of the company. Thus, this taxation system is beneficial at high costs as a result of resale of goods, works or services.
- Value-added tax - VAT, a rate of 20% of the turnover for the sale of goods, works or services inside the country or imports; 0% when exporting goods, works or services. It is worth paying attention to the fact that VAT can be taken into account when purchasing goods, works or services from other economic entities that use VAT or are deducted up to the full volume in the absence of the need to purchase goods, works or services.
3. Other taxes
There are other taxes in the Republic of Belarus, but they practically do not concern companies operating in the IT sector. It is possible to mention only the taxes on real estate or land tax that arise when the company acquires the property of a real estate or land plot, and depends on the established tariffs by the local authorities in the territory of which these acquisitions are made. There is also an offshore fee of 15% if the founder is a resident of offshore zones.
4. Salary costs
The employer pays the following contributions in excess of salary:
- 28% for pension insurance and 6% for social insurance from the size of the salary, but with a maximum contribution of 485 euros with a salary starting from 1387 euros, for example, if an employee receives a salary of 2000 euros, then he will be paid only 485 Euro. It is also worth noting that for a foreign worker pension and social insurance may not be paid, with his consent.
From the paid salary, the employer with the employee retains the following contributions:
- 1% for pension and social insurance;
- 13% income tax.
* It is worth noting that in order to optimize salary costs, employees can be outsourced, but an important condition for such work is that the employee should not be in the employer's office and accordingly adhere to the working schedule.
After paying all taxes and salaries to employees, the company pays the remaining income to its founders, which is called dividends.
As a general rule, the tax rate is:
13% from dividends of founders - individuals.
12% from dividends of founders – legal entities.
It is worth noting that there are many agreements on avoidance of double taxation between Belarus and other countries, which reduces the rate of taxation on dividends to 5%, provided to a foreign company owns at least 25% of a Belarusian company shares or shares.
We are a Belarusian company,
Borius Consulting LLC, operating since 2015.
License for the provision of legal services №02240 / 2262.
Addres: Minsk, st. Karl Liebknecht 66, office 401, Zip code: 220036.
Director of Borius Consulting LLC
Senior lawyer in Minsk
Senior lawyer in Homel
Senior lawyer in Brest