Belarus VAT, GST, and Sales Tax Guide

Worldwide VAT, GST and Sales Tax Guide 2021

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Belarus ey.com/GlobalTaxGuides

Minsk

GMT +3

EY Klary Tsetkin Street 51a 15th Floor Minsk 220004 Belarus Indirect tax contacts Svetlana Gritsouk Vadim Ilyin (resident in Moscow)

+375 (17) 240 42 42 svetlana.gritsouk@by.ey.com +7 (495) 648 9670 vadim.ilyin@ru.ey.com

A. At a glance Name of the tax Local name Date introduced Trading bloc membership Administered by VAT rates Standard Reduced Other VAT number format VAT return periods Thresholds Registration Recovery of VAT by non-established businesses

Value-added tax (VAT) Nalog na dobavlennuyu stoimost (NDS) 19 December 1991 Eurasian Economic Union member Ministry of Taxes and Duties of the Republic of Belarus (http://nalog.gov.by) 20% 10% 25%, zero-rated (0%) and exempt Tax identification number (TIN) with 9 digits Quarterly or monthly No separate registration exists for VAT purposes; taxpayers register for all corporate taxes at the same time, but a VAT exemption is available for smaller businesses No

B. Scope of the tax VAT applies to the following transactions: • Sales of goods (works and services) and property rights in Belarus (including exchanges of goods, gratuitous assignments, leases, transfer of goods under loan agreements) • Importation of goods into Belarus Goods are deemed to be sold in Belarus if either of the following circumstances exists: • The goods are situated in Belarus and are not shipped or transported abroad.

• The goods are situated in Belarus at the time of the commencement of shipment or transportation.

Services (works) are deemed to be provided in Belarus if the activities of a private entrepreneur or organization that performs the works (renders services) are carried out in Belarus.

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Under specific rules, services (works) are deemed to be provided in Belarus in the following circumstances: • The services (works) are directly connected with immovable property situated in Belarus.

• The services (works) are connected with movable property situated in Belarus (except the rent and lease of movable property).

• The services (works) are rendered in Belarus in the areas of culture, art, education (except distance education), physical education, tourism, leisure or sport.

• The purchaser of the services (works) carries out activities in Belarus such as the following: — The transfer of property rights on intellectual property — The provision of audit, consulting, legal, accounting, advertising, marketing, engineering (except engineering related to immovable property) and information processing services — The provision of secondment services (if the staff works in Belarus) — The rent of movable property (except for transportation vehicles) — The provision of services related to the development of computer programs and databases (computer software and information products) as well as the adaptation and modification of these products The place of supply of supplementary services is the same as for the main services.

C. Who is liable In general, a taxpayer is any individual entrepreneur or legal entity (including a foreign legal entity) that performs taxable supplies of goods (works and services) and property rights in Belarus in the course of its business activities or that imports goods across the customs border of Belarus.

Exemption from registration. Private entrepreneurs and legal entities that are applying for the

simplified taxation system without payment of VAT are exempt from VAT payment obligations with respect to sales of goods (work and services) and property rights in Belarus. To apply the simplified taxation system without VAT, the legal entities’ annual revenue and average head count should not exceed BYN1,481,522 and 50 employees respectively, private entrepreneurs’ annual revenue should not exceed BYN465,255. Private entrepreneurs applying the general taxation system can also be exempted from VAT payment obligations with respect to sales of goods (work and services) and property rights in Belarus if their annual revenue does not exceed BYN465,255. Some business activities are subject to special taxation regimes (e.g., gambling tax) and income from such activities are exempt from VAT. Voluntary registration and small businesses. The VAT law in Belarus does not contain any provi-

sion for voluntary VAT registration, as there is no separate VAT registration. The VAT obligations in general depend on the tax system that the taxpayer applies (e.g., taxpayers applying for the general tax system are required to register for VAT and pay VAT on supplies, whereas taxpayers applying for the simplified tax system may not be required to register for VAT and not pay VAT on supplies).

Group registration. Tax group registration is not allowed under Belarusian law. Legal entities that

are closely connected must register for tax purposes separately.

Non-established businesses. A “non-established business” is a foreign company that does not have

a permanent establishment in Belarus. Foreign legal entities that do not have a permanent establishment in Belarus are not subject to VAT when they sell goods (perform works, render services) in Belarus.

