Belarus has suspended the implementation of the provisions of international double taxation agreements with 27 unfriendly countries.
According to SPPLaw for Business, on 7 March 2024, the Council of Ministers of the Republic of Belarus adopted Resolution No. 164 "On Taxation Issues," which introduces additional restrictive measures against "unfriendly" countries. It is about suspension of the provisions of international agreements on avoidance of double taxation until 31 December 2026 inclusive.
The new rules will affect the USA, France, Denmark, Poland, Sweden, Belgium, Lithuania, Latvia, the Netherlands, the Czech Republic, Bulgaria, Estonia, Romania, Cyprus, Switzerland, Slovakia, Austria, Hungary, Croatia, North Macedonia, Italy, Germany, Finland, Ireland, Slovenia, Spain and the UK.
Articles of agreement are suspended with respect to the payment of dividends, income from debt claims and income from the alienation of property.
The period of application may be reduced in case of elimination of the circumstances that served as a basis for its application, or on the proposal of the Ministry of Taxes and Levies.
The decision was also made to increase the tax rate on income of foreign organisations that do not operate in Belarus through a permanent establishment to 25%. This applies to the income specified in subparagraph 1.4 of paragraph 1 of Article 189 of the Tax Code, when there are obligations to pay this tax in respect of foreign organisations, the location of which is a hostile state. The measure will be effective from 1 April 2024 to 31 December 2026.
As noted, the decree will enter into force as follows:
- regarding the avoidance of double taxation on the first day of the month following the expiry of two months from the date of official publication, i.e. 1 June 2024;
- other provisions - after the official publication of the decree.
As the comments note, this is a very serious measure and a marker.
The measure has many consequences, but the closest one is that income from foreign companies will be taxed in Belarus at the full rate, without taking into account the taxes paid in the countries named above.
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