The art of balancing taxation occurs when the system doesn’t overburden the economy and business. On the contrary, it should stimulate their development whilst being stable and allowing businesses to plan ahead. The evolution of the Belarusian tax system can be traced through its progress in the international ratings. Until recently, our country was placed 183rd amongst all nations. Over the last three years however, it has made considerable progress and is now in 60th place. Whether we need to move even further up the ranking is currently under discussion. Often changes in tax legislation don’t benefit our economy. All amendments need to be carefully thought through and their consequences considered.
Tax incentives for business are often another controversial topic. Whilst these have been used to revive flagging industry in the past, the current climate means that they put an additional burden on the state. Now that these industries are stronger, the position as far as allowing tax breaks are concerned should be reconsidered in the light of economic difficulties. Alexander Lukashenko recently reinforced a key principle of our economy that all businesses should work under equal conditions, with a few exceptions. These exemptions should only be given to development projects running at maximum efficiency with a high profit margin and high returns. At present, almost 250 tax incentives cost the government $1bn in 2013 alone. To revise and optimise the fiscal system two parameters can be used. The first is how heavy the tax burden is for businesses. Most businesses agree that, with the exception of weighty pension and social security payments, the tax burdens have eased somewhat in recent years. Whilst we might study the nature of these heavy payments, we should remember that our state is socially-oriented.
The second important measure is that of tax administration, which should be simple, understandable and logical. This is an economic, as well as a psychological issue. If the system requires a business to employ a large firm of accountants to manage its taxation affairs, it’s a testament to the system’s inefficiency. Tax controls are a priority for the government owing to their link to fiscal measures. The necessity of dialogue between the Government and business was a key point at the meeting. It was asserted that changes in tax legislation should be more foreseeable and understandable. The First Deputy Prime Minister, Vasily Matyushevsky, told journalists that the Government promises not to change tax rules for a year in 2016. The Chairman of the Belarusian Union of Entrepreneurs, Alexander Kalinin, commented on the importance of forming tax legislation as a result of the dialogue between business and the Government.
By Veniamin Mikheev
