How to pay income tax in 2021? Analysis with a lawyer

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On January 1, 2021, the Law of the Republic of Belarus dated December 29, 2021 No. 72-Z “ On Amendments to the Tax Code of the Republic of Belarus”

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The document makes many adjustments to the current tax legislation, and also establishes new rates of some taxes and tax deductions. Some of the most high-profile changes are related to the temporary increase in income tax for employees of companies registered in the HTP and Great Stone. The Ministry of Taxes and Taxes has already prepared and published an extensive commentary on the changes. We also use excerpts from it in this series of articles.

Increased income tax for HTP residents

The consolidation of budget revenues to combat COVID-19 has caused an increase in income tax rates for individuals who have employment relationships with companies that are residents of the High-Tech Park, residents of the Chinese-Belarusian Industrial Park "Great Stone" or with joint Belarusian-Chinese development companies the specified industrial park. Increased rates, namely 13% instead of 9%, will be in effect for 2 years, that is, until 2023.

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For tax agents, if regulatory authorities establish the fact of non-withholding and non-transfer of income tax to the budget, the obligation is established to make such payment of income tax at their own expense (without further withholding from individuals).

The size of the craft tax and income tax rates for the self-employed have increased, the tax rates payable for leasing residential premises have been increased, the types of income that are exempt from tax have been adjusted and the amounts have been indexed.

About these and some other changes related to income tax in numbers:

Changing the size of standard tax deductions

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Changes in fixed rates of income tax and fees

You are renting out housing for a long term. How to pay tax

On the income that you receive from renting out housing to individuals for a long period of time (hereinafter referred to as rental income), you need to pay income tax (hereinafter referred to as tax) (subclause 1.4, clause 1, article 197 of the Tax Code).

As a general rule, you need to pay tax in a fixed amount (Part 1, Clause 1, Article 221 of the Tax Code). Fixed tax rates are given in Appendix 2 to the Tax Code. However, regional (Minsk city) Councils of Deputies can reduce general rates for individual settlements or a specific location of housing (subclause 1.1, clause 1, article 221 of the Tax Code).

For the period from February 2021 to December 2021, the tax is calculated (paragraph 3, part 1, clause 10 of the Law of December 30, 2018 N 159-Z):

- at the lowest rates determined at the local level for the region (Minsk), established for December 2021, or

- at rates in accordance with Appendix 2 to the Tax Code.

Note! You do not need to pay tax if you rent out housing: - to young professionals, young workers (employees) (part 1, paragraph 52, article 208 of the Tax Code); - to an organization or entrepreneur. In this case, it will be withheld from your income and transferred to the budget by the tenant of the premises (clause 1, part 1, clause 4, article 216 of the Tax Code).

For the first time, the tax must be paid the very next day after you “let in” the tenants. It doesn’t matter whether you have drawn up the agreement as it should, whether you have registered it, you still have to pay the tax (part 2, sub-clause 1.2, clause 1, article 216 of the Tax Code, sub-clause 1.7, clause 1 of Decree No. 497 of 04.08.2006 ).

The tax must be paid monthly no later than the 1st of the current month. For example, for February it is paid no later than February 1. If rates change this month, the tax will be recalculated next month (part 1, sub-clause 1.2, clause 1, article 216 of the Tax Code).

If you received income from renting out housing under a contract that was not concluded on the first day or was terminated on or before the last day of the month, then the tax is calculated in proportion to the number of days the housing was rented out in that month (Clause 2 of Article 221 of the Tax Code).

Note! When calculating tax at rates in fixed amounts, tax deductions (for children, for paid education, for housing construction, etc.) are not applied (clause 6 of Article 199 of the Tax Code).

Under certain circumstances, the tax office may become “interested” in your income and ask you to fill out a declaration of income and property or provide some explanations. There you can indicate, among other things, that you received income from the provision of housing for rent. If it turns out that they exceeded ten times the fixed tax rate for a certain period, you will have to pay an additional 10% of the excess amount (Part 1, Clause 3, Article 221 of the Tax Code). This will need to be done within 30 days after receiving the relevant notice from the tax office (Part 3, Clause 3, Article 221 of the Tax Code).

