Profitable rates of tax reduction
By Vladimir Vasiliev
Last year, income tax payments into the budget rose by over Br1 trillion (over $300m); according to the Ministry for Taxes and Duties, this shows that people’s income has grown and that more earnings are being declared. As well as strict controls on ‘cash salaries’ (paid illegally, avoiding taxation) certain economic instruments can be used, which may cost less. The transition to a 12 percent flat scale of income tax has become a good impetus to leave ‘shadow’.
Previously, income tax was calculated in line with a five-stage progressive scale: 9, 15, 20, 25 and 30 percent. The higher one’s income, the more tax paid. Not everyone loved the idea of a 12 percent scale, but arguments in favour prevailed.
The Finance Ministry and the Ministry for Taxes and Duties plan to continue reducing the tax burden, simplifying accounting and cutting profit tax. At a recent session of the Finance Ministry, Minister Andrei Kharkovets explained the plans, noting that the current 24 percent rate is due to fall to 20-22 percent in 2012. This should make Belarus more attractive to business circles and the tax may even be abolished where funds are ‘aimed at the establishment and modernisation of acting facilities — until expenditure is recouped’.
The Finance Ministry stresses that reducing existing taxes won’t lead to new ones being launched. “No new taxes are planned in Belarus,” Mr. Kharkovets has promised. Business circles are sure to be pleased.