In such cases, the Belarusian legal entities and individual entrepreneurs who purchase these goods (works, services) must calculate and pay VAT. A foreign legal entity or non-established business may be required to register for tax purposes in Belarus if it meets any of the following conditions: • It plans to conduct business that leads to income generation.

• It owns immovable property in Belarus.

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• It provides electronic services to individuals residing in Belarus.

• It operates entertainment facilities such as merry-go-rounds and Ferris wheels that are usually located in amusement parks.

• It puts on wild animal attractions.

• It sells goods to another non-established entity.

The tax registration procedure for non-established businesses is generally the same as the procedure for Belarusian legal entities. A foreign legal entity should submit a standard application form for tax registration to the Belarusian tax authorities together with supporting information and documentation about the entity.

The sale of goods located in Belarus by a non-established business (without any legal entity or representative office or permanent establishment in Belarus) to another non-established business (without any legal entity or representative office or permanent establishment in Belarus) would be subject to Belarusian VAT, because the place of supply of goods will be recognized as the territory of Belarus. However, who should account for the VAT, and if required to register for VAT in Belarus, is not clearly established under Belarusian legislation. There is no law that the tax authorities would impose the non-established business to charge VAT in Belarus.

If the non-established business had a representative office in Belarus, such transactions would most likely require them to register and account for VAT on the supply. This is because there would be a risk of permanent establishment for tax purposes in Belarus, due to the income generation (entrepreneurial activity).

Tax representatives. Tax representatives are not required in Belarus. However, tax representatives

are optional, and taxpayers may authorize any individual or legal entity to act as a representative of the taxpayer in transactions regulated by tax law, acting on the basis of a power of attorney.

The tax advisor can also be a representative of the taxpayer on the basis of an agreement on the rendering of tax advisory services on a paid basis.

Reverse charge. Belarus has a tax mechanism similar to the commonly understood reverse-charge

mechanism. Foreign legal entities that do not have a permanent establishment in Belarus are not subject to VAT when they provide a supply, i.e., sell goods, perform works or render services, transfer property rights in Belarus. In such cases, the Belarusian legal entities and individual entrepreneurs who purchase these supplies must calculate and pay VAT. Subsequently, VAT paid

by Belarusian taxpayers may be credited in full against the output tax or refunded from the budget.

Domestic reverse charge. The Belarus VAT law does not specify a reverse-charge mechanism, but

Belarus has a similar tax mechanism in place. Foreign legal entities that do not have a permanent establishment in Belarus are not subject to VAT when they make a supply, i.e., sell goods, perform works, render services or transfer property rights in Belarus. In such cases, the Belarusian legal entities and individual entrepreneurs who purchase these supplies must calculate and pay VAT. Subsequently, VAT paid by Belarusian taxpayers may be credited in full against the output tax or refunded from the budget. However, where the non-established business sells goods located in Belarus to another non-established business, this would be subject to Belarusian VAT, because the place of supply of goods will be recognized as the territory of Belarus. See the subsection Non-established businesses above for further detail.

Where a foreign legal entity or non-established business makes a supply to non-established but locally registered businesses, the reverse charge cannot be used, and the supplier must register for VAT in Belarus and charge local VAT. Digital economy. Generally, indirect tax issues related to digital products are regulated by the com-

mon provisions of the Belarusian tax code. High-tech companies registered with certain

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organizations, e.g., the High-Tech Park, the Infopark Science and Technology Association, may apply to receive additional indirect tax benefits and exemptions.

Foreign companies are required to register with the tax authorities in Belarus and pay VAT (20%) and file returns on a quarterly basis if they provide electronic services to individuals residing in Belarus. This separate VAT registration is applicable only for foreign companies that supply electronic services, deemed as a special type of registration.

Electronic services are defined as services that are rendered via the internet using information technologies and include, but are not limited to: • Granting rights to use software, computer games, databases, e-books, informational materials, graphics and music • Online advertising services • Granting of access to online search engines • Providing trade platforms operating online in a real-time mode • Web hosting services • Some other services Individuals/purchasers are regarded as residing in Belarus if their place of residence is Belarus, or a bank account that was used for a payment is opened in Belarus, or a network address used for purchase of services is registered in Belarus, or an international country code used for a payment/purchase is assigned for Belarus.

