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unofficial translation

Law of the Republic of Belarus

No. 1330-XII of December 22, 1991

[As amended at December 31, 2004]

On Taxes on Income and Profit

CHAPTER I. GENERAL PROVISIONS

Article 1. Taxpayers

Payers of taxes on income and profit are organizations determined by point 2 article 13 of the General part of the Tax Code of the Republic of Belarus.

A participant of ordinary partnership, who conducts business in accordance with the contract on joint activity or who receives earnings from the activity of this partnership before it is distributed, fulfills a tax payment of this partnership.

Affiliations, representations and other independent subdivisions of legal persons of the Republic of Belarus having a separate balance and current (settlement) or any other bank account fulfill their tax obligations in order established by the present Law for the relevant object of taxation.

Article 2. Objects of Taxation

1. An object of taxation for tax on incomes are dividends and incomes equated to them recognized such in accordance with point 1 article 35 of the General Part of the Tax Code of the Republic of Belarus including:

payments to a participant (stock holder) of organization at its liquidation or at his exit from the organization in money or in kind and in amount exceeding the sum of his contribution (deposit) to the statutory fund, determined without the consideration of the sums mentioned in sub point 2.2 point 2 article 35 of the General part of the Tax Code of the Republic of Belarus. At that, the amount of payments to the participant (stockholder) and the sum of his contribution (deposit) subject to recalculation to US dollars at the rate established by the National Bank of the Republic of Belarus relevantly on the day of payments and on the day of introduction of the contribution (deposit);

payments to participants (stockholders) of organization in the form of shares (stock) of this organization as well as in the form of increase of the nominal cost of shares (stock) carried out at the expense of organization's own assets, if such payments change a percent share of participation in statutory fund of the organization for at least one participant (stockholder).

Payments mentioned in point 2 article 35 of the General Part of the Tax Code of the Republic of Belarus and also dividends collected at full to relevant budget and imposed on the following are not object of taxation for tax on incomes and profit:

on the share in statutory fund (holding of stock) of economic societies transferred to the property of the Republic of Belarus and (or) administrative territorial units in the established order at restructuring of the debt of such societies for budget payments;

shares (stock) belonging to the Republic of Belarus and (or) to administrative territorial units.

2. Profit subject to tax is calculated based on sum of profit from realization of goods (works, services), other valuables (including the fixed assets commodity material valuables, non-material actives, securities), property rights and incomes from transactions out of realization reduced on the sum of the expenses under those transactions.

Profit (losses) from realization of goods (works and services), other valuables, property rights is determined as positive (negative) difference between the earnings received from their realization and losses on production and realization of these goods (works, services), other valuables (except for the fixed assets), property rights considered at taxation in accordance with article 3 of the present Law, as well as the sums of taxes and dues paid in accordance with the procedure established by legislative acts from the earnings received from realization of goods (works, services).

Profit (losses) from realization of fixed assets is determined as a positive (negative) difference between the earnings received from realization of the fixed assets reduced to the sum of taxes and dues paid in accordance with the procedure

Free assignment of the goods (works, services) and other valuables (including the commodity material valuables, non-material actives, securities) within one owner under his decision or the decision of the body authorized by him is not included to the costs of realization in accordance with the legislation.

At determining the profit from realization of goods the expenses on the actually realized goods are taken.

For the purposes of the present Law into composition of the incomes from the transactions out of realization the incomes coming to the ownership of the recipient from the transactions directly not connected with the manufacture of the goods (works, services) including incomes received from transactions on giving up the property for lease and also the money assets and other valuables received free of charge (including the fixed assets, commodity material valuables, non-material actives and securities), if otherwise is not determined by the present point, are not included.

Composition of incomes and expenses from extra-activity transactions and the procedure for its reflection (recognition) in order to determine the taxable profit are established by the legisltion considering the provisions of the present point. Income and expenses from extra-activity transactions operations are determined by the basis of documents of the accounting and tax account.

Into the composition of the incomes from the transactions out of realization for the purposes of taxation the following is not included:

1) assets received from the funds created in accordance with the legislation of the Republic of Belarus and the budget of the Republic of Belarus as well as the budget of the Union State and used for the purpose. Sums of the assets received from the non-budget and centralized funds and used not for the purposes are taken to the budget with imposing the sanctions at the doubled amount;

2) at organizations financed from the budget (budget organizations) recognized such in accordance with article 16 of the General part of the Tax Code of the Republic of Belarus, social action and religious organizations (associations), republican state and public associations other non-commercial organizations created in accordance with legislation:

a) entrance, share and member deposits at the amounts provided by the statutes;

b) property and money assets gratuitously received from the legal and natural persons of the Republic of Belarus and used for its purpose. The mentioned property and money assets used not for the purpose are subject to taxation in the general order. If the purpose of these property and money assets is not determined by the party that assigns the property, they are used for fulfillment of the tasks determined by the statutes of the public and religious organizations (associations), other non-commercial organizations created in accordance with legislation, statutory documents of organization financed from the budget (budget organizations);

c) incomes (interests) from storing the money assets mentioned in the sub-points a and b on the settlement, current and other accounts in the banking institutions;

3) deposits to the statutory fund that are conducted by the participants (stockholders) as well as the contributions of the participants of ordinary partnership into this partnership carried out in order established by legislation;

4) assets received by the payers in the order of share participation in constructing the dwelling, maintenance of the objects of non-production sphere and used for the purpose;

5) incomes received by the participants of ordinary partnership or economic group at the return of their contributions to this partnership or group as well as at distribution of profit of the ordinary partnership or economic group left after taxation;

6) incomes being object of taxation for the tax on incomes and profits, payments mentioned in point 2 article 35 of the General part of the Tax Code of the Republic of Belarus received by the participants (stockholders) of the organizations in the part of the increase of its cost received as the result of re-estimation conducted in the order established by legislation at the process of the activity of the given organization;

7) the sums of the assets received for maintenance of the management staff of the associations (concerns) created under the decision of the Government of the Republic of Belarus from the organizations entering to these associations (concerns) listed by these organizations from the profit left after taxation;

8) assets coming to the funds of development of free economic zones;

9) goods (works, services), money assets and other valuables (including fixed assets, commodity valuables, non-material assets, securities) received free of charge:

by the successor(s) of the organization at its reorganization;

by the Republic of Belarus or its administrative and territorial units including in the person of the state bodies and specially authorized legal persons and citizens;

republican and municipal unitary enterprises under the decision of the owner of the property being in ownership of the Republic of Belarus or its administrative and territorial units or the body authorized by them;

in the frameworks of one owner under his decision or decision of the body authorized by his.

