The modern world of IT technology is growing rapidly, and with this growth, new opportunities are emerging for professionals and entrepreneurs. One of the key factors in choosing a country to do business in is the tax conditions. Poland and Belarus are two countries with developing IT sectors, and they are interesting examples from the point of view of tax regulation.
In this article, we will compare the tax systems of Poland and Belarus, their advantages and disadvantages, and how these factors influence the choice of a place for IT specialists and companies to work. Understanding the tax conditions will help you better navigate the various opportunities offered in both countries.
The peculiarities of taxation of the IT sector in Poland
Poland provides IT companies with several opportunities for tax optimization and business operations. The main features of taxation for IT companies include:
1. Corporate Income Tax (СIT)
The basic corporate tax rate is 19%, including for IT companies, but for small businesses and startups, there is a reduced rate of 9% (with an annual income of less than €2 million).
IP Box is a possibility that allows IT companies to apply a 5% tax rate to income from intellectual property.
2. Value Added Tax (VAT)
The standard VAT rate is 23%. However, if certain conditions are met, services exported to and outside the EU can be exempt from VAT.
3. Support for R&D (Research and Development), that is, it supports the field of scientific research and development and innovation. Polish companies can benefit from tax deductions for research and development activities (R&D) costs. You can apply a deduction of up to 200% of the cost.
4. Special Economic Zones (SEZ)
Poland has several economic zones where companies can be fully or partially exempt from income tax for up to 15 years. Some IT startups may receive support from the Special Economic Zones (SEZ) or the Polish Investment Zone (PIZ) program, which includes tax benefits and a reduced tax burden.
If you are planning to open an IT company in Poland, it is recommended that you consult with a tax consultant to maximize the available benefits and correctly calculate tax obligations.
Taxation of Individual Entrepreneurs in the IT sector in Poland
The tax rate for individual entrepreneurs in the IT sector in Poland depends on the chosen taxation system. In 2024, the following options are possible:
1. Progressive Taxation (at rates of 12% and 32%):
12% applies to income up to 120,000 zloty annually (approximately 28,118.40 euros).
32% — for the amount of income exceeding 120,000 zloty.
A social contribution (ZUS) and a medical tax are also paid (depending on income).
2. A Singl Tax Rate (19%):
This rate is applied regardless of income level.
They also pay social and medical contributions.
3. A Single Turnover-Based Tax
For IT activities, the rate depends on the PKD (Polish Classifier of activities) code: 12% of income (excluding expenses).
For some IT services, the rate may be lower (for example, 8.5% for consulting services).
4. IP Box (5% rate)
It is available for individual entrepreneurs who create software or other types of intellectual property.
Applies to the portion of income related to qualified intellectual property.
It is important to consider:
The mandatory ZUS social contributions 2024 are about 1,300-1,400 zlotys (up to 328.05 euros) per month for a standard package (excluding discounts).
The choice of tax system depends on your expenses, income and the nature of your business.
If you work in IT, combining a single turnover-based tax or an IP Box is often the most profitable if the activity meets the requirements.
Peculiarities of Taxation of the IT sector in Belarus
Taxation of companies in the IT sector in Belarus varies depending on whether or not they are residents of the Hi-Tech Park (HTP). Compared to regular IT companies, HTP residents have more preferential taxation, although payroll taxes are generally the same for all Belarusian companies. Let’s look at the main features of taxation of resident and non-resident IT companies in the Park.
Taxes for HTP Non-Resident IT Companies
IT companies that are not HTP residents can pay taxes under the Simplified Taxation System (STS) or pay taxes in a generally prescribed manner.
Simplified Taxation System
The STS is expressed in the fact that companies do not pay income tax, value-added tax, real estate tax, or environmental tax on several taxable items.
IT companies may not apply STS in all cases but only when they meet certain government requirements. For example, in 2024, these are the following requirements:
1. The average number of employees in the first nine months of the year before the year it is planned to use the STS is no more than 50 people. If the IT company is registered in the current year and the number of employees is no more than 50 people, then the STS can be applied from the date of the company’s state registration.
2. Gross revenue for the first 9 months of the year before the year the STS is planned to be applied is no more than 1,733,440 Belarusian rubles (approximately 504,288 euros).
The tax base at the STS is gross revenue, and the tax rate is 6%. The tax is paid quarterly.
The General System of Taxation
IT companies that apply a generally established tax system pay several taxes, in particular:
1. Income Tax at the Rate of 20%
Income tax on dividends received from sources outside Belarus at 12%.
A 5% reduced income tax rate is applied to the sale of own-made goods included in the list of high-tech goods.
2. Value-Added Tax (VAT) at the Rate of 20%
When goods are imported into the territory of Belarus, the so-called “import” VAT is usually paid.
The “internal” VAT must be paid in the following cases:
- Purchase of property in Belarus from foreign companies and individual entrepreneurs
- Payments to foreign companies
3. Income Tax on Foreign Organizations is at a Rate of 15%
Such a tax must be paid on the income that a foreign company has received from providing the following services:
- Data processing
- Web hosting
- Data entry and processing, database management, and data processing reporting
- Data storage
- Providing access to databases
- Sales of places and time for online advertising
- The activity of web portals with search engines
The Republic of Belarus and several other countries have concluded international agreements under which income earned by foreign companies for IT services rendered in Belarus is exempt from income tax. These countries include Austria, Azerbaijan, Belgium, the United Kingdom, the United Arab Emirates, and Israel.