Online marketplaces and platforms. Foreign companies that provide electronic services to individuals in Belarus are required to register with the tax authority and pay VAT to the budget for such services at a rate of 20% (B2C). The general procedure of paying VAT is applied when Belarusian companies buy electronic services (B2B). The requirement to pay VAT by a Belarusian company (individual entrepreneur) depends on whether Belarus is recognized as the place of sale of such services. The place of sale of electronic services is determined by the location of the buyer (customer of services).

Tax legislation provides the closed list of what should be recognized as electronic services in Belarus. This list contains such electronic services as providing via the internet capabilities using information technologies and systems to establish contacts and enter into transactions between sellers and buyers (including the provision of an internet trade platform). However, the sale of goods (works, services) does not apply to electronic services in case, when ordering these goods (works, services) is performed via the internet, delivering of them is provided without using the internet.

Registration procedures. There is no separate VAT registration in Belarus. Tax registration is

carried out automatically two working days after the company’s incorporation and covers all taxes paid by a company. Foreign companies shall apply for tax registration before carrying out activities in the territory of Belarus. The administrative procedure for tax registration of foreign companies takes two working days. Foreign companies must submit requested documentation to the tax authority in paper. Documents required for tax registration may be submitted by a duly authorized company official or the company’s tax representative.

For example, if a foreign company plans to conduct business that leads to income generation, it must submit a tax registratiwith the following documents: • An application • The certificate of the tax authority of the country of location of the foreign company where it is registered as a taxpayer with an indication of the payer’s code • The original and a copy of the power of attorney confirming the authority of a representative of the foreign company in Belarus to conclude transactions and other legally significant actions on behalf of the foreign company, including the authority to represent its interests in relations regulated by tax legislation

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• A copy of the charter of the foreign company • A copy of an extract from the commercial register of the country of location of the foreign company Foreign companies that provide services in electronic form for individuals in Belarus may submit an application and a copy of an extract from the commercial register of the country of location (or other equivalent proof of its legal status) in electronic form to the tax authority. The administrative procedure for tax registration of foreign companies that provide services in electronic form for individuals in Belarus also takes two working days.

Deregistration. There is no separate VAT deregistration in Belarus. Generally, tax authorities

deregister taxpayers in cases of liquidation, reorganization or closure of a permanent establishment in Belarus. Tax deregistration applies for all taxes paid by an entity simultaneously, and deregistration of foreign organizations has complications specified in the Belarusian tax code.

Changes to VAT registration details. The taxpayer is obliged to notify the tax authority no later

than 10 working days for changing information previously reported by a foreign company when it was registered with the tax authority. The taxpayer must also notify for any changes to its location and/or the name of the company. Such changes must be notified to the tax authority in electronic form.

D. Rates The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.

The VAT rates are: • Standard rate: 20% • Reduced rate: 10% • Increased rate: 25% • Zero-rate: 0% The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for a reduced rate, the zero rate or an exemption.

Examples of goods and services taxable at 0%

• Exports of goods, some works, and services related to exports • Exports of transport services, including transit carriage • Exports of works on production of goods from raw materials supplied by customers under tolling agreements • Repairs of aircraft and their engines, units of railway technics (e.g., passenger carriages, wagons, diesel trains) for foreign companies and individuals Examples of supplies taxable at 10%

• Sales of crops (except flowers and ornamental plants) • Sales of store cattle, i.e., sales of any products of animal origin such as pork, beef, animal fat, etc. The reduced rate applies to the sale of live animals in that industry as well but does not apply to the sale of animals to be farmed for fur, such as sheep, raccoon, sable, etc.

• Sales of fish and hive products produced in Belarus • Sales and/or imports into Belarus of goods for children and food products as per the list established by the Belarusian President Examples of supplies taxable at 25%

• Sales of telecommunications services (e.g., phone services, data transmission and telematics, TV broadcasting)

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The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.