At gratuitous assignment of the fixed assets and other valuables (including the commodity material valuables, non-material actives and securities) the moment of actual realization is the fact of their realization. At gratuitous transfer of goods (works, services) the earnings from the sale of goods (works, services) is reflected at the amount not less than the sum of costs for production or purchase of the goods (costs for fulfillment of the works or rendering services).

At barter transactions the moment of actual realization is the fact of reception or assignment of the goods (works, services). The commodity received at that is debited under the accounting cost of the shipped goods under the barter transactions.

The accounting cost for the purposes of taxation is determined:

at exchange of the goods of own production—as the sale price of the manufacturer of goods providing him the compensation of the economically grounded costs for production of goods, payment of taxes, non-tax payment and reception of profits calculated from the planed level of profitability adopted by the goods manufacturer, and at the state regulation of the price—as the sale price in accordance with the order of regulation of its level in effect;

at the exchange of other goods—as the price of acquiring increased on the amount of the extra charges established by the legislation.

3. At non-commercial organizations created in accordance with legislation, at organizations financed from the budget (budget organizations) receiving incomes from entrepreneurial and (or) other activity, if otherwise is not established by legislation, a taxation object is profit taxized determined in accordance with part one point 2 of the present article.

4. Is excluded.

4-1. The banks` object of the taxation of the profit tax is such profit determined by part one of the second point of this article. Thus incomes of realization of the goods (works, services) includes such kinds of incomes:

4.1-1. in the form of profit from bank’s accommodation on its behalf and expense money resources, precious metals and jewels, including of credits and loans granting, overdraft by the accounts of organizations and natural persons, including banks accounts

4.2-1. in the form of a payment for the money resources deposited in the fund of obligatory reserves of National bank of the Republic of Belarus;

4.3-1. in the form of sums of the money resources received for compensation of the losses of issuing the preferential credits by decision of the President of the Republic of Belarus or by the Government of the Republic of Belarus;

4.4-1. in the form of reward (payment) for:

opening, keeping and closing of bank accounts of the organizations and natural persons, including correspondent banks, and carrying out by its errand calculations with other organizations and natural persons, including bank commission and reimbursement for transfers of money resources, collection, letter of credit and other operations;

opening and keeping precious metals accounts;

issuing and carrying out the complex of the operations with payment instruments and other special means intended to fulfill the bank operations, including compensation of cost of bank plastic cards, forms of not-nominated checks;

installation (and (or) service) of the systems of electronic document circulation between bank and its clients, automated control bank systems “client-bank”;

granting of extracts and other documents by accounts and for investigation of the sums which haven`t transferred for its purpose;

4.1-5. from cash service of the organizations and natural persons, including incomes for recalculation, sorting and packing of the cash money resources sold to other banks;

4.1-6. from currency and exchange transactions carrying out, including commission(compensations) during operations on purchase, sale, conversion of a foreign currency, including on behalf of clients, on changing (exchange), foreign currency reception for collection, from operations with currency values.

To define the income of purchase, sale, conversion of a foreign currency accepts the positive result estimated as a difference between incomes and charges, received in the settlement period in the form of a cost difference of a foreign currency by the rate of purchase, sale, conversion and cost of a foreign currency by the official rate of National bank of the Republic of Belarus on the date of calculation.

The settlement period (day or month) is established in regards of bank registration policy;

4.1-7. on operations of sale and purchase of precious metals and jewels in the form of a difference between sale and balance price, and also from the reimbursement, connected with precious metals and jewels supply in a physical kind;

4.1-8. on operations with financial instruments of fixed-term contracts in the market of a foreign currency, precious metals, jewels and other financial instruments of fixed-term contracts, including option, future and forward contracts;

4.1-9. on operations with bank guarantees, obligations, sureties for the third parties providing execution{performance} in the monetary form;

4.1-10. from operations on trust management of property, including money resources, precious metals and jewels;

4.1-11. in the form of a positive difference between sum, received on termination or realization (subsequent concession) the right of claim (including acquired before) of resources and balance cost of this right of claim;

4.1-12. from the bank depository service;

4.1-13. from rendering services by the contract of bank storage, services on granting in using by contract of rent of special accommodations or safes for documents and commodity goods (including cash money, securities, precious metals and jewels) stored in it;

4.1-14. in the form of a payment for collection, transportation of cash money resources, payment documents, precious metals and jewels and other values;

4.1-15. in the form of a payment for transportation and storage of precious metals and jewels;

4.1-16. in the form of a payment received by bank from exporters and importers, for fulfillment of functions of the agent of the currency control;

4.1-17. on operations of sale and purchase of the memorable and anniversary coins, which are legal payment instrument of the Republic of Belarus and representing itself as subjects of a collecting, in the form of a difference between the price of realization and purchase;

4.1-18. from the accomplishing factoring operations, acceptance;

4.1-19. in the form of indemnification of the bearded losses by bank on payment of services of the foreign organizations which controls quality adequacy of precious metals bars and coins according to the requirements of the legal acts of technical standards;

4.1-20. other incomes connected to the bank`s activity.

