Belarusian tax laws competitive in Single Economic Space

The new integration project - the Single Economic Space of Belarus, Kazakhstan, and Russia - was launched on 1 January 2012. It has enabled tighter integration and has opened new prospects for economic cooperation. The Single Economic Space includes about 5 million corporate taxpayers and over 5 million self-employed businessmen, who pay taxes. They operate in the common customs space where all the tariff and non-tariff restrictions in mutual trade have been removed, there is no customs control at the internal borders. Apart from the freedom of commodity flows the Single Economic Space has enabled the freedom of services, capital, and workforce.

"In the present situation taxation authorities have to enable effective uniform tax administration in the spheres that influence mutual trade relations of the economic operators in the member states of the Customs Union and the Single Economic Space," remarked Vladimir Poluyan.

The agreement on collecting indirect taxes in the Customs Union and the protocols adopted to build up on the agreement constitute in essence the single legislation for the three countries that regulates the collection of indirect taxes in mutual trade, said the official.

"Certainly, the Single Economic Space has affected other aspects of taxation. Taxpayers are now free to choose the state to register their business. The approach requires effective administrative measures in taxation and the measures have to be competitive in comparison with our partners in the Single Economic Space," continued Vladimir Poluyan.

Belarus has been working for several years to prepare the relevant base. The structure of taxes and the size of taxes have been changed. In comparison with Customs Union member states Belarus has the shortest list of taxes while direct tax rates are rather competitive, BelTA reports.

The official mentioned that the comparison of the volume of tax declarations, the number of administrative procedures that taxpayers have to carry out, the absence of regulated costs for calculating profit taxes and the mandatory tax audit to verify the justifiability of VAT rebates for export also indicates the advantages of Belarusian legislation.

Belarusian taxpayers are relieved of many mandatory tax accounting procedures that taxpayers in Russia and Kazakhstan have to carry out. Belarusian taxpayers can also choose whether they should submit VAT declarations and pay VAT every month or every quarter. Belarusian exporters can choose month as their reporting period and claim VAT rebates every month for zero-VAT exports. In Russia and Kazakhstan VAT information has to be submitted on a quarterly basis only.

In Belarus the profit tax is 18% and the tax on dividends for foreign investors is 12%. The same rate is used for dividends of Belarusian investors. In Russia and Kazakhstan the income tax is 20% while dividends earned by non-residents are subject to a 15% tax.

It should be taken into account that Belarus offers the most attractive conditions of the administration of indirect taxes and the shortest time for tax rebates, noted the Tax Minister.

Thanks to the facilitated procedures for tax rebates and the streamlined VAT tax base as from 2012 restrictions on VAT tax rebates exist only for objects bought at the expense of gratuitous budget funds. The restrictions on tax deduction from "entry" VAT on sales of services, property rights outside Belarus are removed as from 2013. Taxpayers will get tax rebates within 35 days while it can take several months in Russia and Kazakhstan, pointed out Vladimir Poluyan.

The exporters, who use digital customs declarations, no longer have to submit hardcopies to justify export for the sake of getting zero VAT and preferential rate excise duties.

Apart from that, Belarus has simplified tax administration for confirming zero VAT for exports to the Customs Union member states as much as possible.