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You will be surprised. We calculate how much taxes each Belarusian pays

One of the most common questions that clients ask us when opening companies is: What taxes do businesses in Belarus pay?».

In this article, we will try to give you a complete picture of the tax burden of organizations and talk about the basic rules of tax law.

So, any legal entity, regardless of the legal form, can choose one of two taxation systems: general or simplified. The simplified system provides for two more subsystems - with VAT and without VAT.

Regardless of which system the company chooses, it makes mandatory payments related to:

A) payment of wages to employees:

The company is obliged to pay 34% of the wage fund to the Social Security Fund - these are deductions for compulsory social insurance;
0.6% of the wage fund is transferred as compulsory insurance against accidents at work.

The employer is obliged to deduct 13% of income tax and 1% of contributions to the Social Security Fund from the employee's salary and transfer it to the budget and the Social Security Fund, i.e. this does not refer to the burden of the organization, but it is important to know in order to understand the responsibilities of the employer.

B) import of goods into the territory of the Republic of Belarus: as a general rule, import VAT is paid at a rate of 20% of the value of the imported goods, with the import of certain goods the rate may be 10%.

Now let's take a closer look at the taxes associated with the implementation of entrepreneurial activities.

General system of taxation provides for payment:

VAT at a rate of 20% of turnover on the sale of goods, works, services, property rights.
Income tax at a rate of 18% of the profits received.
Other taxes in the presence of objects of taxation (land tax, real estate tax, excises, environmental tax, etc.)

Simplified system taxation can be applied from the moment the company is created or transferred to it from the next year, it is impossible to switch to it during the year. Starting from the new year, only those business entities that, during the first 9 months of the current year, have the right to switch to the simplified tax system:

the number of employees is no more than 100 people on average;
the amount of gross proceeds on an accrual basis is no more than 1,465,565 Belarusian rubles. For individual entrepreneurs, by the way, this amount should not exceed 315,000 Belarusian rubles.
To switch to the simplified taxation system from January 1, 2021, the amount of gross revenue for 9 months, on an accrual basis from the beginning of 2020, is set to no more than 1,538,843 Belarusian rubles for organizations and 330,750 Belarusian rubles for individual entrepreneurs.

Not entitled to apply USN:

organizations and individual entrepreneurs:

producing excisable goods;
selling jewelry and other household items made of precious metals and precious stones.
exercising property rights to means of individualization of participants in civil circulation, goods, works or services (company names, trademarks and service marks, geographical indications, etc.);
who are residents of free economic zones, the special tourist and recreational park “Augustow Canal”, the High-Tech Park, the Chinese-Belarusian Industrial Park “Industrial Park “Great Stone”;
providing for rent (financial lease (leasing)), other paid or free use of capital buildings, their parts, parking spaces that are not under their ownership, economic management, operational management;
who are parties to a simple partnership agreement (agreement on joint activities);
carrying out activities with digital signs (tokens) for their acquisition (mining, receipt), alienation (transfer, placement, use), other than the alienation (acquisition) of digital signs (tokens) for Belarusian rubles, foreign currency, electronic money and their exchange for other digital signs (tokens);
organizations engaged in: lottery activities; activities for organizing and conducting electronic interactive games; activities in the gambling business; real estate activity; insurance activity; banking activity (banks);

2. organizations that are:

professional participants of the securities market;
holding members;
microfinance organizations;
investment funds, specialized investment fund depositories, managing organizations of the investment fund.

In addition, organizations producing agricultural products in the territory of the Republic of Belarus and paying a single tax for producers of agricultural products cannot apply the simplified tax system; organizations that are payers of a single tax on imputed income; unitary enterprises whose property is owned by a legal entity, as well as commercial organizations, more than 25% of whose shares are owned by one or more organizations.

Tax rates under the simplified system:

A) three (3) percent from gross revenue:

for organizations and individual entrepreneurs paying VAT.

B) five (5) percent from gross proceeds - for organizations and individual entrepreneurs who do not pay VAT.