In addition to incomes out of realization established by legislation for the organizations, bank incomes out of realization includes following incomes:

in the form of positive reassessment of precious metals;

the positive course differences which have formed at a rounding off as a result of reassessment of available money resources in a foreign currency, assets and liabilities to receipt or to pay, expressed by the fixed sums of money in a foreign currency (monetary item), for date of balance drawing up;

in the form of the sums received by bank by returned credits (loans), write-off losses from which have been earlier considered in structure of the charges which have reduced tax base, or written off due to the created reserves, allocations by which creation the tax base was reduced earlier;

in the form of the decreasing sums or allocations cancellation to the reserves created in previous years to cover possible losses on banks` assets, subject to credit risk, and by depreciation of securities established by normative legal acts of the National bank of the Republic of Belarus;

in the form of the sums of the restored reserves on questionable debts.

5. The income subject to the profit (income) tax is reduced on the sum of the tax on immovable property beyond the fixed assets.

6. The assets received from organization of lottery process are not subject to the profit tax.

Article 3.  Expenses on Production and Realization of Products, Goods (Works and Services) Considered at Taxation

Expenses of manufacturing and sell (realization) of products, goods (works, services) considered as is during the taxation, represents price estimation during manufacturing of products (works, services) of natural resources, raw material, materials, fuel, energy, fixed assets, non-material assets, manpower resources, and other expenses for its producing and sell (realization). The order of reflection of the expenses during manufacturing and sell (realization) of products, goods (works, services) to determine the taxable income is established by the legislation taking into account the provisions of present article. Expenses of manufacturing and sell (realizations) of products, goods (works, services) during the taxation, determines on the basis of accounting and tax documents.

1. To the expenses on production and realization of products, goods (works, services) considered at taxation at determining the profit the following are included:

-- material costs (excluding the cost of the wastes repayable);

-- expenses on paying for labor;

-- amortization of fixed assets and non-material actives used in entrepreneurial activity;

-- deductions under the norms established by legislation to the Fund of Social Security of population of the Ministry of Trade and Social Security of the Republic of Belarus and the State Fund of Assisting the Employment;

-- insurance deposits under the kinds of obligatory insurance as well as deposits under the list of voluntary insurance and procedure determined by the President of the Republic of Belarus;

-- interests on loans and credits (except for the interests on overdue loans and credits as well as loans connected with purchasing of fixed assets and non-material actives and other non-circulating (long term) actives) ;

-- other expenses on production and realization of products, goods (works, services) considered at taxation of profit in accordance with tax legislation including expenses on all kinds of reconstruction of fixed assets participating in entrepreneurial activity as well as taxes and dues (duties) collected to the state purpose budget and non-budget funds included in accordance with the legislation into the prime cost of the production or goods (works, services);

2. The material expenses are the expenses on the raw materials and basic materials (excluding the cost of the wastes repayable), bought products and semi-products, additional materials, fuel, energy, costs connected with the usage of natural raw material (deductions for covering the costs on geological exploration and geological search work of the minerals including the tax for usage of the natural resources (ecological tax), costs on re-cultivation of the soil, the payment taken for wood sold not cut down), expenses on works and services of industrial character carried out by other organizations and individual entrepreneurs.

3. The payments of salaries calculated based on the piece-work rates, tariff rates and official salaries established depending on the results of work, its quality and quantity, stimulating and compensation payments including the compensations on labor payments in connection with the increase and indexation of prices, system of rewarding the workers, heads, specialists and other employees for industrial results, and other conditions of labor payment in accordance with the labor payment forms and systems applied at the organizations.

4. Depreciation charges of the fixed and non-material assets used in entrepreneurial activity are carried out in order established by legislation of the Republic of Belarus.

Depreciation charges of the fixed and non-material assets which are not used in entrepreneurial activity, as well as the fixed assets, non-material assets which are not operated, are not considered while determining the taxized profit.

5. Peculiarities of the composition of the costs on production and realization of products, goods (works, services) in certain branches of national economy are established in order determined by the President of the Republic of Belarus.

6. The Council of Ministers of the Republic of Belarus determines the order of spending and establishes norms of spending the assets on advertisement, firm and special clothes and representation costs.

7. While determining of the profit taxized included into expenses on production and realization of goods (works, services) the following is not considered:

7.1. expenses for fulfilling by organization or payment for works (services) not connected with production and realization of products, goods (works, services) including the works for better equipment of localities;

7.2. expenses for fulfilment of works on building, equipments as well as maintenance (including amortization reductions and expenses for all kinds of reconstruction) of objects not participating in entrepreneurial activity being at the balance of the organizations;

7.3. payments to natural persons working in the organization under labor contracts in money and natural forms being social additionally granted under the employer's decision and (or) decision of the working staff above the privileges provided by legislation of the Republic of Belarus including:

rewards paid at the expense of special purpose assets and purpose earnings as well as payments under the system of rewarding of employees, heads and workers for the industrial results above the amounts provided by legislation of the Republic of Belarus;

rewards under the results of year's work;

material aid (including gratuitous material aid to workers for the first deposit for cooperative dwelling building, for partial payment for credit for the cooperative and individual dwelling building);

loans including those without interest;

payment for vacations additionally granted under the collective contracts above the limits provided by legislation of the Republic of Belarus, including vacations to women bringing-up children;

extra pension payments;

one time payments to persons leaving for pension;

compensation payments in connection with price increase carried out above the amounts of incomes indexing provided by legislation of the Republic of Belarus;

compensation for the cost of nourishment and (or) its rise in price in cafeteria, buffets and prophylactoriums or its reception at privileged prices or free of charge (except for the special nourishment for certain categories of natural persons in cases provided by legislation of the Republic of Belarus);

price differences for goods (works, services) given with partial payment or free of charge as well as sold by subsidiary entities of organizations for public catering;

payment for housing, trips for treatment and rest, excursions and travel, pastime activities in clubs, sections, for visits of cultural entertainment and sport events, subscribing to periodic press, goods (works, services) for personal consumption and other similar payments and expenses;