Note! When renting out housing to individuals for short-term accommodation, a single tax is paid (subclause 3.2, clause 3, Article 337 of the Tax Code). Such “short-term” rental means the provision of housing under two or more rental agreements concluded in one calendar year for a period of no more than 15 days each (Clause 46, Article 1 of the Housing Code). To do this legally, you do not need to register as an individual entrepreneur (paragraph 33, part 4, clause 1, article 1 of the Civil Code). Before renting out your home, it is enough to notify the tax office in writing and pay a single tax (clause 31, article 342, paragraph 2, part 1, clause 4, article 343 of the Tax Code).

On what income do you not need to pay income tax?

From January 1, 2021, the following types of income are exempt from taxation:

1) Amounts of financial assistance provided by trade union organizations, of which the deceased employee was a member, to persons who are closely related to the deceased employee.

2) Income received from trade union organizations by members of such organizations, including in the form of material assistance , gifts and prizes, payment for the cost of vouchers (except for the income specified in paragraphs 14, 24, 29 and 30 of Article 208 of the Tax Code (hereinafter – NK)).

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3) Income received from the trade union in the form of remuneration simultaneously on 2 grounds:

• for conscientious and active participation in the activities of the trade union organization;
• in connection with public holidays, public holidays, memorials and anniversaries of individuals and organizations.

4) One-time payment for health improvement , made to employees of budgetary organizations that are not state.
civil servants and military personnel, employees (workers) of paramilitary organizations with special ranks, as well as government employees. bodies not financed from the budget. 5) Income received by individual investors from participation in investment funds registered in the Republic of Belarus.

6) State premium received by a participant in the state system of housing construction savings.

7) Interest accrued for the period of placement of funds provided at a time in a non-cash manner to families at the birth, adoption of a third or subsequent children, in bank deposits.

Monetary rewards for coaches and other specialists who took part in the preparation of athletes who received prizes in connection with participation in international and national competitions.

New in taxation 2021: what has changed and how we will pay

01/05/2021 December last year was a month of intense anticipation for frequently discussed changes to tax laws. On January 1, 2021, the Law of the Republic of Belarus dated December 29, 2020 No. 72-Z “On Amendments to the Tax Code of the Republic of Belarus” was published on the National Legal Internet Portal of the Republic of Belarus, which contains important changes. Many adjustments have been made to the current tax legislation, and new rates of some taxes and tax deductions have been established.

Some of the most high-profile changes are associated with a temporary increase in income tax rates for employees of companies registered in the Hi-Tech Park and Great Stone, a change in the procedure for taxing VAT on turnover on the sale of medicines and goods for children, the abolition of the single tax on imputed income, the introduction of a transport tax and more. . You can find out more about the changes in tax legislation in the extensive commentary of the Ministry of Taxation, some of which we will also discuss further in the text.

Income tax

The consolidation of budget revenues to combat COVID-19 has caused an increase in income tax rates for individuals who have employment relationships with resident companies of the High-Tech Park, residents of the Chinese-Belarusian Industrial Park "Great Stone" or with joint Belarusian-Chinese companies for the development of the said industrial park. Increased rates, namely 13% instead of 9%, will be valid for 2 years, that is, until 2023.

For tax agents, if regulatory authorities establish the fact of non-withholding and non-transfer of income tax to the budget, the obligation is established to make such payment of income tax at their own expense (without further withholding from individuals).

The size of the craft tax and income tax rates for the self-employed have increased, the tax rates payable for leasing residential premises have been increased, the types of income that are exempt from tax have been adjusted and the amounts have been indexed.