Taxes for HTP Resident IT Companies
HTP resident companies are not allowed to apply for the STS.
In terms of taxes, HTP residents have the following benefits:
1. Exemption from Income Tax
This exemption does not apply to income tax, which HTP resident companies are required to pay as tax agents.
Income tax rates, depending on the situation, are as follows:
- 12% for the payment of dividends to Belarusian companies.
- 6% – when paying dividends to Belarusian companies if there was no profit distribution among the company owners during the previous three calendar years.
- 0%—when paying dividends to Belarusian companies if profits were not distributed among the owners during the previous five years.
- 9% – taxation of profits from the sale of shares in the company, the sale or repayment of securities, the placement of funds on deposits, income from dividends from abroad and other owners’ income upon leaving the ownership structure or changing their shares.
Resident companies of the Hi-Tech Park pay tax at the generally accepted rate of 20% on transactions that do not have special tax conditions for IT companies. For example, this applies to selling property used for less than 12 months from its purchase date.
2. Resident Companies of the Hi-Tech Park do Not Pay VAT in the following cases:
- When selling their products in the territory of Belarus.
- When buying in Belarus from foreign companies that do not have representative offices in the country, the following rights and services:
- Intellectual property rights
- Advertising, marketing, and consulting services
- Hosting services
- Some other services
However, if the listed rights and services are acquired from foreign individuals, including individual entrepreneurs, VAT exemption does not apply. In such cases, VAT must be paid at the standard rate of 20%.
3. Tax on Income of Foreign Companies
Suppose a resident company of the Hi-Tech Park is a source of income payments to a foreign organization without a permanent representative office in Belarus. In that case, a zero rate is applied to the following income (this means that you do not need to pay tax):
- From the sale of shares in the resident companies of the Hi-Tech Park to foreign companies that own shares in these companies during the year.
- From data processing.
- From Web hosting.
- From providing places for online advertising to communication channels for posting information on the server.
- From debt obligations and royalties.
For dividends paid to foreign owners, residents of the Hi-Tech Park pay income tax on foreign organizations at a rate of 5% or at a more favorable rate specified in an international agreement.
Individual Entrepreneurs in the IT Sector in Belarus
In Belarus, one special feature of taxation for individual entrepreneurs working in the IT sector is that they are prohibited from applying a single tax.
All individual entrepreneurs are required to pay income tax from their income every quarter at a rate of 20%. If their income for the current year exceeds 500,000 Belarusian rubles (approximately 8,6793 euros), then the tax for the year is recalculated, taking into account the increased rate of 30%.
Individual entrepreneurs can deduct expenses related to their activities from their income and apply tax deductions (deducting certain amounts from income before calculating income tax).
Self-Employed in the IT Sector
Self-employed people in the IT sector include professional income taxpayers. These are individuals who provide certain services:
- Using the Internet to complete orders and transmit the results to the customer. An important condition is that such work (services) should be provided outside the customer’s location and the facilities that he controls. This type of activity is formulated so that many IT services and jobs are suitable for it
- Graphic design
- Website development, software development, and testing
- Computer and software configuration, software repair and maintenance
The self-employed pay only professional income tax at a rate of 10% per month and 20% if their income for the year exceeds 60,000 Belarusian rubles (approximately 17455 euros).
Comparison of Taxes for the IT Sector in Poland and Belarus
1. Benefits in HTP (Hi-Tech Park)
Belarus offers a unique tax regime for residents of the Hi-Tech Park (HTP). There is no similar regime in Poland, but it has several benefits for the IT sector.
2. Corporate Taxes
Outside the HTP, the income tax rate is 20% (higher than in Poland).
VAT in Belarus is set at 20%, which is slightly lower than the Polish rate. However, in Poland, startup IT companies can use a corporate tax rate of 9%, and in the case of intellectual property sales – 5%.
3. Support for R&D (Research and Development), that is, it supports the field of scientific research and development. Belarus provides government subsidies and benefits for innovative projects, but there are no tax deductions (approximately 200%) similar to those in Poland.
4. Individual Entrepreneurs
Belarusian individual entrepreneurs can only use the general taxation system with an income tax rate of 20%. In contrast, individual entrepreneurs in the IT sector in Poland have a choice of taxation system. For example, they can use a 12% or 5% tax rate, which is more profitable than in Belarus.
Conclusion
Poland offers more diverse tax optimization tools focused on R&D and innovation. Belarus, in turn, focuses on benefits for HTP participants, which creates attractive conditions for IT companies focused on exporting IT software and services. The choice between these countries depends on the company’s strategy or the individual entrepreneur’s capabilities, the level of innovation, and the business structure.
How to contact us
For more information or advice on issues related to the tax systems in Belarus and Poland, do not hesitate to contact us. We are here to help and support you.
Phone and email communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