7.4. expenses on holding tests (analysis, measurements) by the bodies of standardization, metrology and certification at the Council of Ministers of the Republic of Belarus in order determined by the Council of Ministers, if negative results are obtained at the result of the tests (analysis, measurements);

7.5. payment of consultation and information services as well as auditing services at obligatory audit inspection held above the rules established by legislation of the Republic of Belarus;

7.6. expenses on advertisement and marketing services, representation and traveling expenses made above the norms established by legislation of the Republic of Belarus;

7.7. payment for studies under the agreements with higher and secondary special training establishments made above the norms established by legislation of the Republic of Belarus;

7.8. cost of fuel energy resources spent above the limits provided for organizations in the established order;

7.9. expenses under transactions with securities considered at determining the tax base for the tax on incomes and received in certain areas of activity;

7.10. payments for extraction (mining) of natural resources, rejection (dumping) of contaminating substances to environment for locating of wastes above the established limits;

7.11. losses from lack of property and (or) its spoilage happened above the norms of natural losses approved in order established by legislation of the Republic of Belarus, if the court refuses to collect the given sums because of improper account and storage of material valuables, expiration of the limitation period or other reasons not depending on plaintiff;

7.12. sums of dividends and incomes equated to them charged by organization;

7.13. fines and other sanctions collected to the budget and state purpose budget and non-budget funds;

7.14. contributions (deposits) to statutory funds of organizations;

7.15. expenses on purchasing and (or) creation of amortized property;

7.16. sums of voluntary membership fees (including entrance fees) to public organizations, sums of voluntary fees of participants of unions, associations, organizations for maintenance of the mentioned unions, associations, organizations;

7.17. cost of property or property rights transferred as pawn;

7.18. fees, duties and other obligatory payments paid to non-commercial organizations except for the cases, when the payment of such fees and duties is provided by legislation of the Republic of Belarus and is a precondition for carrying out the activity of the organization that has paid them;

7.19. fees paid to international organizations except for the cases, when payment of such fees is provided by legislation of the Republic of Belarus and (or) is a precondition for carrying out of the activity of organizations paid those fees or condition for rendering of services by international organization necessary for carrying out by the organizations that have paid the fees of their activity;

7.20. other expenses not connected in accordance with legislation of the Republic of Belarus with carrying out of the entrepreneurial activity.

8. Expenses on production and realization of products, goods (works, services) during determination of the banks` income, besides losses by points 1-4 of this article, includes:

8.1. percents on

bank deposit contracts, other obtained clients` money resources (including correspondents banks), including percents of the demand balance of clients` accounts;

credit resources received from other banks, other credit and financial organizations, international financial organizations, including interbank credit as well as credit received by way of refinancing (except for percent on delayed credits), by overdraft;

кредитам, срок погашения которых отсрочен Президентом Республики Беларусь или по решениям Совета Министров Республики Беларусь, принятым в соответствии с законодательными актами; займам и вкладам (депозитам) в драгоценных металлах и драгоценных камнях; иным долговым обязательствам банка;

credits which term of repayment is delayed by the President of the Republic of Belarus or by decisions of Council of Ministries of the Republic of Belarus, accordingly to the legal acts;

loans and deposits in precious metals and jewels;

other promissory notes of bank;

8.2. commission dues for services to the bank and correspondent relations, including charges of operations with clients, payment to other banks (including foreign) for the cash – settlement service, collection of money resources, bills, payment documents, payment for the credit management and reservation, payment for the credit preparation, other commissions connected to attraction and using of the foreign credits, other similar charges;

8.3. charges concerns the realization of currency transactions-exchange, including commission charges of operations in the foreign exchange market, losses from purchasing (selling), conversion of a foreign currency.

To determine the losses from purchasing (selling), conversion of a foreign currency the negative result is accepted and estimated as a difference between incomes and charges, received in the settlement period in the form of a difference between cost of a foreign currency at the rate of purchase, sale, conversion and cost of a foreign currency by the official rate of the National bank of the Republic of Belarus on the date of calculation.

The settlement period (day or month) is established in the bank’s registration policy{politics};

8.4. charges of the operations with financial instruments of fixed-term contracts on the market of a foreign currency, precious metals and jewels as well as other financial instruments of fixed-term contracts, including option, future and forward contracts (the commission gathering, paid to the organizer of the tenders, variation margin, option bonus, other similar charges);

8.5. losses of the operations of sale and purchase of precious metals and jewels in the form of a difference between sale and balance costs;

8.6. bank charges of storage, transportation, quality conformance control of precious metals in bars and coins with the requirements of technical normative legal acts, charges precious metals` affinage, other charges connected with carrying out of operations with precious metal bars and coins, containing precious metals;

8.7. charges of pensions and grants transfer as well as money resources transfer charges without opening an accounts to organizations and natural persons;

8.8 charges connected to the performance of bank functions as the agent of the currency control;

8.9. charges of systems` functioning of electronic payments and e-cash, including charges on manufacturing and issuing of bank plastic cards, of creation of the electronic digital signature;

8.10. charges of collection of the cash money resources, payment documents, precious metals and jewels and other values (including the charges connected with its recalculation, sorting and packing), transportation, transfer and (or) delivery of the bank’s or its clients` values;

8.11. charges of payment of services of the automated system of interbank calculations, of the international payment systems;

8.12. charges of using the services of international telecommunication systems to transfer information and (or) to fulfill payments;

8.13. charges related to the realization of factoring operations;

8.14. charges of guarantees, bails, acceptances and avals, granted to the bank by other organizations if such charges are not concerns to the operations with securities;

8.15. charges of property trust management, including money resources, precious metals and jewels;

8.16. charges of non-capital nature related to the safety and protection of the bank information;

8.17. charges of installation of the local networks to connect the payment terminals, cash dispensers, computer and other equipment to perform bank operations in the indoors belonging to the bank, and areas which are not belongs to it;

8.18. charges of purchasing the instruments of protection, weapon and ammunition, uniform, including equipment, for the workers of collection service of cash money resources, payment documents, precious metals and jewels, other values and for the workers which transports them;

8.19. charges of payment according to the international standards of the accounting (financial) reporting of auditor revisions of the banks, which serves the credit lines, granted on the basis of agreements with international financial organizations, credit organizations of the foreign states, in the limits of norms{rates} of charges for the obligatory auditor checks established by the legislation;

8.20. charges of payment of the services of rating agencies by giving international rating to the banks which serves the credit lines by the agreements with the foreign financial and credit organizations;

8.21. charges of carrying out lottery among the special lottery deposits of natural persons;

8.22. other charges concerned to the banks activity.