This tax rate without paying VAT can only be applied by enterprises with an average number of employees for the period from the beginning of the year to the reporting period inclusive of no more than 50 people, if the amount of their gross revenue on an accrual basis from the beginning of 2020 is set to no more than 1,404,286 Belarusian rubles.

C) sixteen (16) percent in relation to gratuitously received goods (works, services), property rights, funds.

This article provides general information about the taxation of enterprises in Belarus. We strongly recommend choosing a taxation system only after studying the Tax Code of the Republic of Belarus and together with a specialist in this field.

Materials used for the article:

24.02.2020

essence income tax consists in paying the state a predetermined share of the revenues received. Income tax is usually calculated as a percentage, but fixed amounts can also be assigned.

Income tax in the Republic of Belarus is not charged on the income of organizations, therefore it would be correct to call it personal income tax.

It is desirable for all citizens to understand the nuances of calculating and paying income tax. incorrectly collected tax directly affects their disposable income.

Income tax rates in Belarus

Different countries use progressive (Germany, France, USA, China, etc.) or flat income tax (Russia, Latvia, Lithuania, Georgia, etc.). Under a progressive system, the poor sometimes pay no tax at all or pay very little, and the income tax for the rich can be more than half of their income. A flat income tax rate means the same percentage of deductions for everyone.

In the Republic of Belarus, different income tax rates are applied, but they do not depend on the amount of income, but on its source and other circumstances.

According to the website of the Ministry of Taxes and Dues in the Republic of Belarus, since the beginning of 2020, the following income tax rates have been in effect:

16% of income tax is charged on income from the main activities of individual entrepreneurs, lawyers and notaries, the basis is subparagraph 3.1 of paragraph 3 of Article 214 of the Tax Code of the Republic of Belarus;
16% is charged on the excess of expenses over income - paragraphs. 3.2, paragraph 3 of Art. 214 Tax Code of the Republic of Belarus;
16% is paid by individuals on income from illegal business activities - paragraphs. 3.2, paragraph 3 of Art. 214 Tax Code of the Republic of Belarus;
13% - the main rate on all incomes of individuals (including employees), except for the above and below - paragraph 1 of Art. 214 Tax Code of the Republic of Belarus;
A special case is an individual income tax of 9% from individuals working in the High-Tech Park, incl. entrepreneurs. This rate is justified not by the Tax Code, but by Presidential Decree No. 12 “On the Hi-Tech Park”.
6% is charged from dividends if for 3 years in a row there was no distribution of profits between domestic recipients - paragraph 5 of Art. 214 Tax Code of the Republic of Belarus;
4% is assigned to the amount of winnings received from legal entities of the Republic of Belarus (legally operating casinos, bookmakers, lotteries) - clause 4 of Art. 214 Tax Code of the Republic of Belarus;
0% is paid on dividends if the profit has not been distributed for 5 years before - paragraph 6 of Art. 214 of the Tax Code of the Republic of Belarus.

Income tax on renting an apartment and other residential and non-residential real estate is prescribed in fixed amounts. These fixed amounts are determined by the councils of deputies of the regions and the city of Minsk.

Benefits and deductions for income tax in 2020

Some personal income may not be taxed at all. So income tax is not charged on pensions, benefits and other social payments. There are incomes that are not taxed only up to a certain amount.

In cases specified by law, income tax deductions are prescribed. The deduction is the amount by which the taxable base is reduced, i.e. with an income of 400 rubles. and deducting 100 rubles, income tax will be calculated from 300 rubles. (this is a conditional calculation).

Since the beginning of 2020, the following procedure for income tax benefits has been in force in Belarus:

Full exemption from income tax is received by employees of budgetary organizations, but only once a year for the amount of the payment for rehabilitation. This amount has not been determined.
Vouchers for children to health-improving institutions paid by an organization or an entrepreneur are exempted from income tax. Restrictions: 888 rubles. per child once a year.
Gifts in cash and non-monetary form are exempted from income tax, in the amount of not more than 7,003 rubles. in year.
The amounts received from the employer, but not being a salary, are not subject to income tax: gifts, prizes, etc., but not more than 2,115 rubles. per year from a single source. This also applies to pensioners who receive these benefits from a former employer.
Income tax is not charged on income from other organizations, including gifts, etc., if their value for each source does not exceed 140 rubles.
Income tax is not levied on the organization's payments for an employee for insurance services, incl. medical, in the amount of not more than 3,622 rubles. per year from a single source.
They do not pay income tax from gratuitous assistance in the amount of not more than 13,994 rubles. per year from all sources.
Payments to members of a trade union from a trade union organization are also not subject to income tax until their amount exceeds 423 rubles. in year.