About these and some other changes related to income tax in numbers:

Changing the size of standard tax deductions

Changes in fixed income tax rates and fees

Exemption from income tax on certain types of income

From January 1, 2021, the following types of income are exempt from taxation:

1. Amounts of financial assistance provided by trade union organizations, of which the deceased employee was a member, to persons who are closely related to the deceased employee
2. Income received from trade union organizations by members of such organizations, including in the form of material assistance, gifts and prizes, payment for the cost of vouchers (with the exception of income specified in paragraphs 14, 24, 29 and 30 of Article 208 of the Tax Code (hereinafter - TC ))
3. Income received from the trade union in the form of remuneration simultaneously on 2 grounds: • for conscientious and active participation in the activities of the trade union organization • in connection with public holidays, public holidays, memorials and anniversaries of individuals and organizations
4. A one-time payment for health improvement made to employees of budgetary organizations that are not state. civil servants and military personnel, employees (workers) of paramilitary organizations with special ranks, as well as government employees. bodies not financed from the budget.
5. Income received by individual investors from participation in investment funds registered in the Republic of Belarus.
6. State premium received by a participant in the state housing construction savings system.
7. Interest accrued for the period of placement of funds provided at a time by bank transfer to families at the birth, adoption of a third or subsequent children, in bank deposits.
8. Monetary rewards for coaches and other specialists who took part in the training of athletes who received prizes in connection with participation in international and national competitions

Other changes regarding income tax

An addition has been made according to which individuals who receive income in the form of dividends, subject to income tax at a rate of 6%, have the right to receive tax deductions established by Articles 209–211 of the Tax Code.

The amount of income tax for income received by individuals under employment contracts from HTP residents, residents of the Great Stone, has been increased from 9% to 13%.

At the same time, the possibility of applying an income tax rate of 9%, for example, remains with HTP residents in relation to income in the form of dividends and other income not related to income under employment contracts.

VAT

With regard to certain items of food products and goods for children when they are sold on the territory of the Republic of Belarus and (or) when they are imported into the territory of the Republic of Belarus, the VAT rate has been increased from 10% to 20%.

The list of goods for which a VAT rate of 10% is applied is set out in Appendix 26 to the Tax Code - 2021.

Instead of the previously existing VAT exemption, a VAT rate of 10% is established , which is applied medicines and medical devices on the territory of the Republic of Belarus when importing them into the territory of the Republic of Belarus, while the application of this rate is made dependent on the registration of medicines and medical products in the relevant state registers (including registration in the EAEU according to the rules of the EAEU) without complying with the previously mandatory conditions for linking the product to the code of the unified HS of the EAEU and using the product for medical purposes.

The transition period during which prices in the retail network for remaining food products, goods for children, medicines and medical products should be reviewed, taking into account the inclusion of VAT according to the new rules - until February 1, 2021 .

Read more about changes related to VAT

Changes in individual VAT rates

Other changes regarding VAT

Article 31 of the Tax Code has been supplemented with the term “Transfer of property rights to intellectual property objects.” Such transfer is recognized as:

• transfer of such rights by the copyright holder in whole or in part to another person under an agreement providing for the transfer (assignment) of exclusive rights to such objects;
• granting by the copyright holder (licensor) to another person (licensee) or by the licensee to a sublicensee of permission to use the corresponding object of intellectual property.

For foreign organizations operating on the territory of the Republic of Belarus, the scope of works and services recognized as construction activities has been clarified. Installation of objects and other works (services) related to construction activities have been added to them.

Now foreign organizations carrying out construction activities and not registered with the tax authorities of the Republic of Belarus must, if the 180-day period of continuous activity on the territory of the Republic of Belarus is exceeded, become registered and calculate VAT.

Now it is possible to apply a VAT rate of 20% not only on sales of goods subject to VAT at a rate of 10%, but also when importing such goods.

It is legally established that penalties, fines, and interest on commercial loans for goods sold in retail trade are subject to VAT at the actual rate of this tax.

The restriction on deducting amounts of “input” VAT has been lifted:

• for goods (works, services), property rights transferred free of charge to budgetary organizations of healthcare, education, culture, physical education and sports, not subject to VAT in accordance with Article 31 of the Tax Code;
• for goods, works (services) related to the receipt of income from the provision of services for the maintenance and (or) repair of motor vehicles and their components, in connection with the abolition of a special taxation regime - a single tax on imputed income.

