The Belarusian Ministry of Finance has published a draft law which proposes several changes to Belarusian tax law. These changes mainly concern individual entrepreneurs and physical persons working as contractors, craftsmen etc. on the basis of civil agreements.
changes to the taxation system of individual entrepreneurs. The new system
would exclude individual entrepreneurs from using the single tax system, under
which non-VAT paying individual entrepreneurs currently pay a single 5 % tax
from their turnover.
The advantage of this system, apart form the low tax rate, has been that such entrepreneurs have had no need to use resources to maintain their accounting records. Now, apart from paying significantly higher taxes, the entrepreneurs would need to maintain their accounting records in a similar way as any legal entity.
categories of individual entrepreneurs are required to start using cash
registers and card payment systems. This creates another new layer of administrative
costs for individual entrepreneurs working in several categories of retail and
- There are several other changes concerning income tax declarations, VAT, real estate tax, and taxes on transport services which also affect mostly individual entrepreneurs and contractors.
The aim of the changes is to place stricter controls on individual entrepreneurs who traditionally have been able to work quite freely. The goal for these actions appears to be to collect higher tax income from the individual entrepreneur economy and to prevent tax fraud. The business community has voiced concerns that in practice these changes may have the opposite effect. As individual entrepreneurs are mostly already operating on low margins, they may choose to completely opt out of these structures and operate in the grey economy instead.
Similar structures for individual entrepreneurship are in use in neighboring Russia and Ukraine as well. The taxation changes proposed in Belarus would result in a more tax-heavy working environment for IEs in comparison.
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