Examples of exempt supplies of goods and services

• Provision of financial services (e.g., granting loans or bank credits, issue of a bank guarantee, bank account opening and keeping) • Provision of insurance services (e.g., insurance premiums) • Provision of educational services (e.g., education at college or university level) • Provision of cultural services (e.g., services of museums, art galleries, cinema, theaters and libraries) • Provision of housing services (e.g., utilities provided to individuals) • Provision of medical services (e.g., diagnosis, therapy, surgery, dentistry) • Provision of certain medical equipment, prosthetics and devices for disabled persons Option to tax for exempt supplies. The taxpayer is entitled to apply or refuse to apply tax exemp-

tions and other benefits provided by the Belarusian tax code. If the taxpayer refuses to apply any VAT exemption, it must submit an application on refusal to apply respective tax exemption to the tax authorities.

E. Time of supply “Time of supply” is the moment when VAT becomes due.

Under Belarusian law, the time of supply is called the “date of actual realization.”

The date of actual realization of goods, works and services, and property rights is determined as the date of dispatch of goods (performance of works or rendering services) or transfer of property rights disregarding the day of payment.

The date of dispatch of goods or services is the date of the following: • For goods, the first day of shipment by the seller to the customer or to the company that carries out the transportation (if the seller does not provide the transportation of the goods or does not bear the costs of the transportation) • For goods, the date is determined according to the accounting policy of the taxpayer but no later than the day when transportation of the goods began (in the other cases) • For services, the day when the services are considered to be provided in accordance with executed documents, such as act of acceptance • For transfer of property rights, the date of the transfer of property rights under a primary accounting document or the last day of each month to which the transfer of property rights applies (at the choice of the taxpayer) Exemptions from this rule have been introduced, including but not limited to the following: • The date of actual realization of goods, works and services, and property rights performed by foreign legal entities not registered with the Belarusian tax authorities is the day of payment, including advance payments (or other way of obligation fulfillment).

• The date of realization of electronic services provided by foreign companies to individuals residing in Belarus is the last day of the tax period, on which the day of payment (including advance payment) or other way of customer’s obligation fulfillment falls.

Deposits and prepayments. Generally, the time of supply is the date of dispatch of goods (perfor-

mance of works or rendering services or transfer of property rights) disregarding the day of payment. By way of exception, the time of supply depends on the day of payment in some cases (see above).

Continuous supplies of services. In case of continuous supplies of services, the time of supply

depends on whether the customer can use the outcome of the services before the service is completed or not. If the customer can use the outcomes of services in the course of the service

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provision, the time of supply is the last calendar day of each month and the last day of the service provision. If the customer cannot use the outcomes of services before the service completion, the time of supply is the day of completion or acceptance of the services under a primary accounting document (provided that the indication of either of the dates is specified by the service agreement) or the date of issuance of a primary accounting document.

Goods sent on approval for sale or return. There is no specific time of supply rule for these cir-

cumstances, and the general provisions for time of supply should apply. In case of return of goods, the seller should decrease its sales turnover by the relevant amount in the period, in which the buyer returns the goods.

Reverse-charge services. The Belarus VAT law does not specify a reverse-charge mechanism for

services as such. However, Belarus has a similar tax mechanism to the reverse-charge mechanism. This works such that where a non-established business makes supplies of goods or services (including land related services/property rights) to a Belarusian established business (must be established as well as locally registered), the purchaser must pay the VAT due. For these types of supplies, the time of supply is the day of payment, which includes advance payments (or other similar payment obligations fulfilled by the purchaser).

Leased assets. The time of supply for rental payments is the last day of each month to which the

rental payment applies, but not earlier than the date of actual transfer of the rented asset to the renter, and the last day of the rent if the term of the rent does not exceed one month. The time of supply for financial and operating leases is the date of the actual transfer of the leased assets to the lessee (applicable for the first lease payment made prior to the actual transfer), or the last day of each month, to which the lease payment applies, but not earlier than the date of actual transfer (applicable for the other lease payments). The time of supply for finance leases with respect to the residual value of the leased asset, is the maturity date for redemption of the leased asset under the lease agreement providing for the right of redemption.

Imported goods. Imported goods are subject to import VAT in Belarus. For goods imported from

countries that are not members of the Eurasian Economic Union, VAT is collected by the customs authorities. For goods imported from countries that are members of the Eurasian Economic Union, VAT is collected by the tax authorities. VAT on imports is payable on the customs value of goods, including import duty and excise duty (if applicable).