To the addition of the transactions out of realization, established by the legislation for organizations, banks transactions out of realization includes:

sums allocated to the reserves to cover of possible losses on the banks` assets which are subject to credit risk, and by securities depreciation in the established size and order by the National bank of the Republic of Belarus legal acts;

sums allocated to the guarantee fund of protection of contributions and deposits of natural persons in the established size and order by the legislation;

sums allocated to the reserves to cover doubtful debts in the established size and order by the legislation;

negative differences appears during precious metals reassessment;

negative rate differences formed during rounding off as a result of reassessment of available money resources in a foreign currency, assets and obligations to receive or to pay, expressed by the fixed sums of money in a foreign currency (monetary accounts) on the date of balance drawing up;

negative rate differences formed between an official rate on the date of carrying out accounts corrections of incomes or charges by earlier operations with foreign currency and on date of initial reflection of these operations;

cost of the accepted non-payment and fake banknotes, coins, checks, bank plastic cards;

negative rate differences formed as a result of reassessment of the money resources in a foreign currency, as contribution to the statutory fund, carrying out during official rate change of the belarus ruble to the corresponding foreign currency, established by the National bank of the Republic of Belarus.

Article 4. Tax Rates

1. The dividends and incomes equated to them calculated by the organization are imposed under the rate of 15 percents.  The tax is calculated and taken from the payer and is collected to the budget by the organizations that have charged the dividends and incomes equated to them. Such organizations are recognized as tax agents and have rights and bear responsibility established by article 23 of the General part of the Tax Code of the Republic of Belarus.

The tax is calculated and paid under the rate of 15 percent by the Belarusian organizations receiving the dividends and incomes equated to them from the sources abroad. Calculation of the tax is carried out on the date of of reception of those incomes based on the calculated sum of the dividends and incomes equated to them.

2. Is excluded.

3. Is excluded.

4. Is excluded.

5. Is excluded.

6. Is excluded.

7. Is excluded.

8. The profit of organizations is subject to the tax at the rate of 24 percents.

9. Is excluded.

10. Is excluded.

Article 5. Privileges on Taxation

1. Privileges on taxation while calculating the tax on profit under the activity of ordinary partnership and economic group are not granted.

2. Profit subject to profit tax calculated in accordance with the article 2 of the present Law is reduced to:

a) is excluded;

b) is excluded;

c) sums of profit directed to financing the capital investments of industrial purpose and dwelling building and also on paying the credits of banks received and used for these purposes. The mentioned reduction of the profit subject to taxation is conducted on the condition of the full usage of the sums of amortization funds calculated on the first day of the month, when the profit was directed for those purposes.

Under the capital investments for industrial purpose for the purposes of the present article the capital building in the form of a new building, reconstruction, widening and technical re-equipment of the organizations in effect and also acquiring of the building, constructions and objects of not completed building, equipment and other objects of the assets participating in entrepreneurial activity are understood.

The reduction of the profit subject to taxation provided by the paragraph one of the present sub-point is carried out:

by the organizations developing the own industrial base—at the sums actually made costs at the period of account;

by the organizations under the profit directed in the order of share participation on financing the capital investments for industrial purpose and dwelling building—at the sums of costs proved by the builder.

At realization, gratuitous assignment (except for gratuitous assignment within one owner under his decision or decision by the body authorized by him), liquidation, leasing (other onerous and gratuitous usage) of objects of basic funds and objects of not completed construction (or its part) within two years from the moment of their acquiring or construction and on which the privilege on profit tax has been granted, the privilege is terminated and the profit tax not paid in connection with its granting is subject to introduction to the budget with paying the fine for the period from the moment of granting the privilege on the day of paying the tax inclusively;

The privileges by this paragraph are not granted if the payers have in property, economic conducting or operative management the objects of the above permitted standard uncompleted construction for industrial purpose (objects on which the normative terms of construction by the design documentation were exceed), except for the financing capital investments of the given objects after this construction`s end.

d) the sum of costs carried out at the expense of the profit left in disposal of the enterprise on maintenance of the children's health improvement establishments of public education, houses for the elderly and invalids , objects of dwelling fund, health, kindergarten establishments of culture and sport and also the expenses for those purposes at the share participation of the organizations in maintenance of the mentioned objects and establishments being at their balance—in accordance with the standards of the expenses for similar establishments maintained at the cost of budget assets;

e) is excluded;

f) the profit of organizations from manufacture of prosthetic-orthopedic products, means of rehabilitation and invalid service not participating in entrepreneurial activity;

g) is excluded;

h) sums assigned by the organizations registered on the territory of the Republic of Belarus, establishments and organizations of health, public education, social security, culture and sport financed at the cost of the assets of budget or the sums used on paying the bills for commodity material valuables (works, services) acquired and assigned to the mentioned organizations, establishments and organizations and also on the cost of the commodity material valuables (works, services) gratuitously assigned (carried out) to those organizations, establishments and organizations. At that the profit subject to the profit tax can be reduced on the relevant sum of the costs made, but not more than 5 percent of taxized profit determined in accordance with part one point 2 of the present article;

i) is excluded;

j) is excluded;

k) is excluded;

l) is excluded;

m) is excluded;

n) is excluded;

o) is excluded;

p) is excluded;

q) is excluded;

r) is excluded;

s) is excluded.