There are also different grounds for income tax deductions in the Republic of Belarus.

Standard tax deduction - today it is 117 rubles. which should be subtracted from income not exceeding 709 rubles. Then the taxable base will be the remaining 592 rubles.
Income tax deduction for parents (guardians) of minor children and some other dependents is 32 rubles. For two children or more - 65 rubles. for every child.
65 rub. single parents (guardians), parents of disabled children also have a tax deduction;
For payers with disabilities of groups I and II, there is a tax deduction of 165 rubles. Such deductions are assigned to persons who have received the title of Hero, full cavaliers of some orders and some other categories.

The following are also deductible without limiting the total amount:

Funds spent to pay for the first education of the payer or members of his family.
Money spent on life and health insurance, future pensions, health insurance.
The cost of purchasing a home. However, income tax on the construction and purchase of housing is not charged only to those who needed to improve their living conditions and were registered in this status.

The list of income tax benefits and deductions does not end there. Full information on this can be found in Chapter 18 of the Special Part of the Tax Code, as well as in other legislative acts regulating this topic. There are quite a few of them, so sometimes it is better to seek the advice of a specialist.

Income tax for sole proprietorship

For individual entrepreneurs, the calculation of income tax is carried out according to special rules. The fact is that other individuals are taxed only on the amount intended for personal consumption. And the income of the entrepreneur is all the funds that come to him, incl. commercial money. Another difference is that the rate is not 13%, like other individuals, but 16%. However, individual entrepreneurs have the opportunity to deduct expenses incurred in the course of their activities from the tax base.

Here is an example of calculating income tax for an individual entrepreneur:

during the reporting period, an income of 3,000 rubles was received from the main activity.
deductible expenses amounted to RUB 2,500.

Income tax is calculated as follows:

3,000 - 2,500 = 500 rubles
16% from 500 rubles. = 80 rubles.

As a result, the amount of income tax of 80 rubles is subject to payment.

Real calculations are more complicated, but the general principle is just that.

Paying income is more profitable for entrepreneurs with a large and documented expenditure part. Other individual entrepreneurs often prefer a simplified taxation system (STS) or a single tax. Those who choose these forms do not pay income tax.

income tax return

An income tax declaration is a document that gives an idea of the sources and amount of taxable income, the calculation method and the amount of tax payable. The majority of working residents of Belarus do not make such declarations, because are employees and the employer (accounting) conducts the calculation for them.

But entrepreneurs, notaries, lawyers and other persons independently engaged in commercial activities personally draw up and submit an income tax return to the tax authorities.

The declaration is always filled out on the prescribed form. It is submitted either in paper form to the tax office at the place of registration, or in electronic form on the website of the Ministry of Taxes and Duties.

The deadlines for filing the declaration are determined by the Ministry of Taxes and Taxes. So the income tax return for 2019 must be submitted no later than March 31, 2020.

What the law says

Tax Code of the Republic of Belarus (Special Part)
Decree of the President of the Republic of Belarus "On the Hi-Tech Park"
Tax Code of the Republic of Belarus (Special Part): Chapter 18. Personal Income Tax

conclusions

Personal income tax in the Republic of Belarus applies to most of the income received in cash, as well as in goods and services. Therefore, it is better to find out in advance what becomes the basis for calculating income and what does not. Information about this should be sought in Chapter 18 of the Special Part of the Tax Code.

It will not be possible to save a lot on income in Belarus. The bulk of the population pays 13%, and deductions in most cases have little effect on overall income.

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In 2017, additions and amendments to the Tax Code came into force. Alexander Zhuk, director of the legal company "SPRAVA Consulting", told what tax rates for the general taxation system exist in Belarus and what has changed since January.