F. Recovery of VAT by taxable persons A taxable person may recover input tax, which is VAT charged on goods (works and services) and property rights supplied for carrying out activities within the scope of VAT. A taxable person generally recovers input tax by deducting it from output tax, which is VAT charged on supplies made.

Nondeductible input tax. Input tax cannot be recovered in the following circumstances:

• Where it was deducted as expenses for corporate profits tax purposes, because the acquired goods, work, services and property rights were used for activities exempted from VAT • Where it was allocated to the value of goods, works and services and property rights (including fixed and intangible assets) • Where it was not reflected in accounting records • Where it was paid at the expense of donated budget funds • Where it related to goods, which were lost or damaged except cases of emergencies • Or in certain other cases Examples of items for which input tax is nondeductible

• Employee expenses • Goods (excluding fixed assets and intangible assets) in case of damages or losses • Transfer by a construction project owner to the third parties

B E L A RU S 163 Examples of items for which input tax is deductible (if related to a taxable business use)

• VAT paid on purchases of goods, works and services, and property rights from resident legal entities • VAT paid on imported goods • VAT paid on goods, works and services, and property rights purchased from foreign legal entities that do not have a permanent establishment in Belarus Partial exemption. If a taxpayer engages in both exempt and taxable activities, it may account for

input tax related to each activity separately. In this case, input tax directly related to taxable activities is recoverable in accordance with the sequence of VAT deductions, and input tax directly related to exempt activities is not recoverable and must be expensed for corporate profits tax purposes. If the taxpayer does not keep separate accounts of input tax attributable to taxable and exempt activities, it must be apportioned. The statutory method of apportionment is a pro rata calculation, based on the revenue from taxable activities compared with the total turnover of the business. Percentages are calculated separately for activities subject to each VAT rate and for exempt activities. The amount of input tax related to each kind of activity is determined by multiplying the total amount of input tax and the relevant percentage.

The amount of input tax is deducted in the following sequence: • The amount of input tax related to sales of goods, works and services, and property rights, except fixed assets and intangible assets (subject to VAT at 20% rate). The amount of input tax is deductible up to the amount of output tax calculated on the sales of goods, works and services, and property rights.

• The amount of input tax on fixed and intangible assets. The amount of input tax that may be deducted may not exceed the amount of output tax calculated on sales of goods, works and services, and property rights and the amount of VAT deducted in accordance with the rules stated in the first item above.

• The amount of input tax related to activities that are subject to VAT at 10%. In this case, the amount of deduction is not limited by the amount of output tax calculated on sales of goods, works and services, and property rights.

• The amount of input tax related to activities that are subject to VAT at 0%. In this case, the amount of deduction is not limited by the amount of output tax calculated on sales of goods, works and services, and property rights.

• The amount of input tax related to sales of goods that are produced by a Belarusian tax resident and sold to another Belarusian tax resident for the transfer of the goods in international leasing with redemption right outside Belarus. In this case, the amount of deduction is not limited by the amount of output tax calculated on sales of goods, works and services, and property rights and expensed for corporate profit tax purposes. Sales of goods described in the preceding sentence are exempt from VAT. • Amounts of VAT paid from purchased fixed assets and intangible assets that were not deducted in the last fiscal period and that the taxpayer decided to deduct in equal shares in each reporting period of the current fiscal year. In this case, the amount of deduction is not limited by the amount of output tax calculated on sales of goods, works and services, and property rights (see the subsection below Capital goods).

• Amounts of VAT related to sales of goods to foreign companies and/or individuals from the territory of foreign states (certain criteria should be met). In this case, the amount of deduction is not limited by the amount of output tax calculated on sales of goods, works and services, and property rights.

Approval from the tax authorities is not required to use the partial exemption standard method in Belarus. If the taxpayer has exempt and taxable activities, the taxpayer should apportion the input tax between exempt and taxable turnover. For allocating tax deductions the taxpayer uses the method of pro rata calculation or separate accounts. The taxpayers determine the method in the

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accounting policy. At the beginning of the year, the taxpayers determine the method of allocating tax deductions in the accounting policy. The determined method is not subject to change during the year.

