A Give-and-Take Pol­icy

Over the last three years the tax bur­den on the Be­laru­sian econ­omy has fallen by 9.3 per­cent­age points

Economy of Belarus - - CONTENTS -

Over the last three years the tax bur­den on the Be­laru­sian econ­omy has fallen by 9.3 per­cent­age points

On 1 Jan­uary 2012, the law “Con­cern­ing amend­ments and ad­di­tions to the Tax Code of the Repub­lic of Be­larus” came into force. Mr. Poluyan, can you pro­vide the de­tails about the amend­ments? What are they aimed at?

All the amend­ments di­rectly or in­di­rectly pur­sue three ma­jor goals – to ease tax bur­den on eco­nomic en­ti­ties, make tax cal­cu­la­tion and pay­ment faster, and stream­line tax ad­min­is­tra­tion. I would like to note that all these goals have both quan­ti­ta­tive and qual­i­ta­tive pa­ram­e­ters. Qual­i­ta­tive pa­ram­e­ters in­clude hours, rates and mil­lions and bil­lions of rubles of ad­di­tional bud­get rev­enues. Qual­i­ta­tive ben­e­fits in­clude con­ve­nient and easy tax ad­min­is­tra­tion, trans­par­ent and sim­ple tax sys­tem. The ul­ti­mate goal is to in­crease GDP and boost ex­port, pro­mote in­no­va­tive and high-tech pro­duc­tion, raise more for­eign and do­mes­tic in­vest­ments. We will be able to ful­fill tax col­lec­tion tar­gets if the over­all eco­nomic and tax lib­er­al­iza­tion pol­icy is a suc­cess.

A lot has been done in 2012 to lib­er­al­ize the do­mes­tic econ­omy. On 1 Jan­uary this year, we re­duced the profit tax from 24% to 18% as well as the tax rates of the sim­pli­fied tax sys­tem (STS), in­tro­duced a loss car­ry­for­ward mech­a­nism and sim­pli­fied the pro­ce­dure for ap­ply­ing for VAT tax de­duc­tions.

The fis­cal func­tion no longer dom­i­nates the do­mes­tic tax­a­tion sys­tem. At the same time, no­body ques­tions the im­por­tance of tax­a­tion, as taxes are ma­jor sources of state bud­get rev­enue. How­ever, tax con­trol and sanc­tions have ceased to shape the tax pol­icy of the state. The tax­a­tion sys­tem is in­creas­ingly em­ploy­ing stim­u­lat­ing and reg­u­lat­ing mech­a­nisms. It be­came clear that it is all about give and take. Leg­isla­tive re­forms cre­ate pre­con­di­tions for re­al­iz­ing busi­ness ini­tia­tives, en­cour­ag­ing sound com­pe­ti­tion and en­hanc­ing the in­vest­ment ap­peal of the coun­try. Fewer peo­ple now per­ceive tax li­a­bil­i­ties as a tax bur­den. At the same time, Be­larus is look­ing for new re­serves to op­ti­mize tax cal­cu­la­tion and pay­ment. The work con­tin­ues this year, as well. Taxes and Du­ties Min­is­ter of Be­larus Vladimir POLUYAN tells the Econ­omy of Be­larus Mag­a­zine about the present and fu­ture of the tax sys­tem of Be­larus.

We added a new ar­ti­cle to the Tax Code of the Repub­lic of Be­larus to in­tro­duce the com­mod­ity pric­ing prin­ci­ples to the work of tax watch­dogs. Such prin­ci­ples will be used for tax­pay­ers that ap­ply the so­called trans­fer pric­ing.

We ex­panded the list of cases when amended tax dec­la­ra­tions (in­come tax re­turns) should be sub­mit­ted. This is re­quired when, for ex­am­ple, tax­able items were dis­cov­ered dur­ing an in­ven­tory check.

We changed the ap­pli­ca­tion of penal­ties for late pay­ment of taxes. The cal­cu­la­tion of penal­ties for each day over­due is based on the re­fi­nanc­ing rate that was in ef­fect dur­ing the late pay­ment pe­riod, not the day when the taxes were paid.

If a tax­payer was not en­ti­tled to a VAT re­fund he ap­plied for, he will have to pay the amount of VAT with a penalty. While cal­cu­lat­ing the amount of penal­ties on taxes to be paid ad­di­tion­ally af­ter the sub­mis­sion of an amended tax dec­la­ra­tion, we will take into con­sid­er­a­tion ex­cess taxes and du­ties with­held dur­ing the last tax pe­riod.