— Consider the main taxes that legal entities registered in Belarus pay under the general taxation system, and what changes have affected some of them since 2017.

Director of the law firm "SPRAVA Consulting"

value added tax

The VAT rate is 20% of the turnover for the sale of goods, works or services.

Amendments to the Tax Code and to No. 99 “On the Collection of Value Added Tax” came into force. The terms for accepting import VAT for deduction have been reduced. For 2017, the period of acceptance for deduction (refund) of VAT amounts for goods imported by Belarusian importers into the territory of Belarus from outside the EAEU is extended. But under the new rules, the deduction of "import" VAT will be made with a delay of 60 days, in 2016 this rate was 90 days.
For VAT calculations and the application of tax deductions, only electronic invoices are used - ESCF. The general term for issuing / uploading electronic invoices to the portal created for working with ESCF has been changed. The deadline has been shifted from the 5th day to the 10th day of the month following the month of the day of shipment of objects of taxation (goods and services)

income tax

The rate of this tax is 18% of taxable income. The taxable base for calculating income tax is gross profit, dividends and income.

The following income is exempt from this tax:

From the production of rehabilitation facilities and services for the disabled
From the production and sale of crop products, animal husbandry, fish farming, beekeeping, baby food
From the tourism, hotel, sports and health business at the facilities included in the approved list, within three years from the date of opening of these facilities
Enterprises with at least 50% disabled employees (except for trade and intermediary activities)
Insurance organizations directed to increase savings on personal accounts of insured persons under voluntary life insurance contracts
Received at roadside service facilities within 5 years from the date of their opening
From the production and sale of cars and their components for 3 years in the manner prescribed by the Ministry of Industry
From the production and sale of innovative goods according to the list of the Council of Ministers
From the production and sale of high-tech goods according to the list of the Council of Ministers, if the share of proceeds from the sale of such goods is more than half of the total proceeds, etc.

The income tax rate can be reduced:

For manufacturers of high-tech goods, works and services included in the approved list, the income tax in this case will be 12%. At the same time, the difference of 6% should be used for the technical re-equipment of companies
Income tax on dividends for legal entities is 12%
For manufacturers of laser-optical equipment (if the share of these products is at least half of the cost of production volume), the income tax rate will be 10%
For members of the Scientific and Technological Association at BSU, in terms of proceeds from the sale of information technologies and services for their development, a 5% income tax is established

The amendments to the Tax Code, effective from January 1, 2017, established that when calculating income tax, only economically justified costs will be taken into account (clause 2, article 130 of the Tax Code-2017).

The deadline for submitting a tax return is no later than the 20th day of the month following the expired reporting period, and the deadline for paying taxes is no later than the 22nd day of the month following the reporting period.

Property tax

The rate of this tax is 1% of the residual value of fixed assets.

Since 2017, a tax exemption has been introduced for permanent mothballed buildings that are included in the List of unused (inefficiently used). Previously, they were not exempt from paying tax.

For legal entities, the taxable base is calculated annually based on the residual value as of January 1 of the reporting year. The procedure for paying real estate tax is quarterly, no later than the 22nd day of the first month of the quarter following the reporting one.

Land tax

All legal entities that own land plots in Belarus pay this tax, while foreign and joint ventures pay it, like Belarusian companies - without benefits in this area.

The land tax rate (or rent for land) is calculated based on the cadastral value of the land plot, and for agricultural land - from the cadastral valuation score. Land tax rates for legal entities also depend on the area and territorial location of the land plot, the presence of increasing coefficients, etc.

At the same time, from 2017, for calculating the land tax, the cadastral value of a land plot will be set only in Belarusian rubles.

Organizations that use the simplified taxation system must pay tax on all land plots - previously there was no tax on plots of less than 0.5 hectares.

The cadastral value of the land plot and its target category have a significant impact on the amount of land tax. So, plots with different purposes have different tax rates when calculating land tax. Increased coefficients are applied, as a rule, to commercial organizations and organizations whose activities may adversely affect the environment.

