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- A new level of tax privileges for HTP residents in Decree No. 8 "On the Development of Digital Economy"
A new level of tax privileges for HTP residents in Decree No. 8 "On the Development of Digital Economy"
“US Invest” LLC lawyer – Andrei Slabko
Decree of the President of the Republic of Belarus of 21 December 2017 No. 8 “On the Development of Digital Economy” (hereinafter referred as “Decree” No. 8) besides having regulated the turnover of tokens and Blockchain technology has also introduced new tax benefits and extended the validity period of the existing ones.
So, the validity period for HTP’s special legal status will be extended until January 1, 2049. According to the new version on the Provision of High-Tech Park, approved by Decree No. 8, tax benefits include:
- Exemption from profit tax (except for the profits withheld by a HTP resident when paying dividends). Profits from carve-out of stocks, shares in authorized capital, from the alienation of enterprise as a property complex; income from securities, as well as dividends received outside Belarus, the participant's profits when withdrawing or liquidating the organization, the participant's profits when increase of authorized capital changed shares percentage disproportionately, as well as profits from exchange rates differences when loaning are taxed at a rate of 9%;
- Exemption from VAT on the turnover of the sale of goods (work, services, property rights) within the territory of Belarus (except for the tax on a real estate within the territory of HTP; zero-rate VAT exports if export of goods is confirmed);
- Exemption from VAT of turnover when foreign organizations that are not registered in Belarus sell certain objects (property rights to intellectual property, advertising, marketing, consulting services, services for provision disk space and some other information services) to HTP residents within the territory of Belarus;
- VAT and import customs duties are not taxed if goods are imported by a HTP resident for the purpose of investment projects implementation;
- Exemption from land tax for the period of construction, but not for more than three years;
- Exemption from real estate tax, except for the objects leased by a HTP resident;
- The tax rate on the income of foreign organizations for dividends is 5%
- Reducing foreign entities’ income tax to zero, with respect to the income from carve-out of stocks, shares in authorized capital; some services when working with the Internet; debt obligations regardless of the way they are issued, as well as royalties, earnings from intermediary and advertising services;
- When paying dividends into offshore jurisdictions as well as advertising, marketing, intermediary services are exempted from 15% offshore duty;
- Income tax is charged at a reduced rate 9% (instead of the usual 13%). If a stock in authorized capital is sold later than 365 days after its acquisition, the income tax is not paid;
- Obligatory insurance payments (34%) may not be paid from the part of wage amount which exceeds the average wage in Belarus.
Decree No. 8 also establishes tax benefits for mining, creation, acquisition, alienation of tokens. So, the following profits are not recognized as taxable until January 1, 2023:
- VAT and income tax – turnover, profit of HTP residents from mining, creation, acquisition and alienation of tokens.
- Income tax - income of individuals from the mining activities, acquisition (including as a donation), disposition of tokens for Belarusian rubles, foreign currency, electronic money and (or) other exchange tokens;
- VAT – turnover on the alienation of tokens, including turnovers on the alienation of foreign organizations that not registered with the tax authorities of the Republic of Belarus;
- Tax under STS – revenue from alienation of tokens by exchanging them for other tokens;
- Profit tax – profit from alienation of tokens by exchanging them for other tokens;
In addition, HTP residents shall have a right to execute primary accounting documents (accounting certificates) personally, except for the cases specified in Decree No. 58 of the Ministry of Finance on December 21, 2015.
However, in exchange for all benefits provided the residents shall quarterly pay 1% of their profit to the HTP Administration.
So, with the adoption of Decree No. 8, HTP residents are able to implement their projects more effectively from the point of view of taxation. We also hope that the new tax privileges will help HTP residents to reach a qualitatively new level in competition with major global IT players.