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General principles of taxation between Russia and the Republic of Belarus

General principles of taxation between Russia and the Republic of Belarus

LEGAL DIGEST, NEWS \ 21.11.2022

The Russian Federation and the Republic of Belarus have concluded an agreement determining the general principles of taxation on indirect taxes – VAT and excise taxes.

According to the text of the document, by January 1, 2023, the Russian Federation and the Republic of Belarus (the Parties) have to bring their tax legislation concerning VAT and excise taxes, into line with the provisions of the agreement.

For example, in their tax legislation, the parties have to establish excise taxes on all goods and services in accordance with the minimum list of goods and services provided for in Appendix No. 1 to the contract, approved by Decree No. 2583-r of the Government of the Russian Federation dated September 12, 2022. At the same time, the tax rates of excise taxes on the minimum list of goods and services should not be lower than the rates specified in Appendix No. 2 to the agreement.

Regarding VAT, the Parties in their legislation establish tax exemptions, VAT benefits exclusively in relation to:

  • categories of taxpayers exempt from VAT provided for by Appendix No. 4 to the agreement;
  • operations exempt from VAT provided for in Appendix No. 5 to the contract;
  • operations exempt from VAT at a reduced rate provided for in Appendix No. 6 to the contract.

Also, the Parties do not reduce the VAT rate of 20% and 10% established in their tax legislation.

The Parties may establish in their tax legislation the maximum amount of revenue from the sale of goods, works, services, from the alienation of property rights, not exceeding which during the calendar year taxpayers are exempt from calculating and paying VAT. For 2023, such revenue amounts do not exceed:

  • 270,000,000 Russian rubles – for organizations in the Russian Federation;
  • 3,000,000 Belarusian rubles – for organizations in the Republic of Belarus.

The document also assumes the creation of an integrated system for the administration of indirect taxes. Information on transactions of VAT taxpayers of the two countries registered with the tax authorities as of January 1, 2023 will be entered into the system. It is needed for end-to-end analysis of value added tax data.

In addition, within the framework of the agreement, it is planned to create a supranational tax committee that will monitor compliance by the parties with the established agreements.

At the same time, for tax purposes, taxpayers apply the provisions of the tax legislation of the Parties, and not the provisions of the agreement. Also, the requirements of the agreement do not affect the rights and obligations of the Parties under other international agreements concluded by them.

Acsour carefully monitors these legislative changes and will inform you about the latest news on this topic.

Acsour