Local authorities can increase the amount of land tax in relation to real estate plots that are not used for their intended purpose, up to 10 times.

Article 193 of the Tax Code provides a complete list of those categories of land, the owners of which are exempted from paying land tax in full. This tax exemption does not apply to land used for business or farming. At the same time, local authorities can provide benefits to individual payers depending on their property status.

If a land plot is in use or in shared ownership by several persons, then the tax on land plots is charged to each payer in proportion to the area of immovable property in use or a share in joint property.

Since 2017, new rules have come into force that relate to the rent for state-owned land plots - the multiplying factor has been increased from 2 to 2.5 times.

Land tax is paid every quarter in equal installments. The payment deadline is no later than the 22nd day of the second month of the quarter, and for agricultural land no later than April 15, July 15, September 15, November 15 (in the amount of one quarter of the annual amount). In case of an erroneous overpayment of the amount of tax, this difference is reimbursed.

Mandatory payments from the wage fund

income tax rate is 13%. There are a number of exemptions for applying the income tax rate of 9%, which apply to individual entrepreneurs - residents of the Park of High Technologies. The amount of income tax is withheld from the employee's salary.

Deductions to Belgosstrakh(accident insurance) account for less than 1% of the wage fund (0.6% on average). The amount of deductions is set depending on the type of activity of the organization.

Payments to the Social Protection Fund(insurance and pension contributions) make up 35% of the wage fund:

1% of salary is withheld from the employee
34% - paid by the employer

The wage fund is understood as the amount of wages accrued to employees of the organization for a calendar month.

A feature of the tax legislation of the Republic of Belarus is the fact that the Tax Code consists of two parts (general and special), adopted with a large time interval.
The general part, adopted on December 19, 2002, states that the tax legislation consists of:

tax code
relevant laws
international treaties
acts of the President and the Government
acts of state authorities and local self-government.

a common part establishes a general system of taxes, introduces, changes, terminates their action on the territory of the country, gives definitions of basic terms and concepts, regulates all general issues of taxation.

Special part, adopted on December 29, 2009, contains a detailed description of all taxes, various tax regimes in force in the country.

All taxes in Belarus are divided into: republican And local

Republican taxes

value added tax. Payers are organizations and entrepreneurs, and when importing some goods, also individuals. Object - sales turnover for certain types of goods, works and services, as well as imports. The tax base is cash and other receipts from the sale of these works, services and goods. The minimum rate is ten percent.

excises. Payers are manufacturers and importers of excisable goods. Traditionally, excisable products include alcohol-containing and tobacco products, certain types of fuel and fuel oils, disinfectants and household chemicals. The rates depend on the type of product and are set both in a fixed amount and as a percentage of its cost.

income tax. Payers are organizations. Object - gross profit, base - the difference between income and expenses in a certain period. The general rate is eighteen percent, preferential rates are set for science-intensive industries and manufacturers of high-tech goods.

Tax on income of foreign organizations who do not carry out activities on the territory of the republic through a permanent representative office. The tax base is profit minus confirmed expenses. The rate depends on the type of activity carried out and varies from six to fifteen percent.

Personal income tax. The general rate is thirteen percent. A preferential rate of nine percent is set for employees who receive income from residents and non-residents of the Park of High Technologies. The rate for entrepreneurs and notaries is sixteen percent, winnings are subject to a four percent rate.

Property tax. Payers - owners and legal owners of real estate. The tax base is determined on the basis of the residual book value of the property or its valuation data. The rate varies from 0.1 to one percent, depending on the type of property and the name of the payer.

Land tax. The payers are the owners and legal owners of the land plots. The base is the cadastral value of the land. Rates are different for land of different categories.

environmental tax. Payers - persons carrying out harmful emissions into the environment, as well as waste disposal. The base is the volume of such emissions. The rate depends on the type of harmful effect.

Tax on extraction (withdrawal) of natural resources. Payers - all persons engaged in such mining, except for state organizations. Base - the volume of production. The rate is set depending on the type of mineral.

Collection for the passage of motor vehicles of foreign states on public roads. The rate depends on the type of transport and its weight. Vehicles weighing more than five tons are taxed.

