Higher VAT, lower profit tax possible in Belarus in 2014

        The possibility of raising rates of value added tax (VAT) and reducing rates of profit tax in 2014 is under consideration in Belarus, the press service of the Belarus government said.
The possibility is being considered as strategic amendments to tax legislation in 2014 are being prepared in combination with the bill on the next year’s central state budget.
The Finance Ministry suggests raising the VAT rate from 20% to 22% and reducing the profit tax rate from 18% to 15%.
        The press service explained that the measure is necessary for optimizing state budget revenues and making them more stable. The proposal’s implementation will allow bolstering Belarus’ investment appeal by introducing the lowest profit tax rate in the Customs Union, the Single Economic Space, and Europe. Tax burden on the main investment source – profit — will be reduced while the capability to use the money to modernize the real sector will be enhanced. The higher VAT and the lower profit tax will also reduce pressure on exporters because they are eligible to zero VAT rates while putting more pressure on imports, including consumer imports. The proposal’s implementation is also expected to help Belarus advance up the World Bank’s Doing Business ranking (Taxation) thanks to lower tax withdrawals from profit. Meanwhile consequences of external shocks and macroeconomic changes will be minimized as far as revenues of the state budget are concerned.