2-1. Is excluded.

2-2. The organizations of penitentiary labor establishments and health labor preventoriums of the system of the Ministry of Internal Affairs are freed from the payment of the profit tax.

3. Is excluded.

4. Is excluded

5. Organizations using the invalids labor, if the number of invalids in them is more than 50 percents from the listed number in average for the period, are freed from the profit tax.

6. Is excluded.

7. At determining the listed number in average for the period by the organizations for application of the privilege mentioned in the point 5 of the present article, into the listed number (with the consideration of the persons working pluralistically) the persons not being in the staff of the enterprise (working under the contract) are also included.

8. Within three years from the moment of announcing the profit by them, the profit received from realization of goods (works, services) of the own production except for the trade and trade-purchase activity of organizations with the foreign investments (except for the organizations in the form of open joint stock companies), the share of foreign investor in the statutory fund of which is more than 30 percent, is freed from the payment of the tax. The present privilege covers the commercial organizations with the foreign investments the share of the investor in the statutory fund of which till January 1, 2005 was more than 30 percent.

The order of referring the goods (works, services) to the own production is determined by the Council of Ministers of the Republic of Belarus or by the body authorized by it.

The right to receive the privilege can be realized by the enterprise at presenting the relevant document on belonging of the production (works, services) to the goods (works, services) of the own production.

The right to receive the privileges can be realized by the enterprise at the statutory fund formed by every participant (stockholder) within a year from the day of registration at the amount of not less than 50 percent from the amount provided by the statutory documents. The certificate issued in the order established by legislation is a documentary confirmation of the fact of the statutory funds formed.

In case of non-introduction of the deposits in the statutory fund at the full amount at the end of two years from the day of registration or in other term determined in accordance with the part six of the present point the profit tax is calculated at the full amount for the whole period of activity of the enterprise. The profit tax for the second year of the activity is paid with the application of financial sanctions provided by legislation of the Republic of Belarus. At that the privilege on profit tax is terminated and is not renewed in the future.

In case of creation of the enterprise with the foreign investments, by the statutory fund of which the carrying out of construction assembling works as a deposit into the statutory fund is provided, the Council of Ministers has the right to prolong the terms of introduction of the deposits into the statutory fund additionally for the term up to 2 years.

Accumulated actives of the organizations with the foreign investments, except for the funds, the assets of which are designed for the material encouragement and social-cultural development are subject to taxation at liquidation of the enterprise under their depreciated cost in order established for the taxation of the dividends and incomes equated to them.

In case of the loss by the commercial organization of a status of organization with foreign investments, liquidation of the commercial organization with foreign investments or termination of activity of the commercial organization with foreign investments as the result of its reorganization in the period of free from the tax or at the course of three years after the expiration of the term of free from the tax the organization shall pay the tax for the period for which it has been freed form the tax payment.

9. Is excluded.

9-1. Is excluded.

9-2. Is excluded.

9-3. Is excluded.

9-4. Is excluded.

9-5. Is excluded

10. Is excluded

11. The sum of the tax left in disposal of the organizations in connection with the privileged taxation provided by the point 5 of the present article are used only for the industrial and social development. At non-observance of the given conditions the sum of the tax given as a privilege is taken to the budget.

The privileged order of taxation of the profit of organization provided by the point 5 of the present article is not extended to the profit received from the trade, trade-purchase and commission activity.

12. The profit of the organizations of realization of its plant growing products (except for flowers, ornamental plants), animal industries (except for fur farming), fishery and beekeeping is free from the taxation.

13. Is excluded.

14. Is excluded.

15. Is excluded.

16. Is excluded.

17. The profit received form the production of the products of children's nourishment is not subject to the tax.

18. Organizations of consumer's service of population located in the rural area regardless of the forms of ownership in the first three years after their state registration are freed from the profit tax.

19. The profit tax is not imposed on the money assets distributed in order established by the Council of Ministers of the Republic of Belarus and received:

by the state associations and organizations at the process of the entrepreneurs activity form alienation of the property being at the republican ownership and assigned to them on the right of economic running and also of other property introduced in established order to the statutory funds of other economic partnerships and societies and referred in the established order to the long-term financial investments;

by the organizations financed from the budget (budget organizations) for the precious metals returned as scrap and wastes.

20. The profit received from realization of nonuse or inefficiently use of the property, assigned to the Ministry of Defence of the Republic of Belarus by the right of operative management, real estate which is being economic conducted by its subordinated state organizations, except for the available housing, military purpose products and the property which is carry the state secrets, except for the compensation (payment of services) of trading-industrial republican unitary enterprise "Belspetskontrakt" of the Belarus concern of material resources is not subject to the tax.

Article 6. Tax and Accounting Periods. Order of Calculation and Payment of Profit Taxes, Dividends Incomes and Other Equal to Them. Terms of Tax Declarations Representation and Payments of Profit Taxes, Dividends Incomes and Other Equal to Them.

1. Tax period of profit tax is a calendar year.

Accounting period:

for the foreign organizations carrying out its activity through the permanent representative on territory of the Republic of Belarus is a calendar quarter;

for other payers - calendar month.

The sum of the profit tax is determined by the increasing result from the beginning of the tax period as sum of the tax base reduced for the sum of tax privileges in the way, established by the tax laws and the tax rate.

Payers of the profit tax, branches, representations and other isolated divisions of legal persons having separate balance and current (settlement) or other bank account, executing in the established by the legislation order tax obligations of these legal persons, during the tax period by the results of the expired accounting period are representing to tax bodies the tax declaration (calculation) not later 20-th date of the following expired accounting period.

Tax declaration (calculation) is represented irrespective of having or having not an obligation on payment of the profit tax for the corresponding accounting period by payer.

Payment of the profit tax is made during the tax period by results of the expired accounting period not later 22nd day of the month in following accounting period.

