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As from 1 January 2017certain amendments to theTax Code of Belarus willbecome effective.

No significant changes willbe implemented. Thenewsletter summarizesprincipal changes offered bythe authorities.

December 2016

Tax Newsletter

Tax Code of Belarus:2017 Principal Changes

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General Part

Related parties

• The amendments clearly statedthat companies which directly orindirectly owned by Belarusianstate are not recognized as relatedparties for tax purposes.

• The amendments limitedrecognition of shareholders of onecompany as related parties. SinceJanuary 1, 2017 shareholders ofone company will be recognized asrelated parties if they own 20% ormore of the company’s shares.There was no 20% thresholdearlier.

Place of Supply Rules forVAT Purposes

• List of services place of supply ofwhich is determined upon thelocation of the customer isextended by the intermediaryservices, i.e. services that allowsearching and (or) by means ofwhich information about potentialcustomers (consumers) ofservices, works, property rights isprovided. Based on the taxauthorities’ comments, the newregulation will be applied, inparticular, to the services providedvia Uber application.

Information aboutcompanies with taxespayable

• Ministry of Taxes and Charges ofBelarus will publish on itsinternet portal(www.nalog.gov.by) List ofcompanies, which have overduetaxes payable and overdue latepayment interest

Taxpayer’s online account

• Online account of a taxpayer is tobe introduced as of January 1,2017. Online account will allowtaxpayers to obtain and send e-documents and other informationin e-form from / to the taxauthorities.

Appeal procedure

• Not only taxpayers but anyinterested person (e.g.shareholders) will be entitledto appeal against taxauthorities’ decisions andactions

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VAT

• Transactions with non-deliverableover-the-counter financialinstruments at Forex market arenot regarded as VAT objectsstarting from 1 January 2017.Until 1 January 2017 suchoperations were VAT taxable andthe tax base was the commissionincome of the market participant.

• Starting from 1 January 2017 onlyservices within the administrativeprocedures in respect ofimmovable property are exemptfrom VAT. Other servicesrendered to individuals andrelated to immovable propertythat were exempted prior to thereform will be VAT taxable ingeneral order.

• The limitation period isdetermined for VAT to bereimbursed to the embassies,consulates of foreign states aswell as representative offices ofinternational organizations inBelarus.

Special Part

• Starting from 1 January 2017 alltelecommunication services willbe subject to VAT at the rate of25%. Within the period from 1April till 31 December 2016 VATrate of 25% applied only to thetelecommunication servicesrendered to subscribers.

• Obligation of large taxpayers tokeep VAT ledger books isabolished.

• The legislation obliges retailers tospecify the rate and the amountof VAT in the respectivedocuments.

• Electronic VAT invoices do notneed to be issued with regard totransactions with zero tax base.

• Deadline for issuing electronicVAT invoices is moved from the5th date to the 10th date of themonth following the month inwhich the goods (works, services)were supplied or the month inwhich the customs clearance ofthe goods was performed.

• Delay period for offset of VATpaid to customs authorities withregard to the goods importedfrom non-EEU countries isreduced from 90 to 60 calendardays from the date of theircustoms clearance.

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CIT

• Tax Code introduces newcriterion for deductibility ofexpenses for CIT purposes. To bedeductible expenses must beeconomically justified. Tax Codelists expenses which cannot beeconomically justified:(i) expenses for goods, works,services and property rightsactually not received by ataxpayer, (ii) expenses forservices/works of the individualentrepreneur who is an employeeof the taxpayer in case suchservices/works are related to hisor her working duties,(iii) expenses for services/ worksof a taxpayer’s parent company orsubsidiary in case suchservices/works are related toworking duties of the taxpayer’semployees (this does not affectrelations involving joint-stockcompanies).

• Tax Code allows to deduct for CITpurposes expenses for vacationpayments in respect of additionalincentive vacations established bythe legislation (this coversadditional vacations forcontractual form of employment).In 2016 such expenses were notdeductible.

Special Part

WHT

• Starting from 1 January 2017 newtypes of income will be subject to15% WHT: (i) search and provisionof data on potential customers, (ii)access to databases. Double taxtreaties concluded with Belarusnormally exempt these types ofincome from WHT.

Simplified Tax System

• Criteria qualifying for applicationof STS has been indexed by 12,6%.

• The amendments stipulateconditions under whichorganizations operating via onlinestores are entitled to apply STS.

• The amendments set up revenuerecognition procedure with regardto agreements stipulatingsettlements in foreign currency orsettlement in local currency inequivalent to foreign currency.

• Companies applying STS will beobliged to pay immovable propertytax on unused (ineffectively used)buildings and their parts.

FEZ regime

• Domestic sale of goods replacingimport is excluded from the list oftransactions covered by the FEZregime.

• Respectively sale of such goodswill be subject to VAT at the rateof 20%. The reduced VAT rate of10% applied to such transactionsuntil 1 January 2017.

Contact information

Please note that the information contained in this newsletter is for informationpurposes only. For obtaining professional advice tailored to Your particular case,please contact our experts:

© 2016 PricewaterhouseCoopers. All rights reserved. In this document, “PwC”refers to PricewaterhouseCoopers which is a member firm ofPricewaterhouseCoopers International Limited, each member firm of which is aseparate legal entity.

PricewaterhouseCoopers FLLC3, Gikalo street, 3d floor, office 3

220005 Minsk, BelarusPhone: +375 17 335 40 00

Fax: +375 17 335 41 11

Eugenia ChetverikovaBelarus Tax and Legal Services Leader

eugenia.chetverikova@by.pwc.com