Capital goods. A taxpayer may deduct input tax paid on purchased fixed assets and intangible

assets in accordance with the usual VAT deduction rules, or capitalize input tax by increasing the value of a fixed or intangible asset by the amount of VAT.

For VAT deductions of the preceding fiscal period for fixed assets and intangible assets, a taxpayer may deduct them in equal shares in each reporting period of the current fiscal period (1/12 of the amount for a reporting period of a month or 1/4 of the amount for a reporting period of a quarter).

Refunds. If the amount of VAT deductions (input tax) in a VAT return exceeds the amount of

output tax payable, the taxpayer need not pay VAT, and the difference between the amount of VAT deductions and total VAT calculated on sales of goods (works and services) and property rights may be deducted on a priority basis from the total amount of VAT in the following fiscal period or, in certain cases, refunded to the taxpayer.

The decision about reimbursement of VAT must be issued by the tax authorities not later than two working days from the date on which the taxpayer submitted the VAT return and application for refund. The tax authorities may examine the reasonableness of the refund.

Refund of VAT from the budget is carried out by the tax authorities in the following order: • Reimbursable VAT must be offset during 30 days against the following: — Payments for taxes, duties and other mandatory payments to the budget — Debt repayments and fines with respect to taxes, duties and other mandatory payments to the budget — Debt repayments of penalties imposed by the tax authorities • The remaining amount of reimbursable VAT is refunded to a taxpayer not later than five working days from the closing date for offset.

Pre-registration costs. Input tax incurred on pre-registration costs in Belarus is not recoverable.

Write off of bad debts. Output tax accounted for on bad debts cannot be recovered in Belarus.

Noneconomic activities. In general, input tax (including input tax related to nonbusiness activi-

ties) may be recovered in Belarus, except for VAT related to the cost of food, subscription to print media, works and services purchased by the taxpayer for its employees.

G. Recovery of VAT by non-established businesses Only registered legal entities that engage in taxable activities in Belarus may obtain recovery of VAT. If a foreign legal entity is registered with the Belarusian tax authorities as a permanent establishment, VAT incurred on purchases of goods (works and services), including imported goods, and property rights is generally recoverable in accordance with the usual rules (see Section F).

The VAT refund application must be sent to the appropriate tax office. The application must be completed in Russian. The refund is made in Belarusian rubles (BYN) to a bank account held in Belarus. The Ministry of Taxes and Duties of the Republic of Belarus has approved a model form of refund application.

Refunds of differences between the amount of VAT deductions and total VAT with respect to sales of goods (works and services) and property rights are made without the payment of interest.

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When foreign individuals purchase a product in Belarus that costs more than BYN80 from a vendor that is a party to the tax refund services agreement, and then the individuals export the product to a destination outside the territory of the Eurasian Economic Union, they can receive a refund of the VAT they paid if they apply for the refund within six months of the date of purchase.

H. Invoicing VAT invoices. Taxable persons are required to issue electronic VAT invoices for each taxable

transaction and nontaxable transactions with related parties.

Credit notes. A credit note should be issued where both parties agree reduction of the cost of

previously bought goods (works, services), property rights, so the adjustment output/input tax should be accompanied by an additional electronical VAT invoice formed according to the Belarusian legislation.

Electronic invoicing. Electronic VAT invoicing is mandatory for all VAT taxpayers (except for

foreign companies, which are not registered with the Belarusian tax authorities). At the same time, it is not required to issue VAT invoices with respect to some transactions (e.g., electronic services provided by foreign companies to individuals residing in Belarus). Electronic VAT invoices are managed electronically through the web portal of the Belarusian Ministry of Taxes and Duties and are stored there.

Electronic invoices form a basis for VAT payments between sellers and buyers of goods, works, services and property rights, as well as basis for credit of input tax.

The electronic VAT invoice flow is organized through the web portal of the Ministry of Taxes and Duties of the Republic of Belarus. In general, the taxpayer must issue an electronic VAT invoice with respect to each transaction involved no later than the 10th of the month following the month in which the goods or services were provided, or property rights were transferred and either present this invoice to the purchaser or upload it to the web portal.

Simplified VAT invoices. Simplified VAT invoicing is not allowed in Belarus. As such, full VAT

invoices are required.