Tax­pay­ers will no longer need to present doc­u­ments con­firm­ing their right to tax de­duc­tions to tax­a­tion au­thor­i­ties. These doc­u­ments will be asked dur­ing checks.

We added a new pro­vi­sion to the Tax Code abol­ish­ing penal­ties for late pay­ment of taxes (du­ties) in case late pay­ment re­sulted from ful­fill­ing writ­ten in­struc­tions of tax agen­cies. The ad­min­is­tra­tion of in­di­vid­ual taxes has been changed, too. Tell us about the key tax re­forms af­fect­ing the ma­jor­ity of eco­nomic en­ti­ties.

We abol­ished VAT on dis­posal of goods, fixed as­sets, in­tan­gi­ble as­sets and un­fin­ished con­struc­tion fa­cil­i­ties.

We also lifted re­stric­tions from the de­duc­tions for VAT paid for pur­chased fixed as­sets pro­vided turnover is ex­empt from taxes or has a tax credit as well as the VAT paid for pur­chased as­sets out of the funds dis­posed as a re­sult of us­ing tax ex­emp­tion. In both cases, be­fore 2012 the taxes were ap­plied to the in­crease of the cost of fixed as­sets.

As I have al­ready said, we have re­duced the profit tax rate to 18%. We abol­ished profit tax de­duc­tions pre­vi­ously ap­plied for fi­nanc­ing cap­i­tal in­vest­ments and hous­ing con­struc­tion. We si­mul­ta­ne­ously in­tro­duced the right to use ac­cel­er­ated depreciation in tax ad­min­is­tra­tion. We also al­low chang­ing

the cho­sen method of cur­rent profit tax pay­ment within one tax pe­riod. A tax­payer will no longer need to no­tify tax ser­vices in writ­ing about the amount of the due profit tax on div­i­dends.

The dead­line for sub­mit­ting a real es­tate tax dec­la­ra­tion was shifted from 20 Jan­uary to 20 March, while the dead­line for pay­ing the tax – from the first month of each quar­ter of the year to the third month. In case lo­cal Coun­cils of Deputies change real es­tate tax co­ef­fi­cients within a year, the changes will come into force on 1 Jan­uary next year. Thus, tax­pay­ers will no longer need to cor­rect their tax dec­la­ra­tions within a fi­nan­cial year. The same rule ap­plies to the land tax.

With a view to re­duc­ing the num­ber of above-level fa­cil­i­ties un­der con­struc­tion and en­gag­ing idle (in­ef­fi­ciently used) prop­erty into eco­nomic use, we have in­tro­duced a 2% real es­tate tax for these fa­cil­i­ties and Mul­ti­plier 2 for land plots where these idle or un­fin­ished fa­cil­i­ties are lo­cated.

En­vi­ron­men­tal tax dec­la­ra­tions will be sub­mit­ted to tax agen­cies lo­cated in the precinct where a tax­payer is reg­is­tered, in­stead of the precinct where the tax­able fa­cil­i­ties are lo­cated.

Can you please up­date us on the re­cent changes? What is to be done to ease the tax bur­den on SMES?

On 1 Jan­uary 2012, a se­ries of im­por­tant tax reg­u­la­tions came into force aim­ing to cre­ate a fa­vor­able busi­ness en­vi­ron­ment for medium-sized and small en­ter­prises (SMES).

We have re­duced taxes for the sim­pli­fied tax sys­tem (STS) from 8% to 7% for those who pay STS with­out VAT and from 6% to 5% for those who pay STS with VAT. Com­pa­nies and self-em­ployed busi­ness­men pro­duc­ing goods (works, ser­vices) for ex­port will be en­ti­tled to a 2% tax rate if they use STS.

We in­creased the amount of gross rev­enues en­ti­tled to STS. The amount of an­nual gross rev­enues for eco­nomic en­ti­ties opt­ing for STS with VAT makes Br12 bil­lion, that for tax­pay­ers opt­ing for STS with­out VAT and (or) us­ing gross in­come as a tax base makes Br3.4 bil­lion.

In ad­di­tion, we en­sured the tran­si­tion from per­mit-based STS to ap­pli­ca­tion-based one, ex­tended the dead­line for send­ing STS tran­si­tion no­ti­fi­ca­tions from 30 Novem­ber till 31 De­cem­ber. Of course, we keep work­ing on the STS op­ti­miza­tion. We will con­tinue pol­ish­ing the sys­tem this year tak­ing into ac­count the ef­fi­ciency of the in­no­va­tions we im­ple­mented ear­lier.

