Income tax in Belarus and its meaning
Income tax in the Republic of Belarus refers to the contributions to the state budget levied on the income of the population.
Individuals are obliged to pay income tax, regardless of their type of activity.
The meaning of income tax is to pay the state a predetermined share of the income received. As a rule, income tax is calculated as a percentage, but there may be fixed amounts.
Contributions to the State Social Welfare Fund
The Law “On Compulsory Insurance Contributions to the Budget of the State Extra-budgetary Fund for Social Protection of the Population of the Republic of Belarus” provided for the amount of compulsory insurance contributions for insurance in case of reaching retirement age, disability and loss of a breadwinner (pension insurance):
for employers – 28%;
for employers engaged in the production of agricultural products, the volume of which is more than 50% of the total volume of manufactured products – 24%;
for consumer cooperatives (except for consumer cooperative organizations (consumer societies, their unions)); partnerships of owners; horticultural associations; public associations of disabled people (their legal representatives) and organizations whose property is owned by these public associations; public associations of pensioners – 5%;
for individuals who independently pay mandatory insurance premiums, for Belgosstrakh – 29%;
for working citizens – 1%.
The amount of compulsory insurance premiums for insurance in case of temporary disability, pregnancy and childbirth, childbirth, caring for a child under the age of three years, providing one day off from work per month to the mother (stepmother) or father (stepfather), guardian (trustee), raising (raising) a disabled child under the age of 18, death of the insured or a member of his family (social insurance) for employers, individuals who independently pay mandatory insurance contributions, Belgosstrakh (for persons who are paid an additional payment up to the average monthly salary or are paid an insurance benefit for temporary incapacity for work) is 6%.
Contributions to Belgosstrakh
The procedure and conditions for compulsory insurance against industrial accidents and occupational diseases are regulated by the Regulation on insurance activities in the Republic of Belarus.
The implementation of such insurance is entrusted to BRUSP “Belgosstrakh”.
The amount of insurance premiums is determined according to the size of the insurance rate, approved by: Decree No. 531 “On the establishment of the size of insurance rates, insurance premiums, liability limits for certain types of compulsory insurance”; discounts and premiums to the insurance rate established by the insurer in the manner determined by the Rules for establishing premiums to insurance rates for compulsory insurance against industrial accidents and occupational diseases and discounts from these rates; benefits to the insurance rate in the cases specified in the Regulations on insurance activities in the Republic of Belarus.
In accordance with Decree No. 531, the following tariffs are established (mandatory contributions):
for budgetary organizations – 0.1%;
other policyholders – 0.6%;
Insurance premiums in Belgosstrakh are calculated only on salaries.
Payroll taxes at the HTP
In accordance with the requirements of the Regulations on the HTP, income of individuals (except for employees who maintain and protect buildings, premises, land) received during a calendar year from HTP residents under employment agreements (contracts) are subject to income tax at a rate of 9%.
From 01.01.2021 (until 01.01.2023) the income tax rate on employee income has been increased to 13%.
This increase is due to the need to finance measures to combat the COVID-19 virus (amended by the Law of December 29, 2020 “On Amendments to the Tax Code of the Republic of Belarus”.
How contributions to the Social Security Fund in the HTP are calculated
HTP residents have the right to apply a reduced base size when calculating mandatory insurance contributions to the Federal Social Security Fund.
Thus, the amount of insurance premiums for HTP residents in accordance with the benefits provided to them is significantly lower than for other organizations and individual entrepreneurs that are not HTP residents.
For HTP residents, compulsory insurance premiums are not charged on a part of the employee’s income (except for employees who maintain and protect buildings, premises, land plots) of an HTP resident, which is an object for calculating such contributions, exceeding the one-time average wage of employees in the republic for the month preceding the month for which the mandatory insurance premiums must be paid.
In accordance with the Regulations, employees of HTP residents have the right to refuse to use the above benefits.
If an HTP resident has an accrued wage higher than the average wage of workers in the republic for the previous month, and has not refused to use the benefit, then the amount of mandatory insurance contributions to the Federal Social Welfare Fund for such an individual will always remain the same regardless of the actual amount of wages and other accruals in cash and in kind, which are the object for calculating compulsory insurance contributions to the Federal Social Welfare Fund, such an employee for a month.
The very size of compulsory insurance contributions, determined by the Law “On Compulsory Insurance Contributions to the Budget of the State Extra-budgetary Fund for Social Protection of the Population of the Republic of Belarus” for HTP residents, are the same as for other business entities. For HTP residents, only the “base” for calculating compulsory insurance contributions to the Federal Social Welfare Fund has been reduced.
Payroll taxes in the Great Stone
Today in the Republic of Belarus there are a number of zones with benefits and preferences. This includes not only the HTP, but also the Chinese-Belarusian Industrial Park “Great Stone”.
In accordance with the Regulations on the Special Legal Regime of the Chinese-Belarusian Industrial Park “Great Stone”, the income of individuals received under labor agreements (contracts) from residents of the industrial park and (or) a joint company, until 01.01.2027, are subject to personal income tax. rate of 9% (in the period from 01/01/2021 to 01/01/2023 – 13%).