Payment of the profit tax on summary balance of primary activity of the Belarus railway is made in the centralized order.

The order and terms of representation of tax declarations (calculations) and payments of the profit tax on summary balance of primary activity of the Belarus railway, and also the profit tax, received from realization of flowers, ornamental plants and production of fur farming, are determined by the President of the Republic of Belarus.

In the cases determined by part eighth of the 8th paragraph of the article 5 of this Law, commercial organizations pays the profit tax and represent by place of its registration the tax declaration (calculation) of the profit tax:

at the liquidation or reorganization - not later than five working days from the date of making decision of liquidation or reorganization;

at the loss of the status of the commercial organization with foreign investments - not later than five working days from the date of the state registration into the statute documents of these organizations of the amendments and additions connected to the reduction of foreign investments in the statutory fund till 20 000 USD, but not later than two months from the date of status loss of the commercial organization with foreign investments.

2. Tax period on tax on incomes of dividends and equal incomes is calendar month.

The sum of tax on incomes of dividends and equal incomes determines as product of tax base and tax rate.

Payers of tax on incomes of dividends and equal incomes are presenting to tax bodies by place of its registration not later than 20th day of the month following to the expired tax period, the tax declarations (calculations) on tax of incomes of dividends and equal incomes.

On charging of dividends and equal incomes by belarusian organization the tax estimates by increasing result from the beginning of the year, kept and transferred to the budget by these organizations recognized according to the article 23 of the Common part of the Tax Code of Republic of Belarus by tax agents, not later 22 day of the month followed to the expired tax period.

On reception of dividends and equal incomes by belarusian organizations from sources outside the Republic of Belarus, the tax on incomes of dividends and equal incomes is estimated by increasing result from the beginning of year and paying to the budget not later 22 day of month, following to the expired tax period.

3. If the terms of representation of the tax declarations (calculations) or terms of taxes payment, established by this Law, falls at state holiday or holiday, established and declared as is by the President of the Republic of Belarus as a day off, or falls at day off, this term is transferred to the first working day after this day off (non-working day) or a holiday.

CHAPTER II. PECULIARITIES OF CALCULATION OF THE TAX ON INCOME AND PROFIT OF FOREIGN ORGANIZATIONS.

Article 7. Taxpayers

1. Payers of the profit tax are the foreign organizations carrying out the entrepreneurs activity on the territory of the Republic of Belarus through the permanent representations located on the territory of the Republic of Belarus.

2. Under the foreign organizations, the organizations, which in accordance with the legislation of the state regulating the legal capacity of the given organizations are considered for the purposes of the taxation legal persons, are understood.

3. In case of works and (or) renders services performing by foreign organization on the territory of the Republic of Belarus, a place of works performing, rendering of services of the foreign organization is considered as place of permanent representative, if specified activity is performing during 30 days or during one calendar year at whole.

4. Building site, mounting or assembling object are considered as place of permanent representation of the foreign organization if such platform or object exist on territory of the Republic Of Belarus during the period exceeding 90 days in any 12 month period, beginning or coming to an end in the corresponding tax period.

5. Under the permanent representation of the foreign organization located on the territory of the Republic of Belarus for the purposes of taxation the following are understood:

a) independent structural subdivision (establishment) through which the entrepreneurs activity of the foreign organization is carried out on the territory of the Republic of Belarus;

Including under the establishment the following is understood:

the place of production and (or) realization of production;

the place of realization of goods, carrying out of works, rendering services.

The place used exclusively for one of several purposes listed below is not considered permanent representation:

storage, demonstration and delivery of the goods of the own production;

purchase of goods for foreign legal person;

accumulation or dissemination of information for the foreign organiztion or carrying out other kinds of activity, if at that its activity in the whole has preparation or additional character;

b) organization or the natural person which performs activity on behalf of the foreign organization and (or) in its interests and (or) having and using powers of such organization to conclude contracts or to coordinate its essential conditions.

Foreign organization is not considered as having permanent representation if on organization and realization of its activity on behalf of the foreign organization and (or) in its interests the organization or the natural person operates within the limits of its usual activity.

Usual activity is understood the activity which is performed independently, not as subject of instructions and control of a foreign organization and to perform this activity entrepreneurial risk by its results falls on organization or natural person, rather than on represented foreign organization.

Article 8. Object of Taxation

1. Taxable profit is the profit received by the foreign organization through permanent representation on the territory of the Republic of Belarus and concerning the activity of this permanent representative office.

The profit of the foreign organization received through the permanent representation on the territory of the Republic of Belarus and being the sum of the profit received from realization of goods, works, services and also of other valuables and property rights and the incomes from transactions out of realization reduced on the sum of the expenses under these operations directly connected with carrying out of the activity through the permanent representation incurred in the Republic of Belarus and beyond its territory is subject to taxation.

If the foreign organization receives the profit, one of which sources is the activity performed through permanent representation on the territory of the Republic of Belarus, then the taxable profit on the territory of the Republic of Belarus in case of absence of separate account is determined by specific weight of profit of the specified activity in total amount of the received profit by the foreign organization.

Foreign organizations receiving the payment in the form of goods or other property as the compensation for the activity carried out in the Republic of Belarus through the permanent representation pay the tax on profit calculated based on the contractual prices, prices of the main organizations-exporters or the prices determined on the base of the world prices on such or similar (identical) goods or other property.

2. Foreign organization carrying out the activity in the Republic of Belarus use the same privileges granted by the legislation of the Republic of Belarus for payers on the territory of the Republic of Belarus, if otherwise is not provided by the international agreements.

Article 9. Order of Calculation and Terms of Paying the Tax

1. The profit tax of foreign organization is calculated directly by the payer at the place of location of the permanent representation of the foreign organization.

The foreign organizations which performs activity in Belarus through its permanent representation, paying the profit tax in 10-day's term from the established day for tax declaration (calculation) representation. Thus payments by profit tax is made quarterly not later 22 day which following the accounting period.

