Belarus does not follow the OECD TP Guidelines as binding law; instead, it applies them through provisions incorporated into its Tax Code.
Arm’s Length Principle
The tax authorities can adjust the corporate income tax base if transaction prices deviate from the market price in certain cases, particularly for related party transactions and transactions involving special tax regimes. This indicates that the authorities are ensuring that prices used in such transactions align with market prices.
Related Party Definition
In Belarus, the definition of related parties is provided in Article 88 of the Tax Code, which includes entities that are under common control or influence, such as legal entities with direct or indirect participation; it also qualifies transactions engaging offshore residents. Under Belarusian transfer pricing rules, tax authorities may control the corporate income tax (CIT) base in audits of transactions that meet certain thresholds and involve related parties or special tax regimes, including:
- foreign trade transactions with related parties if the annual transaction value surpasses 400,000 BYN (net of VAT) for regular taxpayers or 2 million BYN for major taxpayers;
- domestic transactions with Belarusian legal entities that are related parties and benefit from CIT exemptions (such as residents of free economic zones or special tax regimes) if the value exceeds 400,000 BYN;
- transactions with related parties involving real estate, housing bonds, shares, or loans under special regimes;
- foreign trade in strategic goods, as defined by the Council of Ministers, if the transaction value exceeds 2 million BYN; and
- transactions involving residents of offshore zones or those carried out through intermediaries lacking substantial functions, assets, or risk, which may also be treated as controlled transactions.
Transfer Pricing Methods
The methods that can be used to determine the arm’s length price in Belarus are:
- Comparable uncontrolled price method
- Resale price method
- Cost plus method
- Transactional net margin method
- Profit split method
In Belarus, the tax authorities usually calculate corporate income tax based on the market price of similar goods, services, or work. If they can’t find information on market prices, they use one of the above methods.
They can also combine two or more methods, but they should try to use the Comparable uncontrolled price method or the resale price method first. If that’s not possible, then other methods can be used. To check if profits are at a fair market level, the interquartile range (middle 50% of data) is usually used. If data from several years is used, a weighted average (which gives more importance to years with more data or sales) should be calculated.
Documentation Requirements
Taxpayers in Belarus must inform the tax authorities about transactions with related parties by entering the information into electronic VAT invoices sent through a government portal. If they conduct large or strategic transactions, they also need to explain why the prices used make economic sense. Large taxpayers and those involved with strategic goods must keep documents showing that their prices match market levels, including details about the companies involved, the transactions, and the pricing method used. Some transactions are exempt from these documentation rules, such as stock exchange deals (unless involving related parties), and those under advance pricing agreements, tax-exempt profits, or small one-off deals. However, even in exempt cases, the tax authority can still request documents starting from June 1 of the year after the transaction.
Advance Pricing Agreements (APA) and Mutual Agreement Program (MAP)
In Belarus, advance rulings are not available. However, advance pricing agreements (APAs) can be obtained by major taxpayers and those whose controlled transactions exceed 2 million rubles, excluding VAT.
Approach to Transfer Pricing Audits
Belarusian tax authorities conduct transfer pricing (TP) audits to ensure compliance with TP regulations. These audits may involve desk reviews or other types of tax inspections. If the authorities detect pricing that deviates from market standards, they can adjust the Corporate Income Tax (CIT) base accordingly.
Penalties
Belarus does not have specific rules for using wrong prices in related-party transactions, but they must pay fines and interest if they don’t pay their taxes on time or pay too little. Interest is charged daily based on the National Bank’s refinancing rate. If taxes are unpaid, the company or responsible people, like the accountant or CEO, can face extra penalties depending on how much is owed.
Taxation at a Glance
Belarus operates under a unified Tax Code, which is divided into a general part and a special part and is regularly updated. This Tax Code is supplemented by regulations issued by the Ministry of Taxes and Duties, the authority responsible for tax administration in Belarus, as well as by presidential Edicts and Decrees. The tax system in Belarus includes both national and local taxes. However, the main taxes and duties such as corporate income tax (CIT), personal income tax (PIT), and value-added tax (VAT) are all imposed at the national level.
The currency of Belarus is the Belarusian ruble.
The table below provides a summary of the main taxation rates related to businesses:
Tax Type | Tax Rate |
Corporate Tax | 20% |
VAT | 20% |
Withholding tax on dividends to non-residents | 15% |
Withholding tax on interest to non-residents | 10% |
Withholding tax on royalties to non-residents | 15% |
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