Income tax of Belarusian organizations

An unpleasant surprise for cellular operators was the increase in income tax to 30% (instead of the previous rate of 18%). A similar rate for this tax is established for microfinance organizations. This increase is justified as an additional measure to compensate for expenses due to COVID-19 and, like the increase in income tax rates, is temporary - for 2021-2022.

Taxation costs

The list of criteria when an organization's expenses are not recognized as economically justified is expanded by the following fact: the property has not been leased (leasing) and continues to be used by the lessor (lessor).

Now, production and sales costs can include expenses for the purchase of foreign currency in the amount of the difference between the purchase rate and the official exchange rate of the Belarusian ruble to the corresponding foreign currency, established by the National Bank at the time of purchase, regardless of the intended purpose of the purchased currency.

Investment deduction

It is allowed to apply the investment deduction not at once, but over a period of 2 years.

Objects of fixed assets for which investment deductions can be applied have been added. These now also include:

• objects of fixed assets acquired under a leasing agreement providing for the repurchase of the object;
• residential premises related to rental housing (there is an exception);
• built-in and attached non-residential premises in residential buildings.

Non-operating income and expenses

Both non-operating income and non-operating expenses can no longer include amounts of exchange rate differences arising in connection with:

• with the implementation of expenses that are not taken into account for taxation in accordance with Article 173 of the Tax Code and other provisions of the law;
• with the receipt of income that is not taken into account for taxation.

Changes in income tax rates

Changes in income tax benefits

The following income (profit) is exempt from income tax:

1. profit (in the amount of no more than 10% of gross profit determined for the tax period in which the profit is transferred) transferred to the local charitable foundation "Touching Life";
2. profit from the provision of ownership and use of rental housing, as well as special residential premises in administrative and public buildings of emergency agencies and departments, including in fire station buildings;
3. profit of investment funds registered in the Republic of Belarus from investment operations, as well as dividends received by investors-legal entities from participation in such funds.

Tax benefits have been canceled for the following types of income (profit):

• profit from the sale of innovative products
• profit from the sale of high-tech goods
• profit from the sale of property rights to the results of scientific and scientific-technical activities

Tax on profits of foreign organizations

For foreign organizations operating on the territory of the Republic of Belarus through a permanent representative office, the provisions on confirming foreign expenses have been improved:

• Now it is possible to confirm foreign expenses of foreign organizations with the opinions of foreign tax consultants or foreign audit organizations (auditors), and such opinions can be submitted to the tax authority both on paper and in electronic form.

Foreign organizations operating in the territory of the Republic of Belarus through several permanent representative offices are now allowed to file income tax returns with one tax authority.

Representative offices of foreign organizations whose activities do not lead to the establishment of a permanent establishment are no longer required to submit income tax returns based on the results of the reporting quarters (with the exception of submitting a return at the end of the year or upon termination of activities).

Introduction of transport tax

From January 1, 2021, the state duty for issuing a permit to admit a vehicle to participate in road traffic has been abolished. Instead, a transport tax has been introduced.

Payers of transport tax are organizations and individuals.

Transport tax for organizations

It is clarified that when leasing a vehicle (vehicle), the lessee is recognized as the tax payer.

For organizations, the objects of taxation are vehicles registered with them in the State Traffic Inspectorate. In this case, the following vehicles are exempt from tax:

• in respect of which the permit to participate in road traffic has not expired, for the issuance of which a fee was paid;
• deregistered before July 1, 2021

There is also a list of vehicles that are not recognized as objects of taxation by transport tax for organizations, namely:

• lost from possession as a result of illegal actions of other persons;
• used to provide medical care, including emergency medical care;
• released no later than 1991 or for which there is no information about the year of release;
• categories M1 or M1G, driven exclusively by an electric motor;
• intended to provide social services and the provision of social services to the disabled and other categories of citizens in difficult life situations and which, in accordance with the law, are marked with the inscription “Social Service”, as well as specially equipped for use by people with disabilities.

The tax base for transport tax is the number of vehicles.

