Token Transactions: Exploring Tax Benefits

The inclusion of tokens in business activities has become a common practice for many companies. Functioning as digital signs in the information system, tokens, often recognized as cryptocurrencies, serve various purposes, primarily as an investment tool. Having the predominant global role of a universal medium of exchange, cryptocurrencies facilitate transactions between residents and non-residents of Belarus, in particular, through the services of a crypto exchange -a resident of the Hi-Tech Park. This article discusses the types of transactions possible with tokens through the crypto exchange in Belarus, discusses the related tax benefits and consequences set out in the presidential decrees.

Operations with tokens in Belarus

The possibilities of transactions through the crypto exchange in Belarus
Companies working with tokens can perform several operations using the crypto exchange of a resident of the Hi-Tech Park:

  • Creation and placement: Companies can create and place their tokens both inside Belarus and abroad.
  • Storage: Tokens can be securely stored in crypto wallets.
  • Trading: It is possible to buy, sell and conduct various transactions with tokens, including their use for offsets under foreign trade agreements.

The resident companies of the Hi-Tech Park follow the established procedures set out in the Regulations on the Hi-Tech Park. Individuals, whether non-entrepreneurs or individual entrepreneurs, have the right to engage in mining, exchange tokens for other cryptocurrencies, store tokens in crypto wallets, buy, sell, give and bequeath tokens. In addition, individual entrepreneurs can create and place their tokens in Belarus and abroad through a crypto exchange or platform.

Tax benefits for token transactions

Presidential Decree No. 8, issued on December 21, 2017, laid the foundation for tax benefits applicable to token transactions until January 1, 2023. Following this, Decree No. 80, which comes into force on March 31, 2023, extended the validity of these benefits until January 1, 2025. The main tax benefits include:

  • Exemption from VAT and income tax: Turnover and profit earned by residents of the Hi-Tech Park from mining, creation, purchase and sale of tokens are exempt from value added tax (VAT) and income tax (applies to individual entrepreneurs). These types of activities are not taken into account when calculating income tax.
  • Exemption from income tax for individuals: Individuals trading tokens for Belarusian rubles, foreign currency, electronic money or other cryptocurrencies are exempt from paying income tax. The expenses of individual entrepreneurs related to these operations are also excluded from income tax calculations.
  • Non-inclusion in the income tax declaration: Tokens belonging to individuals who do not act as individual entrepreneurs do not have to be included in income tax declarations.
  • VAT exemption for token sales: Turnover from token sales by both foreign and Belarusian companies is exempt from value added tax.
  • Exemption from income tax when exchanging tokens: The profit received from the exchange of tokens for other cryptocurrencies is not subject to income tax.

Although the simplified taxation system in accordance with Decree No. 8 no longer applies to token-related activities from 2023, the expanded tax benefits in accordance with Decree No. 80 remain relevant.

Understanding the intricacies of token transactions and related tax benefits is important for companies and individuals interested in the cryptocurrency business in Belarus.

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