Self-billing. Self-billing is not allowed in Belarus. However, in some cases it is an obligation to

file the primary accounting documents unilaterally (e.g., for leasing).

However, one of the obligatory bases to recover input tax is a signed electronic VAT invoice. The suppliers (taxpayers) are obliged to file the electronic VAT invoices in respect of supplies, including exemption, and send them to the customers or direct to the web portal. And the customers should individually file and submit electronic VAT invoices in the case of import goods or purchases of goods, works, services or property rights from a nonresident when the place of realization is Belarus.

Proof of exports. Goods exported from Belarus, as well as some types of works and services

related to exports, are subject to VAT at a rate of 0% in Belarus. To confirm the applicability of the 0% rate, the supplier must collect and provide to the tax authorities the supporting documents.

Foreign currency invoices. If money liabilities in a contract are fixed in Belarusian ruble (BYN)

as an equivalent to an amount in foreign currency, the VAT base is determined in BYN, using the foreign currency rate published by the National Bank of the Republic of Belarus on the date of actual realization.

Supplies to nontaxable persons. In case of exempt supplies made to private consumers, VAT invoices are not required to be issued. In case of taxable supplies made to private consumers, the

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supplier should issue a single VAT invoice for all supplies to the private consumer in the reporting period and upload it to the web portal.

Records. Each transaction should be confirmed by primary accounting documents (acts, invoices,

etc.). Input tax can be recovered after its reflection in the accounting and the purchase ledger (if the conduct of the purchase ledger is established by the taxpayer’s accounting policy).

Primary accounting documents must contain the following information: • Name of the document, date of its preparation • Name of a company • The content and basis of an economic transaction, its assessment in physical and value indicators or only in value indicators • The positions of persons responsible for the transaction and/or the correctness of its design, their names, initials and signatures Primary accounting documents may contain other information that is not mandatory.

The taxpayers are obliged to ensure the safety of accounting documents, accounting of income (expenses) and other objects of taxation, other documents and information required for taxation.

The tax authority that conducts the tax audit has the right to demand from the taxpayer the documents and (or) information required for the tax audit, including in electronic form. Documents are submitted in the form of a duly certified copy or extract from documents. If it is impossible to provide such a copy or extract, the originals of the documents are submitted. In cases provided by tax legislation, the tax authorities have the right to demand originals of documents from the taxpayers.

There is no explicit prohibition on keeping records outside the country. But it is recommended to keep such records local in Belarus, since at the request of the tax authorities taxpayers must provide documents in a timely manner.

The director of the company is held personally liable for keeping of records.

Record retention period. The primary accounting documents in a company should be stored 3 years after the tax audit and 10 years if the tax audit was not carried out. Purchase ledgers are stored for five years from the date of the last entry in it, if the tax audit was carried out in a company. If the tax audit has not been carried out purchase ledgers should be stored 10 years from the date of the last record.

Documents confirming the application of the zero VAT rate (application for the import of goods and payment of VAT, etc.) are stored for 3 years after the tax audit, if the tax audit has not been carried out within 10 years. And electronic VAT invoices and returns are stored on the web portal for an unlimited time.

Electronic archiving. Belarusian legislation allows to archive the primary accounting records in paper or electronic form (in case electronic documents are signed by electronic digital signature).

Electronic VAT invoices and VAT returns are created only in the form of electronic documents and archived in the electronic archive of the web portal.

I. Returns and payment Periodic returns. Taxpayers must file VAT returns quarterly or monthly (at the choice of the tax-

payer) with cumulative effect in the calendar year by the 20th day of the month following the reporting period. The reporting period for the taxpayers who provide telecommunication services is a calendar month, and for the foreign companies providing electronic services, it is a calendar quarter.

B E L A RU S 167 Periodic payments. At the choice of the taxpayer, the reporting period for VAT is a calendar month

or calendar quarter. The decision to choose a reporting period is not subject to change during the current tax period.

VAT is calculated and paid at the end of each reporting period. As a general rule, payments must be made by the 22nd day of the month following the reporting period.

VAT is paid in cash or with a cash-free payment in Belarusian rubles. Also, the payment of VAT is possible by offsetting the previously excessively paid or recovered amount of VAT or other taxes and penalties.