Offshore fee. Payers are residents. Object - the transfer of funds to an offshore zone and the fulfillment of other (non-monetary) obligations to a non-resident registered in an offshore. Base - the cost of the transfer or the price of the contract. The rate is fifteen percent.

Stamp duty. Object - operations with bills of exchange. Base - the amount of the bill. The rate for cases directly provided for by law varies from fifteen to twenty-five percent, depending on the type of operation, as well as the parties to the transaction. In cases not expressly stipulated by law, the fee rate is 0.1 percent.

Consular fees, state fees, patent fees. Object - various legally significant actions carried out at the request of citizens and legal entities, respectively: by diplomatic missions and consular offices of the republic, various authorized state institutions, the state institution "National Center for Intellectual Property". Rates depend on the type of action requested.

There are also a number of fees and duties classified by the Tax Code of the Republic of Belarus as tax payments, the rates and procedure for collecting which are regulated by other regulations.
These fees include:

customs duties and fees (established by decrees of the President of the Republic of Belarus)
recycling fee (established by decree of the President of the Republic of Belarus dated 04.02.2014)
collection for financing public expenditures (established by the Decree of the President of the Russian Federation of April 2, 2015 "On the Prevention of Social Dependency").

Local taxes and fees

dog ownership tax. The payers are the owners of the animals. Object - dogs older than three months of age. The rate is calculated based on the height of the dog.

Resort fee. Payers are individuals. The object is the fact of being in health-improving institutions. Base - the price of services rendered or vouchers. The rates are different, but cannot be more than five percent.

Collection from manufacturers. Payers - persons who collect and harvest mushrooms, plants, other raw materials for the purpose of their further industrial processing and sale. Base - the cost of harvested, the rate can be no higher than five percent.

Special tax regimes

On the territory of the republic, a large number of special tax regimes are provided, which include:

simplified taxation system
uniform taxes: from individual entrepreneurs and other individuals, for producers of agricultural products
gambling business tax
lottery tax
fee for the implementation of: handicraft activities, activities in the field of agro-ecotourism
a single tax on imputed income

These regimes simplify taxation for certain areas of activity, as a rule, replace in whole or in part several taxes in various combinations.

Conclusion

Assessing the tax system of Belarus, it should be noted that its main tax law is modern, understandable, and detailed. There is a tendency to stimulate the development of high-tech industries, as well as agricultural producers. This is done by providing privileges and preferences to these categories of taxpayers.

The legislation has carefully worked out a large number of special simplified tax regimes compared to other CIS countries, which has a beneficial effect on the development of small and medium-sized businesses.

Tax rates for basic taxes (income, VAT, income) are very liberal. However, the total amount of taxes in the country is considerable.

Even with a very general analysis of the main provisions of tax legislation, it is especially striking that the amount of taxes collected from individuals is excessive. In addition to traditional taxes, there are also those that are not found in any other CIS state: a tax on dog owners, a fee to finance government spending, and a resort tax.

Assessing whether this is good or bad is difficult. Given the financial stability and high level of income of the population, the presence of these taxes has a positive effect on the interests of the state, since at low rates for taxpayers, these fees and taxes are not too burdensome. But if the level of income of the population is low, then the collection, in addition to the main, and such secondary fees, does not seem fair and correct.

The article was prepared by specialists of SoyuzPravoInform LLC.

So, you have opened an individual entrepreneur, registered an LLC or a unitary enterprise, and now you can work calmly. Then there is the issue of taxation. What taxes and how best to pay and what will happen in case of an error? Together with Belarusbank and lawyers, we understand the nuances.

It is worth saying that there is practically no global difference in approaches to taxation for individual entrepreneurs and legal entities. In most cases, only a few taxation systems are used in Belarus: simplified (two options) and general.

What is the general system of taxation and when does it apply?

Under the general taxation system, you will have to pay income tax and value added tax.

Income tax is 18% per month for legal entities and 16% for individual entrepreneurs. In some areas of business, the rate may be lower or higher, for example, insurance companies pay 25%. And manufacturers of some high-tech goods - 12%, and so on. The value added tax in Belarus is 20%.