Are there any novel con­cepts in the tax­a­tion of selfem­ployed busi­ness­men?

For sin­gle tax pay­ers we have abol­ished the re­quire­ment for sep­a­rate ac­count­ing and tax­a­tion of the in­come de­rived from re­tail sale of goods. Start­ing from 2012 these op­er­a­tions will be sub­ject to the sin­gle tax.

We re­moved the cap on the size of trade and to­tal ar­eas of re­tail

fa­cil­i­ties used for man­u­fac­ture, pro­cess­ing and stor­age of goods. The pay­ment of the sin­gle tax will not de­pend on the area of such fa­cil­i­ties.

In or­der to make ac­tiv­i­ties of self-em­ployed busi­ness­men more trans­par­ent in 2012 we mod­i­fied the prin­ci­ples of us­ing Mul­ti­plier 2 to the sin­gle tax rate in re­tail. This mod­i­fier will now be ap­plied to the sale of goods in case the payer has no doc­u­ments con­firm­ing their pur­chase.

For the self-em­ployed who use the gen­eral tax­a­tion sys­tem, we can­celed the list of ex­pen­di­tures that are taken into ac­count while cal­cu­lat­ing in­come tax as part of the pro­fes­sional tax de­duc­tion, which will make it pos­si­ble to take into ac­count any costs re­lated to run­ning a busi­ness. In ad­di­tion, in­come tax pay­ers have the right not to sub­mit tax dec­la­ra­tions (in­come tax re­turns) in case of the ab­sence of any in­come dur­ing the quar­ter of the year or if their earn­ings are ex­empt from in­come tax fully or within the lim­its es­tab­lished by the law.

Has the tax bur­den on in­di­vid­u­als who pay in­come tax and other types of pay­ments de­creased?

Yes, this bur­den has de­creased and, in my opin­ion, big time. Start­ing from 1 Jan­uary, we can­celed in­come tax with re­gards to prof­its of cit­i­zens in need of med­i­cal as­sis­tance, in­clud­ing surg­eries, with­out re­stric­tions on the amount, re­ceived from Be­laru­sian or­ga­ni­za­tions and cit­i­zens in the form of grants. Such prof­its are ex­empt from in­come tax pro­vided there is a rel­e­vant con­fir­ma­tion from the Health­care Min­istry of the Repub­lic of Be­larus. I would like to note that ear­lier there were some re­stric­tions on the non­tax­able amount, namely 1,000 ba­sic amounts per year or Br35 mil­lion.

In ad­di­tion, we in­tro­duced a new priv­i­lege: in­come tax is not levied on prof­its un­der Br1,750,000 in the form of vouch­ers to sana­to­ria and health re­sorts ac­quired for chil­dren by Be­laru­sian or­ga­ni­za­tions or selfem­ployed busi­ness­men.

Start­ing from 2012, par­ents with two or more mi­nor chil­dren will have the right to get a stan­dard tax de­duc­tion for chil­dren at a higher rate – Br246,000 per month. Ear­lier this right was en­joyed by par­ents of three or more chil­dren.

Mr Poluyan, how tax changes af­fect the tax bur­den on the econ­omy as a whole?

Over the past three years, the tax bur­den on the econ­omy has de­creased from 36.1% to 26.8%. A sig­nif­i­cant re­duc­tion in the tax bur­den (9.3%) was due to a num­ber of de­ci­sions in the tax pol­icy.

Amend­ments and ad­di­tions to the Tax Code in­clude the ex­pan­sion of tax priv­i­leges for pro­duc­ers of in­no­va­tive and high-tech goods. Will you tell us more about it?

In­deed, on 1 Jan­uary 2012, in­come tax is no longer levied on prof­its of or­ga­ni­za­tions re­ceived from the sale of their own goods which can be con­sid­ered in­no­va­tive in ac­cor­dance with the list com­piled by the Coun­cil of Min­is­ters of the Repub­lic of Be­larus.

Prof­its or­ga­ni­za­tions re­ceive from the sale of their own goods, which are high-tech in com­pli­ance with the list and which are also de­fined by the Gov­ern­ment, in agree­ment with the Pres­i­dent of the Repub­lic of Be­larus, shall also be ex­empt from profit tax if the share of the pro­ceeds re­ceived from the sale of such goods is more than 50% of the to­tal amount of pro­ceeds re­ceived from the sale of goods (works, ser­vices), prop­erty rights, in­clud­ing rev­enues from prop­erty lease (fi­nance lease). If the cri­te­ria that I just men­tioned are not met, the or­ga­ni­za­tion has the right to tax the profit from the sale of their own goods listed as high-tech prod­ucts at a rate of 10%.

