Taxes in 2025: What's changing in the legislation?

Amendments to the Tax Code have already been adopted in the first and second readings in the House of Representatives and approved by the Council of the Republic. First Deputy Minister of Finance Dmitry Kiiko and Deputy Minister of Taxes and Duties Svetlana Yeskova discussed the changes planned for 2025.

"Traditionally, amendments are made due to the need to align the Tax Code with legislative acts adopted during the year. it is also necessary to adapt tax rates to ongoing inflation and other processes. A number of changes were proposed based on an analysis of the effectiveness of incentive measures that have been in effect for a sufficiently long period, allowing for the assessment and drawing of certain conclusions. Furthermore, a number of adjustments are based on the practical application of tax legislation, the results of audits by the Ministry of Taxes and Duties and other bodies, and taxpayer initiatives and requests, which were analyzed and summarized," said Dmitry Kiiko.

Indexation of Tax Rates

. The first major set of changes concerns the basic tax policy measures. The tax rates set in Belarusian rubles will be indexed based on the inflation forecast. Land tax, property tax , environmental tax, and personal income tax rates will be indexed in fixed amounts. Income tax deductions and benefits will also be indexed, with indexation based on the growth rate of nominal wages.

"The excise tax rate on cigarettes in the first price group is proposed to be increased by 11.9%. Other excise tax rates on tobacco andALCOHOL prices will be indexed within the inflation range. Excise tax rates on motor fuel are proposed to remain unchanged. Non-alcoholic energy drinks are being introduced as a new excise taxable item. The rate will be 50 kopecks per liter of finished product. This measure is proposed as part of a phased expansion of excisable products. "Its entry into force is scheduled for January 1, 2026, so taxpayers can adapt to the changes," noted the First Deputy Minister of Finance.

The second block is the permanent consolidation or extension of the tax policy measures for budget consolidation adopted in previous years. These measures were taken to adapt the economy to operating under the pandemic and sanctions. "We tried to implement these measures selectively, without increasing the tax burden on the vast majority of taxpayers," added Dmitry Kiiko. In particular, the increased profit tax rate of up to 25% for taxable income exceeding Br25 million will remain in effect, as will the tenfold increase in transport tax rates for luxury cars with a service life of no more than three years.

Review of tax incentives

. The third block is the implementation of additional tax consolidation measures and the elimination of deficiencies identified during the audit. "The right to an investment deduction will only apply to commercial organizations for industrial buildings and structures. The application of the investment deduction by budgetary organizations, public and religious associations, and other non-profit organizations will be excluded due to the lack of production activity,” noted the First Deputy Minister of Finance.

It is proposed to cancel the income tax benefit for individuals with respect to income received from the sale of shares in the authorized capital and stocks of Belarusian organizations owned by the taxpayer for at least three years. In addition, a gradual abolition of reduced rates of profit tax and income tax on dividends is proposed. An increase in the tax rate on income from dividends received by foreign organizations from 15% to 25% is also envisaged.

“We estimate the total effect of all consolidation measures at more than Br300 million,” added Dmitry Kiiko.

The fourth block is social incentive measures. Among them is the extension of tax benefits on profit tax, land tax, and land rent for organizations employing disabled people for three years. It is also proposed to extend A five-year tax break on profit and income taxes for investment funds. Furthermore, it is proposed to allow the inclusion of employee transportation costs to and from work as part of other expenses for profit tax purposes.

The standard tax deduction established for young professionals is being expanded to cover a wider range of categories. The amount of this tax deduction is also being increased.

It is also planned to lift the restriction on the one-time receipt of a property deduction for large families building or purchasing housing. This will allow large families to claim the property deduction multiple times.

Cryptocurrencies

: A new article, "Special Features of Calculating and Paying Personal Income Tax on Income Received from Transactions with Digital Symbols (Tokens)," is planned to be added to the Tax Code of Belarus starting in 2025. Income is defined as any funds received from such transactions, including mining, exchanging tokens for other tokens, and sale for Belarusian rubles, foreign currency, and electronic money .

"The income tax rate for HTP residents is 9%. For entities that are not HTP residents, the general rate of 20% will apply, and for gross profits exceeding Br25 million, 25% will apply," added Dmitry Kiiko. Individuals

will not be required to pay income tax if income is received from transactions with tokens created by High-Tech Park residents and/or through HTP residents, or from transactions with tokens conducted through HTP residents. Income from mining activities, from the exchange of tokens for other tokens (except for illegal and prohibited activities), and if tokens are received as gifts or inheritances from individuals will also be exempt from taxation.

Changes for Foreign Organizations.

For diplomatic missions, consular offices of foreign states, representative offices and bodies of international organizations and interstate entities registered with the tax authorities, the administration procedure for VAT refunds will change starting in 2025. Instead of submitting VAT refund documents to the MINSK Tax Ministry Inspectorate, such organizations were required to submit documents to the Minsk Tax Ministry Inspectorate instead of territorial tax offices.

Registration of foreign organizations based on contracts for the performance of work and provision of services in Belarus is also abolished. These changes occurred due to the entry into force of the new version of the Civil Code. Effective November 19, 2024A six-month transition period has been in effect since 2018. "This period allows such organizations to bring their documents into compliance. During this six-month period, they can continue to conduct business under the same conditions. However, starting May 19, a foreign legal entity registered with the tax authorities and operating through a permanent establishment will be required to either open a branch, establish a legal entity, or join an organization in Belarus, or cease operations in accordance with the procedure established by law," noted Svetlana Yeskova.

Combating Shadow Schemes

: "In an effort to combat shadow schemes, particularly those involving the simplified taxation system (STS) or unjustified value-added tax refunds, certain provisions have been included in the Tax Code. The first is a ban on the use of the STS for organizations created as part of a reorganization. Second, we have introduced the tax authority's right to restrict and restore access to a taxpayer's personal account on the electronic invoice portal. However, this will only be possible if the taxpayer is not actually conducting business transactions and has outstanding value-added tax debt

to the budget," explained the Deputy Minister of Taxes and Duties. More detailed provisions will be set out in a resolution of the Ministry of Taxes and Duties, which will be adopted pursuant to this provision. "I'd like to reassure conscientious taxpayers a little – this provision will affect suppliers, not buyers. I recommend buyers exercise due diligence when choosing a counterparty. This is very important. Today, many information resources allow this," added Svetlana Yeskova.

Digitalization:

Last year, the Ministry of Taxes and Duties took over the preparation of land tax declarations for organizations. Nearly 77% of taxpayers confirmed them and made no changes. By January 30, 2025, taxpayers will again receive such completed declarations. "And another step forward – organizations will receive similarly completed declarations for transport tax. We also want to begin prefiling value-added tax declarations based on electronic invoice information. I hope that in 2025 we will successfully develop this project so that you will have this opportunity by 2026," the Deputy Minister of Taxes and Duties noted.

Since May 1, 2024, cross-border electronic document flow has been operational between the regions of Belarus and RUSSIA. "This issue is of great importance. However, the success of the project will depend primarily on taxpayers. Your involvement in the use and processing of electronic documents will allow the tax authorities of both countries to begin working on simplifying the administration of indirect taxes. Perhaps, with your involvement, we will consider the possibility of eliminating the indirect tax payment declarations currently required for cross-border trade. The benefits for businesses are obvious," emphasized Svetlana Yeskova.

Valeria GAVRILOVA,
BELTA