Temporary increase in the tax burden in the Republic of Belarus for residents of "unfriendly" countries

On 07.03.2024, the Council of Ministers of Belarus adopted Resolution No. 164 "On Taxation Issues", which entered into force on 14.03.2023.

The norms of the Resolution determine temporary restrictive tax measures in respect of passive income of residents from “unfriendly” countries received from sources in Belarus.

The restrictions are outlined in more detail below.

The tax rate on dividend income is increased from 15% to 25%

From 01.04.2024 to 31.12.2026, income in the form of dividends and similar income received by residents (legal entities - foreign companies) of "unfriendly" countries from sources in Belarus will be subject to income tax at the rate of 25%.

Income (dividends) received by foreign citizens, including residents of "unfriendly" countries, from participation in legal entities in Belarus is subject to income tax at the rate of 13% provided that the total amount of income for a calendar year does not exceed BYN 200,000. Income tax at the rate of 25% is payable on the excess amount.

Suspended enforcement of certain provisions of Double Taxation Treaties ("DTTs")

From 01.06.2024 to 31.12.2026, certain provisions of DTTs concluded with the following 27 countries are suspended:

Austria, Belgium, Bulgaria, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Great Britain, Hungary, Ireland, Italy, Latvia, Lithuania, Macedonia, Netherlands, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom, USA.

Restrictions relate to the application of DTTs’ norms regulating the taxation procedure and income tax rates on such passive income as dividends, interest, income from the alienation of property, including income from the alienation of stakes (shares) in the authorised funds of legal entities.

Such passive income received by residents (legal entities - foreign companies) of "unfriendly” countries from sources in Belarus will not be subject to reduced income tax rates and other tax exemptions established by the relevant provisions of the DTTs during this period.

For the taxation of royalty income or income from the provision of services, the rules of DTTs with the above 27 countries continue to apply and may be applied on a case-by-case basis.

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