Annual transport tax rates are set in Belarusian rubles depending on the permitted maximum weight, capacity or per vehicle unit. Tax rates are given in Appendix 27 to the Tax Code. For example, for a passenger car with a permissible maximum weight of no more than 2 tons, a tax is set at 209 rubles, for more than 3 tons - 325 rubles.

The tax period for transport tax is a calendar year.

The Tax Code provides for the procedure for calculating transport tax in cases where an organization did not own a vehicle for a full calendar year:

• If the vehicle is registered during the tax period, the transport tax is calculated from the month following the month of registration;
• If the vehicle was deregistered during the tax period, transport tax ceases to be calculated from the month following the month of deregistration.

For organizations, advance tax payments are made during the year (in 1-3 quarters). Advance payments are calculated in the amount of a quarter of the amount of transport tax, calculated based on the number of taxable vehicles on the 1st day of each quarter (changes in the number of vehicles within one quarter are not taken into account to determine the amount).

The tax return for transport tax is submitted only at the end of the tax period - no later than February 20 of the year following the expired tax period.

No later than February 22 of the year following the expired tax period, additional payment of transport tax is made.

Amounts of transport tax are taken into account by organizations as part of the costs of production and sale of goods (work, services).

Transport tax for individuals

As for organizations, individuals are required to pay transport tax for each vehicle, regardless of its participation in road traffic, except in cases where:

• the year of manufacture of the vehicle was 1991 and earlier, or there is no information about the year of manufacture of the vehicle;
• The vehicle is stolen;
• The vehicle is specially equipped for use by disabled people;
• The vehicle belongs to category M1 or M1G and is driven exclusively by an electric motor - until December 31, 2025;
• The vehicle was deregistered with the State Traffic Inspectorate of the Ministry of Internal Affairs until July 1, 2021.

A category of individuals has been determined who have the right to a reduction in the amount of tax (for example, veterans of the Great Patriotic War, disabled people of groups I, II and III, etc.), among other things, complete or partial exemption from payment of transport tax on vehicles not used in business activities, individuals who are in difficult life situations are entitled to receive.

For individuals, transport tax will be calculated by the tax authority. Payment of transport tax by payers will be made for the past calendar year on the basis of a notice from the tax authority, handed to individuals no later than September 1.

The deadline for payment of transport tax by individuals is November 15 of the year following the current one.

Cancellation of the single tax on imputed income

Tax Code 2021 no longer provides for a chapter regulating the procedure for calculating and paying a single tax on imputed income. In this regard, the Ministry of Taxes and Taxes informed organizations that are single tax payers in 2021 about their right to switch to the use of the simplified tax system from January 1, 2021.

simplified tax system

The criteria for applying the simplified taxation system have been changed:

The amount of gross revenue on an accrual basis from the beginning of 2021 for accounting by payers using the simplified tax system in the book of income and expenses should not exceed 817,520 Belarusian rubles.

Changes for individual entrepreneurs using the simplified tax system

Unlike the Tax Code 2020, according to which for individual entrepreneurs on the simplified tax system the general procedure for calculating and paying income tax was maintained in relation to income received by them from commercial organizations in which they or their close relatives are the founders or owners of these organizations, the Tax Code 2021 provides for the following :

1. the above income is not subject to income tax, but to tax under the simplified tax system at a rate of 16%,
2. the circle of persons whose income for individual entrepreneurs on the simplified tax system is taxed under the simplified tax system at a rate of 16% has been expanded and now looks like:

• non-profit organizations in which individual entrepreneurs or their close relatives are participants, property owners, managers or their close relatives;
• commercial organizations in which individual entrepreneurs or their close relatives are managers.

Other changes

Changes in tax/duty/excise rates

Expanding the powers of local authorities:

• regional councils of deputies are allowed to introduce a local fee for crossing the border by vehicles whose maximum weight does not exceed 5 tons, in the amount of no more than 3 basic units.
• Local Councils of Deputies are given the right to increase or decrease the single tax rate for individual entrepreneurs and other individuals up to 2 times, depending on the type of activity, and the Minsk City Council - to increase it up to 4 times.