Re­quire­ments for the use of these priv­i­leges are min­i­mal: avail­abil­ity of the prod­uct certificate is­sued in ac­cor­dance with the es­tab­lished pro­ce­dure, and a sep­a­rate ac­count­ing of goods of own man­u­fac­ture pro­duced dur­ing the pe­riod of va­lid­ity of this certificate.

This year, Be­larus, Rus­sia and Kaza­khstan have started work­ing in the Sin­gle Eco­nomic Space. To what de­gree has the tax leg­is­la­tion been har­mo­nized in the Cus­toms Union? Have tax as­pects re­gard­ing eco­nomic en­ti­ties been fully set­tled in the SES?

The Sin­gle Eco­nomic Space (SES) of Be­larus, Kaza­khstan and Rus­sia be­came op­er­a­tional on 1 Jan­uary 2012. This is the new eco­nomic as­so­ci­a­tion of the three coun­tries, which are home to over 165 mil­lion peo­ple. In terms of econ­omy, the SES boasts the ag­gre­gate GDP of $2 tril­lion, about 5 mil­lion cor­po­rate tax pay­ers and more than 5 mil­lion self-em­ployed busi­ness­men work­ing in the sin­gle cus­toms space with no tar­iff and non-tar­iff bar­ri­ers in mu­tual trade and cus­toms con­trols at the in­ter­nal borders.

The SES was con­ceived as an in­te­gra­tion project to cre­ate the most fa­vor­able con­di­tions for the de­vel­op­ment of man­u­fac­tur­ing co­op­er­a­tion, mu­tual trade, and for­ward-look­ing busi­ness ini­tia­tives. Tax ad­min­is­tra­tion com­pli­ant with the ob­jec­tives is be­com­ing an es­sen­tial part of the in­te­gra­tion.

In cir­cum­stances where there is no con­trol on the move­ment of goods from Brest to Vladi­vos­tok we had to de­vise new so­lu­tions and prin­ci­ples of work: im­ple­ment new schemes of con­trol, which would not hurt tax­pay­ers, and at the same time al­low main­tain­ing the level of bud­get rev­enue at the pre­vi­ous level, pre­vent ap­pli­ca­tion of dif­fer­ent rates of in­di­rect taxes on goods im­ported and pro­duced in the ter­ri­tory of each mem­ber state of the Cus­toms Union. In fact, we are talk­ing about the de­vel­op­ment of the uni­form leg­is­la­tion gov­ern­ing in­di­rect taxes in mu­tual trade, in­tel­li­gi­ble to busi­ness, ef­fec­tive for fis­cal bod­ies, and above of all – last­ing and bind­ing for Be­larus,

Kaza­khstan and Rus­sia, re­gard­less of the na­tional leg­is­la­tion.

It is for that logic that we have de­vel­oped the agree­ment on prin­ci­ples of levy­ing in­di­rect taxes in the Cus­toms Union and adopted the pro­to­cols to it. These in­stru­ments al­lowed charg­ing VAT and ex­cise du­ties in the ab­sence of cus­toms clear­ance in the sin­gle cus­toms ter­ri­tory since 1 July 2010.

In gen­eral, it should be noted that the pro­ce­dure de­vised by the tax au­thor­i­ties of the three coun­tries re­gard­ing the levy­ing of in­di­rect taxes in the Cus­toms Union fa­cil­i­tates the work of tax­pay­ers in the Sin­gle Eco­nomic Space. Sta­tis­tics is best ev­i­dence to it: in 2011, trade among the mem­ber states of the Cus­toms Union in­creased as against 2010.

Can you ex­plain this on the ex­am­ple of some par­tic­u­lar tax?

As we are talk­ing about in­di­rect taxes, let it be VAT and ex­cises. The level and or­der of their col­lec­tion, had they re­mained su­per­vised by na­tional leg­is­la­tion of the SES mem­ber states, might have promptly in­flu­enced the trade flow be­tween the states. There­fore, uni­form rules in cal­cu­la­tion and pay­ment of in­di­rect taxes in mu­tual trade would be the main way for the three coun­tries to de­velop co­op­er­a­tion in the tax sys­tem.

