Knowledge of the specifics of taxation is one of the critical aspects of the successful operation of any company, including IT companies in Belarus. It is essential to understand the specifics of the tax system to optimize the tax burden, comply with the law and avoid fines and other negative consequences.
In addition, assistance in awareness of the specifics of taxation allows companies to better plan their finances, make informed decisions about investments and expenses, and take into account tax benefits and regimes that may be available to them under Belarusian legislation.
Moreover, having a good comprehension of the tax system makes it possible to ensure transparency and legality of the company’s financial transactions.
Tax optimization for IT companies in Belarus
Tax optimization for IT companies in Belarus can be expressed by using various tax benefits and regimes provided explicitly for the development of the IT sector, in particular, to residents of the Hi-Tech Park. Some ways to optimize taxes for IT companies in Belarus include government support measures and the use of such measures:
- Exemption from paying some taxes in certain cases.
- Using the tax benefits that are available to the company.
- Timely payment of taxes and filing of tax returns.
- Accounting and tax accounting in accordance with the established requirements.
Tax optimization for IT companies in Belarus allows them to increase competitiveness, reduce financial risks and improve the financial situation of the company. However, it is important to remember that all tax optimization actions must be consistent with the law and not violate tax regulations.
Features of the simplified taxation system
Companies that pay taxes under the Simplified Taxation System (STS) pay:
- Tax under the simplified taxation system;
- Payroll taxes and taxes on dividends.
They don’t pay:
- Value-added tax (VAT);
- Income tax, except for income tax, which the company withholds and pays as a tax agent;
- Property tax;
- Environmental tax;
- Collection from the suppliers.
However, VAT must be paid in a number of cases, for example, when importing goods to Belarus.
Income tax must be paid in relation to:
- Dividends.
- Gross profit from securities transactions.
- Profits from the sale of a share in the authorized capital of the company.
The property tax must be paid on the leased property.
Accounting of income and expenses for the STS is carried out in a special Book, which can be maintained in an electronic service.
Which IT companies can and cannot use the simplified tax system
When the STS is unavailable
The simplified tax system is not available to companies and individual entrepreneurs who are residents of the Hi-Tech Park in Belarus. Therefore, if a company wants to become a resident of a Hi-Tech Park, it is necessary to take care in advance of the transition to a standard tax system. It should be done so that in the reporting period after registration as a resident of the Hi-Tech Park, there will be no problems with determining the tax base for income tax and VAT turnover.
When the STS is available
For IT companies that are not residents of the Hi-Tech Park in Belarus, a simplified taxation system (STS) is available under the following conditions:
- The average number of employees per year is no more than 50 people.
- Gross revenue on an accrual basis with the STS is no more than 2,150,000 rubles in 2023. If the gross revenue for 2023 exceeded this amount, then in 2024 the company cannot apply the STS.
The company cannot switch to the STS from 2024 if the gross cumulative revenue for the first 9 months of 2023 exceeds the amount of 1,612,500 rubles.
Recall that the last day of the transition to the STS in 2024 is April 1, 2024.
You can find out about the possibilities and prospects of your company’s transition to the STS in consultation with our experienced accountants in the IT field.
Features of income tax payment by IT companies
For residents of the Hi-Tech Park
IT companies that are residents of the Hi-Tech Park do not pay income tax. The exemption is not related to the income tax that companies pay when they perform the duties of a tax agent.
The income tax rates in this case, in particular, are as follows:
12% — when calculating dividends to Belarusian companies.
6% — when calculating dividends to Belarusian companies, if there was no profit distribution between the owners of the company in the previous 3 calendar years.
0% — when calculating dividends to Belarusian companies, if the profits of the previous 5 years were not distributed among the owners of the company.
9% — profit from the sale by the owner of his share in the company, from the sale (repayment) of securities, from placing money in deposits, dividends from abroad, some types of income of owners upon leaving the ownership structure, changes in their shares.
At a generally established rate of 20%, resident companies of the Hi-Tech Park pay for transactions for which there are no tax features of IT companies. For example, when selling property that such a company has used for less than 12 months from the date of purchase.
For IT companies that are not residents of the Hi-Tech Park
The generally established income tax rate is 20%.
The income tax rate on dividends from sources outside Belarus is 12%.
The reduced tax rate on profits from the sale of goods of own production, which are included in the list of hi—tech goods, is 5%.
Features of payment of Value Added Tax (VAT) by IT companies
For IT companies – residents of the Hi-Tech Park
The resident companies of the Hi-Tech Park do not pay VAT when:
- They sell their products on the territory of Belarus.
- They buy in Belarus from foreign companies that do not have representative offices in Belarus:
- Intellectual property rights.
- Advertising, marketing, and consulting services.
- Hosting services.
- Some other services.
When purchasing the listed rights and services from foreign individuals, including individual entrepreneurs, there is no VAT exemption. In this case, you need to pay VAT at the generally established rate of 20%.
For non-resident IT companies of the Hi-Tech Park
IT companies that use the STS do not pay VAT as a general rule when selling products in Belarus.
When using the general taxation system, there is a need to pay VAT.
When importing goods to Belarus, the so-called “import” VAT is paid.
“Internal” VAT is paid:
- When buying property in Belarus from foreign companies and individual entrepreneurs.
- When making settlements with foreign companies.
The VAT rate is set at 20%.
When an IT company provides services to non-residents, in order to resolve the issue of applying VAT, it is necessary to determine the place of sale of services. When the place of sale of services is not specified in Belarus, you do not need to pay VAT. You can consult with our experienced accountants on the issue of determining the place of sale of services.
Tax on income of foreign organizations
This tax is paid by Belarusian companies that pay income to foreign companies that do not have representative offices in Belarus and are not registered with the Belarusian tax authorities. Belarusian IT companies often cooperate with non-resident companies, so it is necessary to check the need to pay such a tax.
For IT companies – residents of the Hi-Tech Park
When a resident company of a Hi-Tech Park is a source of income payment to a foreign organization that does not have a permanent representative office in Belarus, a zero rate is applied to the following income of foreign companies:
- From the sale of shares in the resident companies of the Hi-Tech Park to foreign companies that have owned shares in such companies during the year.
- When purchasing by resident companies of the Park:
- Data processing services;
- Web hosting;
- Places to advertise on the Internet;
- Communication channels for placing information on the server;
- Debt obligations and royalties.
When paying dividends, residents of the Hi-Tech Park pay income tax on foreign organizations at a rate of 5% or a more preferential rate established by an international agreement.
For non-resident IT companies of the Hi-Tech Park
They are taxed on the income of foreign organizations at a rate of 15%.
Income received by a foreign company from the provision of services:
- Data processing.
- Web hosting.
- Data entry and processing, database management, and data processing reporting.
- On data storage.
- To provide access to databases.
- Sales of space and time for advertising on the Internet.
- On the activities of web portals with search engines.
International agreements have been concluded with some states, according to which income received in Belarus by foreign companies from IT services rendered is exempt from income tax in Belarus. For example, these are Austria, Azerbaijan, Belgium, the United Kingdom, the United Arab Emirates, and Israel.
For a non-resident company to confirm its location and avoid double taxation, you need to ask a non-resident company for an extract from the international catalogue (directory).
How to contact us
For more information or advice on taxation of IT companies in Belarus, do not hesitate to contact us. We are here to help and support you.
Phone and e-mail communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