2. Foreign organization carrying out the activity in the Republic of Belarus not later than April 15 of the year following the year of account, present to the taxation body the report on the activity in the Republic of Belarus and also the tax declaration (calculation) at the form approved by the Ministry of Taxes and Dues of the Republic of Belarus. At termination of the activity before the end of the calendar year the mentioned documents shall be presented before the moment of its termination along with submission of the notification to the taxation body on termination of the activity or termination of the period for which the permit on opening the representation has been issued.

3. Is excluded.

4. If the international treaty of the Republic of Belarus establishes other rules than those contained in the present Law, the rules of international treaty are applied.

The provisions of the present Law do not concern the taxation privileges established by the general rules of international law and by the special agreements of the Republic of Belarus with other states.

5. Collection of taxes on profit and income of foreign organizations can be terminated or limited on the basis of reciprocity principle in cases, when in the correspondent foreign state such measures are taken in relation to the legal persons of the Republic of Belarus applicably to such or similar taxes, that shall be confirmed by the taxation bodies of this state.

6. Legal and natural persons of the Republic of Belarus at concluding the contracts with the foreign organizations have no right to include into the contracts the clauses replacing the taxpayer in comparison with the provisions of the present Law.

Article 10. The Tax on Incomes of the Foreign Organizations Not Carrying Out the Activity in the Republic of Belarus through the Permanent Representation

1. Foreign legal persons not carrying out the activity in the Republic of Belarus through the permanent representation and receiving the income from the sources in the Republic of Belarus pay the tax on:

the dividends (determined in order provided by the article 2 of the present Law)—under the rate of 15 percent;

the royalty—under the rate of 15 percent.

The term "royalty" includes the payments of any kind received as a reward for using or granting the right to use the property rights on the works of literature, art, science, including motion pictures, films used for radio broadcasting, television, satellite or cable transmission for translation, any patent, trademark, service mark, designs or model, scheme, formula or the processes, reward for using or granting the right to use the property or information regarding industrial commercial or scientific experiment (including know-how);

Term "royalty" includes the compensation for using or for granting the right to use the property rights on objects of the copyright, including literature, arts, sciences, computer programs, other products related to the object of copyright, on objects of the adjacent rights, including soundtrack performance, transfer by the organizations of radio and cable announcement, and also payment for patent, trade mark, service mark, company name, sketch, useful model, scheme, formula, industrial sample or process as well as for the information concerning industrial, commercial or scientific experience (including a know-how) for using or for granting the right to use the property rights, except for payments on international rent (continental and intercontinental) of channels and networks of telecommunication;

the licenses—under the rate of 15 percent;

other incomes—under the rate of 15 percent. The list of incomes of foreign organizations subject to taxation as "other incomes" are determined by the President of the Republic of Belarus;

incomes from the debt obligations (claims) of any kind except for registered officially loans (deposits, credits usage of temporary free assets on the accounts in the banks of the Republic of Belarus)—under the rate of 10 percents.Incomes of realization (redeem) of securities for the purposes of the tax collection on incomes are not concerns to the incomes of promissory notes;

on payment for carriage, freight in connection with carrying out the international carriages—under the rate of 6 percent.

2. Excluded.

3. Foreign organization having in accordance with international treaty of the Republic of Belarus the right to full or partly freeing from the tax of incomes form the sources in the Republic of Belarus, submits the application on reduction or abolishment of the tax in order established by the Ministry of Taxes and Dues of the Republic of Belarus.

4. The tax on incomes of foreign organizations from the sources in the Republic of Belarus is deducted by the legal persons and individual entrepreneurs paying the income to foreign organization from the full sum of income. In case of paying the income not in money form the tax is paid from the money equivalent of the income. The tax is deducted and transferred to the budget not later than the day following the day of charging the payment. Legal persons and individual entrepreneurs mentioned in the present part are recognized to be tax agents and have rights and bear responsibilities established by article 23 of the General Part of the Tax Code of the Republic of Belarus. The income is calculated as a general sum of incomes with the reduction of the borne costs in cases and procedure determined by the President of the Republic of Belarus.

The tax declaration (calculation) of the tax on incomes of the foreign organization is represented by the legal person or individual entrepreneur to the tax bodies monthly not later than 20th day of the month, which following after the month of payment charge of the foreign organization.

Foreign organizations that have opened the account in the banks of the Republic of Belarus, not later than April 15 of the year following the year of account, present to the inspection of the Ministry of Taxes and Dues of the Republic of Belarus the tax declaration (calculation) on the incomes under the form approved by the Ministry of Taxes and Dues of the Republic of Belarus attested by the auditor. Closure of the account is conducted after submitting to the inspection of the Ministry of Taxes and Dues of the Republic of Belarus the final tax declaration (calculation) on the income obtained.

5. Foreign organizations importing to the territory of the Republic of Belarus the goods for demonstration at the exhibitions, trade exhibitions and fairs (further—exhibitions) in case of realization of those goods pay the tax at the rate of 10 percent from the customs cost of the goods demonstrated at its presentation to customs registration at the regime allowing to engage the goods in the civil turn-over.

The tax is taken by the customs body at presentation of goods to customs registration in the regime allowing to engage the goods in civil turn-over.

In case of importing on the territory of the Republic of Belarus of the goods from the countries in relation to which there is no customs control, for demonstration at the exhibitions the foreign organization or the person its representing before opening the exhibition is obliged to present to the taxation body at the place of holding the exhibition the guarantee of the bank or introduce at the account of the taxation body the money assets as securing the payment of the mentioned tax on the sum at the amount of 10 percent from the cost of the imported goods.

The tax is deducted and paid at the rate of 10 percent from the cost of the goods imported and realized at the exhibition by the legal or natural person at the charge of the payment, but not later than the last day of exhibition and is transferred at the account of the taxation body at the place of its holding.