Let us take a closer look at VAT, a tax on do­mes­tic con­sump­tion. Thanks to a ter­ri­to­rial prin­ci­ple of VAT we avoid tax dis­tor­tions in in­ter­na­tional trade, level out con­sumer or pro­ducer prices. Thus, in line with the uni­form rules de­fined by the Cus­toms Union in­ter­na­tional agree­ments, each mem­ber state sets na­tional VAT rates on im­port. Ex­porters are granted zero VAT rate with full tax re­bates. As a re­sult, ev­ery Cus­toms Union mem­ber state guar­an­tees equal com­pet­i­tive con­di­tions for all cat­e­gories of goods through ap­pli­ca­tion of VAT flat rates both on do­mes­tic and im­ported goods.

The same ap­proach is ap­plied in the EU where ev­ery mem­ber state has the right to in­tro­duce its VAT rate tak­ing into ac­count the eco­nomic de­vel­op­ment of the coun­try.

Zero-rate VAT con­fir­ma­tion and pay­ment sys­tem en­vis­aged in the Cus­toms Union in­ter­na­tional agree­ments with re­gard to in­di­rect taxes re­quires a dec­la­ra­tion on the im­port of goods. It is, in fact, a tax ad­min­is­tra­tion in­stru­ment which rules out un­fair prac­tices from tax­pay­ers. The dec­la­ra­tion stamped by the tax au­thor­ity of the im­port­ing coun­try con­firms the im­port of goods as well as a zero-rate VAT for the ex­porter, and hence, the right for VAT re­claim. It is worth men­tion­ing that the dead­line for pre­sent­ing the state­ment on zero-rate VAT was pro­longed from 90 to 180 days on 1 July 2010.

But, keep­ing in mind a gen­eral trend for an in­creas­ing amount of e-doc­u­ments sent by eco­nomic agents to tax bod­ies, tax­pay­ers want us to al­low them to re­ceive doc­u­ments from their busi­ness part­ners on­line, too. Tax bod­ies will have to ad­dress this is­sue. We have agreed to in­crease the fre­quency of the ex­change of in­for­ma­tion be­tween tax au­thor­i­ties of the three coun­tries from one to three times a week.

I am con­vinced that such amend­ments will pro­mote a bet­ter tax cli­mate.

The Sin­gle Eco­nomic Space has an im­pact on other ar­eas of tax­a­tion. In the SES tax­pay­ers have a right to choose where to reg­is­ter their busi­ness. That is why we need ef­fi­cient ad­min­is­tra­tive mea­sures in the tax sys­tem to en­hance our com­pet­i­tive abil­ity in the SES.

What use­ful prac­tices can the Min­istry of Taxes and Du­ties of Be­larus bor­row from Rus­sia and Kaza­khstan?

We take in­ter­est in the ex­pe­ri­ence of Rus­sia and Kaza­khstan in pro­vid­ing on­line ser­vices. We are also in­ter­ested in Rus­sia’s cadas­tral eval­u­a­tion of real prop­erty for the cal­cu­la­tion of the prop­erty tax. The Rus­sian and Kazakh leg­is­la­tion in sub­sur­face re­sources man­age­ment war­rants care­ful study as well. But I can say with con­fi­dence that the Be­laru­sian tax sys­tem has a lot to of­fer, too.

Do you mean that the Be­laru­sian tax­a­tion sys­tem has cer­tain fea­tures that might be­come a com­pet­i­tive ad­van­tage in the SES? What do you think might be of in­ter­est to busi­ness­men from the SES part­ner coun­tries?

Con­trary to Rus­sia and Kaza­khstan, Be­larus has the short­est list of taxes, and tax rates here are very much com­pet­i­tive. Our ad­van­tages in­clude fewer tax dec­la­ra­tions, com­pul­sory ad­min­is­tra­tive pro­ce­dures for tax­pay­ers, the ab­sence of reg­u­lated costs used to cal­cu­late in­come tax and com­pul­sory tax checks of VAT re­bate claim va­lid­ity in ex­port op­er­a­tions. Un­like in Rus­sia and Kaza­khstan, tax­pay­ers in Be­larus are not obliged to run an ad­di­tional tax ac­count­ing for profit tax or com­pile a pur­chase ledger to keep a record on VAT re­bate.

We have set up quar­terly ad­vance pay­ments on profit tax as well as the right to choose VAT pay­ment dead­line (monthly or quar­terly), abol­ished ad­vance pay­ments on ex­cises.

Tax re­turns on profit tax, VAT, and real es­tate tax that are sub­ject to fil­ing in 2012 have been con­sid­er­ably sim­pli­fied. And I would like to add that tax dec­la­ra­tions (on VAT, profit and real es­tate tax) filed by tax­pay­ers in the Rus­sian Fed­er­a­tion and Kaza­khstan are much more complicated than their Be­laru­sian ana­logues.