Import VAT related to the goods imported from the Eurasian Economic Union must be declared in the tax return by the 20th day of the month following the date of acceptance of these goods in accounting.

Electronic filing. VAT returns must be filed only in the form of an electronic document signed by

taxpayer’s digital signature.

The taxpayer is entitled to use one of the following methods of creating and filing an electronic document to the Belarusian tax authorities: • Using specialized software developed by the Ministry of Taxes and Duties of the Republic of Belarus and posted on the web portal, which can be installed on the taxpayer’s computer • Through the personal account of the taxpayer on the web portal • By sending an xml file to the web portal Significantly, the day of submission of electronic VAT returns is considered the date of its acceptance by the web portal, recorded in the confirmation of the web portal.

Payments on account. Payments on account are not required in Belarus.

Special schemes. VAT returns in respect of property income trusts must be submitted to the tax

authorities separately from VAT returns related to other activities of the trust manager.

Annual returns. Annual returns are not required in Belarus.

Supplementary filings. No supplementary filings are required in Belarus.

Correcting errors in previous returns. If the taxpayer identifies incomplete information or errors

in VAT returns submitted for the reporting period of the previous tax period, then the taxpayer makes the changes and (or) additions in VAT return for the previous tax period by submitting the revised VAT return.

If the taxpayer identifies incomplete information or errors in VAT returns submitted for the previous reporting period of the current tax period, then the changes and (or) additions are reflected in VAT return submitted for the next reporting period of the current tax period.

The revised VAT returns are submitted in the same way as original VAT returns. In case of submitting of the revised VAT return, the taxpayer must indicate the purpose of submitting such return. Also, the taxpayer should fill out Section V of the revised VAT return, in which the taxpayer indicates the reporting period in which the error was identified and the payable or refunded amount of VAT. Digital tax administration. There are currently no transactional reporting requirements in Belarus.

168 B E L A RU S

J. Penalties Penalties for late registration. Belarusian administrative law provides for several types of fines in

the following amounts for tax registration violations: • Delay in tax registration: penalty on the responsible official of not more than five basic units (one basic unit = BYN27).

• Non-registration: penalty of not more than 20 basic units. The amount of the penalty depends on the duration of the delay in tax registration. For legal entities, the penalty equals 20% of the amount of income generated during the period of unregistered business activity.

Penalties for late payment and filings. The Belarussian administrative law provides for the follow-

ing fines with respect to the filing of VAT returns and nonpayment or partial payment of the amount of tax: • Delay in tax return submission (delay of not more than three working days): penalty on the responsible official of up to one basic unit or warning • Delay in tax return submission (delay of more than three working days): penalty on responsible official of two basic units plus 0.5 basic unit for each full month of delay but not more than 10 basic units • Nonpayment or partial payment of tax: penalty on legal entity of 40% of the underpaid tax but not less than 10 basic units • Nonpayment or partial payment of tax resulting from the negligence of company’s officials: penalty on responsible official of 2 to 20 basic units • Willful nonpayment or partial payment of tax: penalty on responsible official of 40 to 120 basic units Penalties for errors. If the taxpayer made a mistake carelessly, that resulted in late payment of

VAT: • Identified error within a desk audit – penalty on responsible official of two to eight basic units • Identified error (except within a desk audit) – penalty on responsible official of 8 to 20 basic units According to the general rules, if the taxpayer finds errors in VAT returns submitted for a previous period, the taxpayer must make changes or additions to VAT returns and make an additional payment in the budget if necessary. The deadline for submitting revised VAT returns has not been set. In case there is no additional VAT payable after submitting a the revised VAT return, then there will be no penalties for late payments.

Failure to provide mandatory information to the tax authorities for changes to a taxpayer’s VAT registration details, results in a warning or penalty on the responsible official of up to 20 basic units.

Penalties for fraud. If the taxpayer made a mistake willfully, that resulted in late payment of

VAT – penalty on responsible official of 40 to 120 basic units. For failure to provide documents and other information for tax control or the provision of false information (e.g., in relation to an electronic VAT invoice) – penalty on responsible official of 2 to 30 basic units.

Personal liability for company officers. Company officers can be held liable for VAT errors and

liabilities, and the penalties outlined above can be charged to such company officers.