Failure to confirm sources of income can lead to tax audits and fines. This article explains when the tax service may require reporting on sources of income and how to prepare properly for such a request.
Income of individuals
The income of individuals received from other persons, including foreigners, individual entrepreneurs and companies, is classified by the tax service as:
Property of individuals
The property includes:
Expenses of individuals
The tax service includes money and other property that:
When it is necessary to submit a declaration to the tax service voluntarily
By March 31, 2024, some individuals need to submit an income tax return voluntarily.
The declaration has a section where you need to specify information about income: the types of income, the source from which the income was received, and the amount of income.
Banks and government organizations registering real estate and other property transactions transmit information about significant financial transactions and transactions to the tax authorities. This is a duty that cannot be circumvented. Such information always contains the amounts of your income and the monetary value of your purchases.
Therefore, the tax service can find out about your income not only from your tax return.
What can happen after the tax service finds out about your income and expenses
First, the tax service will compare your tax return information with your purchases and transactions. To do this, the tax inspector conducts an audit, which is called a “desk audit.” This means that the check is carried out according to the documents in the tax service.
As a result of the audit, tax inspectors identify persons whose expenses exceed income and determine the costs and sources of income.
The tax service checks information on expenses not only for Belarusian citizens. Information is also checked for foreigners with a residence permit and stateless persons if information about their income is available in the tax service.
As a result of checking the documents in the tax service, a document is prepared to calculate expenses and income in Belarusian rubles.
An individual is not warned that an audit is being conducted regarding his expenses and income compliance.
For what period will the tax service check income and expenses
The tax service can check income and expenses for the current calendar year and for the past 10 years.
Option 1. Expenses did not exceed income
The tax service can ensure that an individual’s expenses do not exceed his income. In this case, the desk check for an individual ends in nothing.
Option 2. Expenses exceed income
In this case, an individual is usually called to the tax office for explanations about the sources of income in two cases:
The tax inspectorate requests an individual explain his sources of income and requires him to report on them. A request is a paper document usually sent by mail to the individual’s home address or handed over personally under his signature.
The claim indicates the amount of excess of expenses over income in Belarusian rubles and the period in which the excess was allowed.
The calculation of excess expenses over income is applied to the request.
Usually, a phone number is written in the request, where you can find out more details.
What to do after the request is received
An individual who has received a request to provide explanations about the sources of income must submit information about the sources of income to the tax inspectorate in person, by mail or electronically within 30 calendar days.
Information can be submitted electronically if an individual has a personal account with the payer or the application “Professional Income Tax.” Otherwise, it is submitted in paper form.
It is necessary to confirm only those incomes at the expense of which the person made purchases (made expenses) named in the tax claim.
When will the deadline for submitting explanations be extended
It may be that the individual who needs to bring the documents to the tax office is not in Belarus. In this case, he or his representative can contact the tax service at the number specified in the request, or the representative can come to the tax service and ask for an extension of the deadline for submitting information.
There are also cases when you can ask the tax service to extend the deadline for submitting explanations:
The tax service will extend the deadline for providing explanations only for the period of illness, absence from Belarus, business trip, and only if documents confirm these periods.
What to include in income information
What can be omitted from income information
Suppose an individual is an individual entrepreneur or an artisan or pays a single tax as an individual. In that case, it is possible not to indicate in the information about the sources of income the personal data of individuals who bought goods, services or works from such an individual.
Individual entrepreneurs may not specify personal data of persons and information about companies that were sources of income from transactions concluded by a person as an individual entrepreneur in information about sources of income.
The tax inspectorate will not accept explanations if:
The tax service will accept your explanations and update the calculation of income and expenses. As a result, taxes may not be calculated. The individual will be given a document: a message that no excess of expenses over income has been detected.
If the expenses exceed the income, the tax service will draw up an inspection report. One copy of the act will be handed over to an individual. The act will write the amount of excess expenses over income, calculate the income tax at the rate of 26% of the excess amount, and specify the deadline for tax payment.
The inspection report is drawn up within three months, but usually earlier.
