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Insights Belarus: New restrictions for businesses from “unfriendly countries”

Belarus: New restrictions for businesses from “unfriendly countries”

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published on 14 March 2024 | reading time approx. 2 minutes


On 13 March 2024, the Resolution of the Council of Ministers of the Republic of Belarus No. 164 (hereinafter – the “Resolution”) has been officially published.


The “unfriendly countries” comprise the ones as follows:

  • EU member states
  • USA
  • UK
  • Switzerland
  • Norway
  • Liechtenstein
  • Canada
  • New Zealand
  • Albania
  • Iceland
  • Montenegro
  • North Macedonia
  • Australia

  
The new restrictions cover taxation of the incomes as follows:
  • Dividends
  • Interests
  • Disposal of assets
  
Still, based on the content of the Resolution it does not implement whatever restrictions with respect to royalties.
 

Dividends

As from 1 April 2024 the rate of a tax on income of foreign companies from the “unfriendly countries” which do not exercise activities in Belarus via permanent establishment (“WHT”) with respect to dividends shall amount to 25 percent instead of the standard rate of 15 percent. As from 1 June 2024 the provisions of the Double taxation treaties (the “Treaties”) with the “unfriendly countries”, which stipulate incentive WHT rates for dividends, shall be suspended.  

Therefore, when it comes to payment of dividends towards shareholders, being the companies from the “unfriendly countries”:

  • until 1 June 2024 – the provisions of the respective Treaty can be applied, thus the dividends can be subject to ongoing WHT rates
  • as from 1 June 2024 – dividends shall be subject to WHT at the rate of 25 percent
 

Interests 

The provisions of the Treaties with the “unfriendly countries”, which provide for incentive WHT rates with respect to incomes out of debt obligations (e.g. interests accrued under loans), shall be suspended. Thus, by default, as from 1 June 2024 when it comes to payment of interests towards the companies from 
the “unfriendly countries” the standard WHT rate of 10 percent shall be applied.
  

Disposal of assets

As from 1 June 2024 by default the incomes of residents from the “unfriendly countries” out of disposal of shares, stocks, other movable assets as well as real estate in Belarus shall be subject to WHT in Belarus.  
 
Please consider that the said restrictions are of a temporary nature and shall be applied up to 31 December 2026. Upon resolution of the Government the restrictions can be lifted prematurely.

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