Business in Belarus

COMPANY ESTABLISHMENT

Before undertaking business activity in Belarus, it is necessary to choose which type of legal entity to form. The type of company form will influence all the activity of the company, which includes financial and tax reporting as well as customs procedures. An investor should pay special attention to determining the appropriate corporate form according to their goals. The most common company forms used are the Limited Liability Company or LLC, and the Representative Office.

As in most countries, the LLC company form allows the owner to undertake most business activities without restrictions as their own legal entity. Conversely, the representative office allows only for activity that supports the owning company's business - usually this is marketing activity done locally in order to create sales for the parent company.

Some business areas require licenses in Belarus. These include banking and financial activities, legal counseling, power supply, alcohol and tobacco sales and production, telecommunication, insurance activity.

Accounting & TAXATION

Accounting and Payroll in Belarus

Accounting and payroll in Belarus are legally much the same as in more developed European markets, but in practice a lot of nuances have to be taken into account. The accounting practices in Belarus are governed by the Law on Accounting and reporting, adopted in 2013.

The fiscal year begins on January 1st and ends on December 31st, i.e. it is always the calendar year. As in other CIS countries, the accounting and payroll program 1C dominates the market and finding accountants with skills to use other programs can be difficult. Currently there is a push going on to adopt IFRS standards in Belarus.

What are the controlling institutions?

The regulatory body for accounting is the Ministry of Finance. For tax payments, companies are controlled by the Ministry of Taxes and Duties. Payroll taxation and employees' rights are monitored by the Ministry of Labor and Social Protection.

Tax rates in Belarus: 
Corporate income tax - 18 %
VAT - 20 %
Social security contributions (payroll tax) - 34 %
Personal income tax - 12 %
Capital gains tax - None

These are the basic tax rates that apply to normal companies and people in Belarus. Companies should always consider if they are eligible to work in some of the regional tax-exempt zones or for example the High-Tech Park, where considerable tax breaks are available for foreign investors.

In Belarus, special economic zones are areas with special legal status and various economic benefits designed to bring Russian and foreign companies into sectors that are considered as a priority in the Belarusian economy. Examples of SEZs are the Belarus High-Technology Park and the Great Stone industrial park. Companies enjoying the tax benefits of HTP can be located anywhere in Belarus. Production companies working in Great Stone need to be located within the park limits near the Minsk international airport. For more information about taxation in these zones, contact us.

Interesting facts about accounting and payroll in Belarus

Physical paper accounting documentation is still a mandatory thing in Belarus. This creates extra work for accountants, who need to be able to manage and store sometimes very large quantities of paper documents. If outsourcing is used, then the exchange of documents between client and service provider needs to be arranged in a systematic way. The company stamp is no longer compulsory, however many organizations still opt to use it. Even though the law no longer requires a company stamp, it is sometimes easier to just use it than to try explaining this to some of the representatives of the local bureaucracy.

Belarusian law forbids foreign organizations to conduct business within the Belarusian borders without having being incorporated in the form of an LLC, representative office or other body. This creates a challenge to payroll companies who would like to provide Employer of Record services in the market. Outstaffing agencies such as in Europe are not found in Belarus due to this law.

How often do I have to report?

Tax reports every month, for majority of companies also quarterly, and annual report once per year. The quarterly and annual reports include the balance sheet, income statement, cash flow statement, and a statement of possible changes in shareholder equity. Annual reporting for the previous year is due on the 31st of March.

How often will the government audit me?

On average, companies are audited by the government once per four years. However this depends very much on each case. With new companies, usually there will be no audits in the first three years of operating.

Companies have to organize an external audit if they made over 5 million EUR turnover in the previous reporting year, or if they fall within certain specific categories of companies.

Are tax authorities strict regarding the Accounting and Payroll regulations?

Yes, they are - sometimes even brutal. This is a fact that companies operating in Belarus have to take into account. Many minute details have to be taken into account when doing accounting, as it is very easy to break the rules. A professional and accurate accountant is the best way to minimize risks when it comes to government audits and checks.

EMPLOYMENT

The regulation of employment in Belarus is governed by the Labor Code of the Belorussian Republic, which applies equally and must be complied with by both the executives and employees. Belorussian labor laws apply to foreign nationals and foreign businesses in Belarus in the same manner as to domestic entities. All regulations related to minimum guarantees, employment benefits and compensation supersedes any agreement between the employer and employee. In general, the Belorussian labor law is protective of the employee.

Expats are liable to pay resident Belorussian taxes and social charges only if they stay in the country at least 183 days during a calendar year. Your employer will typically arrange for your registration with the Belorussian tax office and secure your tax number. Self-employed workers will need to arrange their tax registration and Belorussian tax number themselves. Belorussian social security payments are deducted from your gross salary by the employer.

In the condition of an employer-terminated agreement as a result of redundancy or liquidation, two months’ notice is given along with a two months’ salary severance payment to the employee.

Termination of the employment agreement by the employee may be carried out by providing one months' written notice to the employer, which is a basic right under the Labor Code that cannot be overridden by contractual terms.

BEING AN EXPAT

An investor looking to start a company in Belarus may want to consider moving here to manage their company. In this case they must first start their company so that they have the company's registration certificate, and after that apply for a work permit. The work permit entitles them to receive an entry visa into Belarus, and afterwards apply for a year-long work visa and temporary residence. This process is somewhat cumbersome but easily done with the right help. It is also possible to visit Belarus for a maximum of 30 consecutive days visa-free, not more than 90 days per each 180.

Minsk is a very nice place to live, and the living costs are quite low. Finding an apartment may be tough if requirements are complex. Usually foreigners who move to Minsk will not have too many great apartment options to choose from at first. We recommend to use a real-estate agent when looking for an apartment, as most of the advertisements online are outdated.

The foreign national who is living or working in Belarus for more than 183 days in a calendar year is obliged to pay taxes and contributions towards the Belorussian social security system. Usually double taxation can be avoided but this should always be checked on a case-to-case basis.

QUALITY

We follow international accounting and business standards and we understand the needs of international customers. Our competitive edge is based on experience, quality and a Finnish manager present on site.

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