Ex­cept for spe­cific cases (min­eral and gam­bling taxes), a tax­payer in the Repub­lic of Be­larus pays taxes at the place of reg­is­tra­tion, re­gard­less the lo­ca­tion of the tax­able item, while in Rus­sia cor­po­rate prop­erty taxes, land and water taxes are paid at the place of the lo­ca­tion of the item of tax­a­tion.

Ex­porters fil­ing e-dec­la­ra­tions to tax au­thor­i­ties have been ex­empted from the ne­ces­sity to present ad­di­tional doc­u­ments for zero-rate VAT and ex­cise re­lief.

I be­lieve that a lot of the above­men­tioned reg­u­la­tions will be of keen in­ter­est to our col­leagues from Rus­sia and Kaza­khstan. For in­stance, not long ago Rus­sian spe­cial­ists in­quired about our pro­ce­dure of profit tax pay­ment with the pre­sen­ta­tion of an an­nual dec­la­ra­tion and quar­terly pay­ment and in the ab­sence of sig­nif­i­cant in­ac­cu­ra­cies in book­keep­ing and tax ac­count­ing.

Last year, for the first time ever, in­ter­na­tional ex­perts as­sessed re­forms in the tax sys­tem as im­por­tant steps to pro­mote fa­vor­able busi­ness con­di­tions. In the World Bank Do­ing Busi­ness 2012 re­port Be­larus moved up 27 po­si­tions to 156th in Tax­a­tion. What mea­sures have im­proved the coun­try’s per­for­mance?

Ac­cord­ing to the WB Do­ing Busi­ness 2012 re­port, Be­larus is ranked among the three top re­form­ers and shows great progress in the Tax­a­tion rank­ing.

It is worth men­tion­ing that the meth­ods the World Bank uses are spe­cific and the Do­ing Busi­ness 2012 re­port as­sesses the tax leg­is­la­tion of 2010. Thus, the fig­ures de­scribed in the WB re­port the coun­try achieved were due to a whole range of mea­sures im­ple­mented in 2010. We stream­lined our tax sys­tem to a stan­dard list of taxes: VAT, ex­cises, cor­po­rate prof­its tax, in­come tax, prop­erty tax (real es­tate and land), eco­log­i­cal tax, con­tri­bu­tions to the so­cial se­cu­rity fund.

The ex­perts also praised the abol­ish­ment of turnover and lo­cal taxes. In the as­sess­ment they took into ac­count the op­por­tu­nity given to or­ga­ni­za­tions to file VAT and profit tax re­turns and pay taxes on a quar­terly ba­sis; and new ap­proach to­wards es­ti­mat­ing ex­pen­di­ture in profit tax­a­tion, and ex­clu­sion from rate set­ting ex­pen­di­ture on ad­ver­tis­ing, in­for­ma­tion, con­sult­ing and mar­ket­ing ser­vices, hos­pi­tal­ity costs.

We have also low­ered taxes on sales of shares, stakes in Be­laru­sian or­ga­ni­za­tions and pay­ment of div­i­dends on profit taxes from 24% to 12%, for­eign cor­po­rate prof­its taxes – from 15% to 12%, and in­come taxes – from 15% to 12%.

Sim­pli­fied tax ad­min­is­tra­tion and con­trol al­lowed for re­duc­ing the amount of com­pul­sory tax dec­la­ra­tions and the num­ber of ad­min­is­tra­tive pro­ce­dures con­ducted by tax au­thor­i­ties.

Yet, the 156th po­si­tion is not the rat­ing we are aim­ing for.

We be­lieve that this as­sess­ment does not re­flect the real state of the tax sys­tem in the coun­try. In par­tic­u­lar, the WB re­port points out that the Be­laru­sian tax­payer spends 654 hours a year on tax ad­min­is­tra­tion (18 tax pay­ments in­clud­ing 12 in oblig­a­tory in­sur­ance). The Ukrainian tax­payer spends 657 hours a year to make 135(!)

oblig­a­tory pay­ments. Tax­pay­ers in Rus­sia spend 290 hours to make 9 pay­ments while those in Kaza­khstan – 188 hours (7)…

As for the higher po­si­tion of the Repub­lic of Be­larus in the World Bank’s Do­ing Busi­ness rank­ing, we will fo­cus on the im­prove­ment of the in­di­ca­tor “Time Re­quired to Start a Busi­ness”. There­with, spe­cial at­ten­tion will be drawn to a broader ap­pli­ca­tion of the elec­tronic dec­la­ra­tion sys­tem, the de­vel­op­ment of the elec­tronic ser­vices sec­tor. Thus, in line with the Tax Code, in 2012 or­ga­ni­za­tions with more than 50 em­ploy­ees have to file tax dec­la­ra­tions in elec­tronic form.