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What else has changed regarding income tax?

An addition has been made according to which individuals who receive income in the form of dividends , subject to income tax at a rate of 6%, have the right to receive tax deductions established by Articles 209–211 of the Tax Code.

The amount of income tax for income received by individuals under employment contracts from HTP residents, residents of the Great Stone, has been increased from 9% to 13%.

At the same time, the possibility of applying an income tax rate of 9%, for example, remains with HTP residents in relation to income in the form of dividends and other income not related to income under employment contracts.

In the next issue of tax analysis, we will learn how to pay transport tax.

How to give a discount to a tenant without losing a ruble. Let's talk about tax benefits

It is psychologically difficult for landlords to reduce prices, so the average cost changes slowly. Recently, in 2-3 days it was possible to find tenants for a two-room apartment with good repairs for $350. Now this deadline can only be passed to Chinese students or IT specialists, if you’re lucky. Otherwise you have to wait for weeks.

Due to the large outflow of tenants after last year's rise in the dollar, options are emerging that recently might have been considered completely unrealistic. For example, now you can find a one-room apartment for $180 within the first ring. But landlords don’t want to lose money, so we’re talking about an option that would satisfy everyone.

Navigation:

1. How to avoid losing money with tax deductions
2. We conclude an agreement (with examples of documents)
3. What's the result?

How to avoid losing money with tax deductions

There is an option in which the landlord can reduce the price of the apartment painlessly. And the employer can ask for a discount without threatening the owner’s wallet. The fact is that if you rent out an apartment to a young specialist, you don’t need to pay income tax .

Owners should think about this before the summer, because according to the plans of the Ministry of Education this year, about 50 thousand state employees from universities and colleges will be assigned to work. These are all young professionals who will need housing. Some will be able to live in dormitories or rent apartments from the state, but some will seek housing from private landlords.

The rental tax for one room in Minsk is 34.3 rubles. That is, if you want to hand over three rubles under the contract, you will pay 103 rubles monthly - that’s $40. That's $480 per year that you could keep or give the employer a discount.

How to conclude an agreement

When all the conditions have been discussed orally, the owner and the tenant go either to the housing and communal services department or to the Cash Settlement Center of the district to which the house belongs. There they contact the “One Window”, where they issue a standard rental agreement for the premises. It is filled out on site and submitted for registration. Registration takes a day, so you will need to return the next day for the contract and copies.

The agreement can be drawn up and signed in advance. Download the standard contract form from the Ministry’s website and fill in all the required fields. There you can also specify additional conditions such as a deposit or payment for the last month of residence. Then you won’t have to wait in line, just hand over the already signed paper.

Typical apartment rental agreement

One caveat. If you rent out an apartment to several tenants at once, then in order to receive a full deduction, only the one who is a young specialist must be indicated in the contract.

After you have collected the registered agreement, two papers will be required from the new tenant:

1. A copy of the referral certificate/confirmation of arrival at work certified by the employer;
2. Certificate of place of work and position held, issued by the employer. It indicates that the employee is a young specialist;

These are small documents, so depending on how busy the accounting department is, they can be completed within one day.

With these documents and the agreement, you will need to go to the Inspectorate of the Ministry of Taxation for the region. There, an inspector will examine them and register them. That's it, you are now exempt from paying income tax for letting as long as the tenant remains a young professional. If he has just graduated from an educational institution, then the period will be 2 years.

What's the result?

We did not consider options when the apartment is rented without a contract or the contract is only for one room, so as not to pay for the entire apartment. This way you can really save money, but all participants in such an oral transaction remain completely unprotected. Tenants may not report at all that they are moving out and leave the keys behind. And the landlord may not give up the deposit that was paid for the safety of the property, but no one will prove that there was one.

But both parties can legally save on taxes. Don’t be shy to explain to someone interested in the apartment or the owner, if you are a young specialist yourself, about tax deductions. This will save you between $15 and $55 each month, depending on the number of rooms. In the regions, the savings will be smaller, but the cost of rent there is much lower, so in percentage terms the benefits do not disappear here.