Recent legal and business developments in Belarus, December 2009
1. The National Bank of the Republic of Belarus (National Bank) adopted a Resolution of the Board of the National Bank No.187 dated 20 November 2009 providing for reduction of refinancing rate by 0,5% to 13,5% per annum starting December 1, 2009. It is the first time in 2009 when the National Bank reduces the refinancing rate. The decision was approved by the IMF mission. Starting 1 December the National Bank has also slightly reduced rates on instruments for provision of bank liquidity.The National Bank reports that the sustainable decline in inflation, growth of household deposits, situation of stability on domestic foreign exchange market, and a number of other positive trends in the country’s economy afforded ground for the decision. It is noticeable that the Government of Belarus encourages the national Bank to reduce the interest rates in agreement with the policy of the Central Bank of Russian Federation.
2. The application of simplified tax system expands: under the Edict of the President No. 592 dated 7 December 2009 the requirement for the number of employees of retail and public catering enterprises which have gross receipts not expanding 1 bln. BYR per annum increased from 5 to 15. Such enterprises now entitled to pay tax on gross receipts under simplified tax system. The introduction will foster tax deduction and create an incentive for the development of the enterprises. For the purpose of arrangement of conditions for increase of the exports of goods by small business entities applying simplified tax system the Edict sets forth reduced tax rate of 3% on export receipts received by such business entities. Moreover, the Edict sets up equal terms of taxation of business entities and republican associations both applying simplified tax system. These associations as well as business entities on application of simplified tax system shall not pay real estate tax and land charges.
3. President Alexander Lukashenko signed Edict No. 660 “On some issues of formation and activity of holdings in the Republic of Belarus”.The Edict creates legal foundation for formation and operation of holdings in Belarus. For these purposes the definition of a holding as an association of commercial entities provided one of the members (holding’s managing company) or the owner being capable of determine the decisions taken by other members (holding’s affiliate companies) is introduced by the Edict. The requirements for the shareholders, incorporation of holding’s managing company, the order for registration of the holding as a whole as well as the procedure for the embodiment and the expulsion from the members of the holding are defined. The formation and the activity of holdings intending to monopolize production and disposal of commodities, limitation or elimination of competition, impairment of legitimate interests of consumers is prohibited in the Republic of Belarus.
4. President Alexander Lukashenko signed the Special part of the Tax code on 31 December 2009. The Special part of the Tax code sets forth the application of each republican and local tax, duties as well as special tax treatment. The taxpayers, object of taxation, taxable base, rates, list of reliefs, as well as tax calculation procedure, due date for tax payment and filing of tax return are defined in relation of every tax payment. In 2010 with the aim of improvement of the tax system of Belarus the duty to the republican fund of support for agricultural producers, food and agricultural science, vehicle purchase tax, local tax on retail sale, local duty for parking were abolished. In order to fill up the shortfall in income of the state budget in connection with the simplification of tax system and the reduction of the number of taxes the VAT rate increased from 18% to 20%. The new rate applies to goods and services dispatched after 1 January, 2010.
