On May 25, 2020, the President of the Republic of Belarus signed Decree № 3 “On granting of free aid” in order to improve registration, taxation, and use of free foreign aid, which enters into force starting August 27, 2020.
What is meant by free foreign aid?
- money and goods (property) that are transferred by senders to recipients for ownership, use, possession, and (or) disposal free of charge,
- goods (works, services) acquired (paid, performed, rendered) on the territory of the Republic of Belarus by the recipients at the expense of senders’ money and transferred (performed, rendered) to recipients in the manner prescribed by the plan of target use aid free of charge.
- Goods prohibited for import, food products with an expiration date of less than 4 months from the date of import into the Republic of Belarus, and vehicles that have been manufactured more than 15 years ago cannot be provided as aid.
Who can use free foreign aid and how?
- Legal persons and private entrepreneurs registered in the Republic of Belarus are empowered to use free foreign aid for purposes strictly defined by the Decree, including, for example, the provision of medical care, the purchase of medicines and medical devices, consumables for their maintenance, payment for medical services, sanatorium treatment and rehabilitation of the population, construction and repair (reconstruction) of social facilities, etc. The list of purposes is not exhaustive, but the approval of other purposes for using aid is required by the Interdepartmental Commission on Free Foreign Aid (hereinafter- the Interdepartmental Commission).
- Natural persons have the right to use it for personal purposes and also for the above mentioned purposes except payment of general expenses related to the administration of the legal entity, individual entrepreneur, and promoting their activities, according to the list determined by the Office of the President of the Republic of Belarus.
Registration of free foreign aid
- The Department for humanitarian affairs of the Office of the President of the Republic of Belarus (hereinafter referred to as the Department) conducts mandatory registration of aid upon the application of its recipients, if:
а) legal persons and private entrepreneurs are its recipients,
b) natural persons are its recipients and they apply for the income tax exemption.
- Legal entities and private entrepreneurs are prohibited from using aid that requires registration until they receive a certificate issued by the Department. If the aid was provided in the form of property and before the state registration of the right, restrictions (encumbrances) of the right to real estate may arise from the relevant authorities.
- For registration of aid, legal entities and individual entrepreneurs receiving free foreign aid are charged a fee of 5 % of the amount (cost) of aid received, which is not exempt from taxes, fees (duties).
- No fee is charged for registration of aid fully exempt from taxes, fees (duties).
No registration is required if the aid is received:
- by legal entities and private entrepreneurs in form of:
- goods for industrial and economic purposes of the recipient at the value of less than 500 basic values (approx..$ 5.630) at the date of its receipt;
- advertisement production;
- goods samples intended for testing (certification), studying their technical characteristics and consumer properties.
- Money received as payment for aid registration to the bank account of the Department is not subject to taxes, fees, or duties.
For which purposes it is not allowed to use free foreign aid?
- It is prohibited to use aid for carrying out terrorist and other extremist activities or other acts prohibited by law, or to finance political parties, unions (associations) of political parties; to prepare or conduct elections, referendums, recall deputies of the Parliament, local Council of deputies, organize or conduct meetings, rallies, street marches, demonstrations, picketing, strikes, and the production or distribution of campaign materials; organization of the actions directed on carrying out the political and mass agitation work among the population.
How can foreign free aid be exempted from taxation?
- The decision to exempt aid from taxes, fees, and duties is made by The Office of the President of the Republic of Belarus, if the aid is sent by legal entities and individual entrepreneurs for the intended purpose, with the exception of aid to pay general economic expenses, which is not exempted from taxation. In other cases, the decision is made by the Interdepartmental Commission.
- Decisions on the exemption of aid from taxes, fees, and duties are made by the Office of the President of the Republic of Belarus and the Interdepartmental Commission if there is a conclusion of the competent authority on the feasibility of such an exemption, except in cases where such a conclusion is not required.
- Aid can be exempted from:
- VAT in terms of turnover on further gratuitous transfer by the recipient of aid in the form of goods imported into the territory of the Republic of Belarus and exempted from VAT, goods (property), works, services purchased (paid, performed, rendered) at the expense of money subject to registration as aid and exempted from taxes, fees (duties);
- income tax in the part of income of natural persons and private entrepreneurs in the amount of aid received, and income in the amount of value of goods (property), works, services purchased (paid, performed, rendered) according to the plan of target use (hereinafter – the plan) for the cash account, subject to registration as an aid;
- CIT, tax at the simplified taxation, a single tax on private entrepreneurs and other natural persons, a single tax for agricultural producers in terms of money, the cost of goods (property) received by recipients as an aid. Subsequent recipients are exempted in part of cash value of goods (property) received as an aid, the cost of gratuitously received goods, the performed works, rendered services on the territory of the Republic of Belarus, paid for by the recipients according to the plan at the expense of sender’s money registered as an aid;
- customs duties for customs operations, customs duties (other than excisable goods), VAT when legal entities or private entrepreneurs import goods received as aid to the territory of the Republic of Belarus.
- When considering the issue of changing the purpose of using aid, the Interdepartmental Commission may decide to refuse to exempt aid from taxes, fees, and duties.
- Money received by legal entities and private entrepreneurs as aid are transferred to the charity accounts of these persons within 3 banking days from the date of receipt or their import into the Republic of Belarus.
Responsibility for the violation of the Decree
- If the aid is used before the certificate issuance or the state registration of rights, if restrictions (encumbrances) of rights to immovable property in the relevant authorities prohibit its use, and if the aid is misused by recipients (or subsequent recipients), the violators bear responsibility provided by legislative acts, and pay taxes, fees, and duties in accordance with the legislation.
- The provision of aid for prohibited purposes, including making such an offence once, by representative offices of foreign organizations or international non-governmental organizations on the territory of the Republic of Belarus, constitutes grounds for the termination of their activity.
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