The Min­istry of Taxes and Du­ties has put for­ward a pro­posal to in­tro­duce the Best Tax­payer sta­tus for or­ga­ni­za­tions and self-em­ployed busi­ness­men. Was this ini­tia­tive im­ple­mented?

This form of award­ing tax­pay­ers has been in­tro­duced. We hope that it will help cre­ate a bet­ter tax cul­ture, im­prove the in­di­ca­tors of fi­nan­cial and eco­nomic ac­tiv­i­ties of tax­pay­ers, and stim­u­late hon­est tax­pay­ers. The in­for­ma­tion about award­ing the eco­nomic op­er­a­tor the Best Payer of Taxes and Du­ties sta­tus may be used for ad­ver­tis­ing pur­poses. The com­pa­nies can also use this sta­tus when ap­ply­ing to gov­ern­ment bod­ies and or­ga­ni­za­tions and im­ple­ment­ing public pro­cure­ment con­tracts in Be­larus.

Be­fore the norm was in­cluded in the Tax Code, this form of award­ing tax­pay­ers had been ap­proved by the Min­istry of Taxes and Du­ties of Be­larus. In line with the doc­u­ment, in April 2012 the best pay­ers of taxes and du­ties will be cho­sen among or­ga­ni­za­tions, small and medium-sized busi­nesses, and selfem­ployed busi­ness­men.

The min­istry will, first of all, take into con­sid­er­a­tion whether taxes, du­ties, and other pay­ments to the bud­get are made in time and in full. More­over, the com­pany should have no ad­min­is­tra­tive and other penal­ties for the vi­o­la­tion of tax leg­is­la­tion in the past three years.

The Min­istry of Taxes and Du­ties will present let­ters of thanks and pro­vide cer­tain in­cen­tive dis­counts to the best pay­ers of taxes and du­ties. For ex­am­ple, they will be able to sub­scribe to such pe­ri­od­i­cals as “The Taxes of Be­larus” and “The Busi­ness Con­sul­tant” at a 50% dis­count, place ad­ver­tise­ments in of­fi­cial pa­pers of the min­istry on dis­counted terms, and take part in sem­i­nars of the In­for­ma­tion and Pub­lish­ing Cen­ter for Taxes and Du­ties (IPCTD). It will be eas­ier for such tax­pay­ers to ex­tend their reg­is­tra­tion as mem­bers of the IPCTD cer­ti­fy­ing cen­ter.

To­day elec­tronic tech­nolo­gies are widely used vir­tu­ally in all ar­eas of life. Does the tax ser­vice of Be­larus make am­ple

use of them? Was elec­tronic dec­la­ra­tion in­tro­duced in Be­larus in 2009 a suc­cess? What other hitech nov­el­ties will be avail­able for tax­pay­ers in the near fu­ture?

Over the three years fol­low­ing the in­tro­duc­tion of the elec­tronic dec­la­ra­tion sys­tem, more than half of all eco­nomic op­er­a­tors of Be­larus have started to use it. Elec­tronic dec­la­ra­tion sys­tems are used more fre­quently.

Apart from fil­ing elec­tronic tax dec­la­ra­tions, tax­pay­ers can get elec­tronic con­sul­ta­tions, rec­on­cile their pay­ments with the bud­get, ap­ply for tax re­funds, switch to spe­cial tax­a­tion regimes, and get more in­for­ma­tion us­ing the Per­sonal Cab­i­net ser­vice.

There is a le­gal doc­u­ment al­low­ing tax­pay­ers to re­quest an elec­tronic state­ment of taxes, du­ties, and fines from tax bod­ies. This state­ment will be sent to the tax­payer within three work­ing days fol­low­ing the sub­mis­sion of a hard­copy or an elec­tronic ap­pli­ca­tion.

Since 2011 tax­pay­ers have been able to sub­mit a num­ber of ad­di­tional doc­u­ments in elec­tronic form. For in­stance, they can file elec­tronic no­ti­fi­ca­tions on the liq­ui­da­tion or re­struc­tur­ing of the or­ga­ni­za­tion, sus­pen­sion of en­tre­pre­neur­ial ac­tiv­i­ties of selfem­ployed busi­ness­men, ap­ply for cer­tifi­cates. Or­ga­ni­za­tions and self-em­ployed busi­ness­men may also in­form tax bod­ies that they want to switch to the sim­pli­fied tax sys­tem, file an ap­pli­ca­tion on the re­pay­ment of dif­fer­ence in tax de­duc­tions and value added tax. They can also ask tax bod­ies to re­fund ex­ces­sive tax pay­ments and in­form about the changes of lo­ca­tion or di­rec­tor. Tax­pay­ers can also in­form rel­e­vant agen­cies that they are will­ing to ar­range a dif­fer­ent date for in­spec­tions, open or close ac­counts abroad, file an ap­pli­ca­tion on the pay­ment of a sin­gle tax for the man­u­fac­tur­ers of agri­cul­tural prod­ucts, etc.

Tax­pay­ers can also file elec­tronic re­quests and get elec­tronic con­sul­ta­tions which have the sta­tus of of­fi­cial doc­u­ments.

Start­ing from 1 Jan­uary 2012, tax­pay­ers can file vir­tu­ally all data in elec­tronic form us­ing Mi­crosoft Ex­cel. Thus, tax bod­ies no longer need hard copies of dec­la­ra­tions on the man­u­fac­ture and sale of al­co­holic and to­bacco prod­ucts, CMR way­bills, re­ports on the use of iden­ti­fi­ca­tion and ex­cise marks, re­ports on the vol­ume of pro­duc­tion, im­port, sales and use of goods with iden­ti­fi­ca­tion marks. Tax­pay­ers can be in­formed about their debts and over­pays, get cer­tifi­cates which con­firm the amount of tax with­held (for for­eign­ers work­ing in the Repub­lic of Be­larus), get in­for­ma­tion about the per­ma­nent stay of Be­laru­sian tax res­i­dents on the ter­ri­tory of the Repub­lic of Be­larus to avoid dou­ble tax­a­tion.

The In­for­ma­tion and Pub­lish­ing Cen­ter for Taxes and Du­ties holds nu­mer­ous events to pro­mote the ap­pli­ca­tion of public key cer­tifi­cates. Thus, apart from the Min­istry of Taxes and Du­ties, the dig­i­tal sig­na­ture of the cen­ter is used by Bel­go­sstrakh (for ac­count­ing), the Jus­tice Min­istry (for elec­tronic reg­is­tra­tion of eco­nomic op­er­a­tors), the Be­laru­sian Univer­sal Com­mod­ity Ex­change (for the par­tic­i­pa­tion in elec­tronic auc­tions to im­ple­ment public pro­cure­ment con­tracts).

The Pub­lish­ing Cen­ter for Taxes and Du­ties and the Na­tional Sta­tis­tics Com­mit­tee have signed an agree­ment on fil­ing elec­tronic ac­counts for the year 2011 to the na­tional sta­tis­tics bod­ies in ac­cor­dance with the forms of sta­tis­ti­cal ac­count­ing “Re­port on the Fi­nan­cial and Eco­nomic Op­er­a­tion of the Small Busi­ness” and “Re­port on the Fi­nan­cial and Eco­nomic Op­er­a­tion of the Mi­cro-or­ga­ni­za­tion”. In the fu­ture we are plan­ning to make a tu­to­rial on the use elec­tronic dec­la­ra­tion sys­tems, open cen­ters to send land and real es­tate tax no­ti­fi­ca­tions to in­di­vid­u­als and in­form tax­pay­ers about var­i­ous mat­ters.

The Min­istry of Taxes and Du­ties op­er­ates a hot­line to ex­plain tax leg­is­la­tion mat­ters to in­di­vid­u­als. In sum­mer a sim­i­lar hot­line will be opened for self-em­ployed busi­ness­men and or­ga­ni­za­tions. We will also step up ef­forts to op­ti­mize the process of cal­cu­lat­ing real es­tate and land taxes for in­di­vid­u­als.

Start­ing from 1 Jan­uary 2012 VAT is no longer levied on in­com­plete con­struc­tion projects

Re­duc­ing the tax bur­den on small and medium-sized busi­ness is one of the main con­di­tions to cre­ate a fa­vor­able

busi­ness cli­mate

Ex­pan­sion of tax pref­er­ences for in­no­va­tive and high-tech pro­duc­tions will pro­mote an in­vest­ment in­flow and en­hance the coun­try’s ex­port po­ten­tial

Be­laru­sian fam­i­lies with two and more chil­dren un­der 18 are now en­ti­tled to a higher tax re­bate

Lift­ing re­stric­tions on the size of re­tail space, which was

es­sen­tial for the sin­gle tax, will ben­e­fit both re­tail­ers

and con­sumers

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