- If you opened a limited liability company or a unitary enterprise and did not notify the tax office of your choice in any way, then the tax office will automatically apply the general taxation system to you,- says the lawyer of the company Revera Ekaterina Popova.

How to calculate income tax?

Income tax is calculated from the amount of net profit. If schematically, then net profit is the amount that you received by subtracting the amount of costs from the total revenue.

So, from the amount of net profit (specialists call it the taxable base), you need to calculate 18% or 16% (depending on whether you are a legal entity or an individual entrepreneur). The resulting figure is the amount that you need to attribute to the tax. But at the same time, it is important to remember that not all costs can be deducted to calculate the tax.

- For example, if a company manufactures chairs and buys wood - these costs can be taken into account,- explains Ekaterina. - But if a company decides to buy a TV set for its employees' rest room and does not prove its connection with the company's production activities, then in this case the cost of the TV set cannot be included in the costs and the tax base cannot be reduced.

What is the feature of the simplified taxation system?

The simplified system involves the payment of tax at a reduced rate. There may be two options here:

5% of the company's revenue without paying value added tax;

3% of the company's revenue with VAT (still the same 20%).

The main difference between the "simplified" system and the general system is that costs are not taken into account here. You pay taxes on gross receipts - the total amount of money for goods and services that you received in a month (or quarter).

- From the moment of registration, the company has 20 working days to notify the tax office that the simplified tax system will be applied, Catherine notes. - If suddenly the company changes its mind, then you can return the general taxation system.

When can't you use "simplification"?

According to the lawyer, in order to apply the general taxation system, a company must meet certain criteria. There are activities when the simplified system cannot be applied in principle. These are real estate and insurance activities, sublease of premises and so on.

- It is also impossible to apply the simplified tax system if the founder of an LLC or a unitary enterprise is not an individual, but a legal entity with a share in the authorized capital of more than 25%,- explains the lawyer.

But most importantly, the “simplification” cannot be applied if the company has exceeded certain limits on revenue and the average number of employees.

- For companies, the average number of employees should not exceed 100 people, and the annual revenue should not exceed 1,949,208 rubles (about $900 thousand),- explains the expert. - As for individual entrepreneurs, here the annual limit in 2019 will be 420 thousand rubles. Individual entrepreneurs already have restrictions on the number of employees: you can hire no more than three people.

What "bonuses" in taxes do individual entrepreneurs have that companies do not have?

Individual entrepreneurs can also apply both general and simplified taxation systems. At the same time, since 2019, even those individual entrepreneurs who were required by law to pay a single tax (for example, food sales, custom-made clothing, photography, a more detailed list can be found at the link) can choose whether to continue to pay a single tax or switch to another system of taxation.

Under the simplified system, the same principles apply for individual entrepreneurs as for legal entities: either you pay 5% of gross revenue, or 3% of revenue and VAT. Under the general system, an entrepreneur pays income tax at a rate of 16%. Moreover, the costs in this case are also taken into account in the presence of supporting documents.

But here's what's interesting. After paying taxes, an individual entrepreneur can safely use the income anywhere. But for legal entities, not everything is so simple. For comparison: in order for the members of the organization to receive income, after paying corporate taxes (tax under the simplified tax system or income tax), it is also necessary to withhold income tax at a rate of 13% when paying dividends to individuals.

But as of 2019, there are two exceptions to this rule:

If the company's profit has not been distributed for 3 years, then upon receipt of dividends, the income tax rate will be 6%;

If within 5 years the company's profit has not been distributed - when receiving dividends from the company, you do not need to pay income tax, the rate will be 0%.

What will happen if the revenue has become more than the limit, and you still apply the "simplification"?

- From the month following the reporting period (you can have either a month or a quarter), you must already apply the general taxation system, Catherine notes. - It is not necessary to notify the tax office, the company itself or an individual entrepreneur must calculate taxes in a new way. If you underpay tax and apply the simplified tax system, then you can get both a fine and penalties for this.

What is more profitable - the simplified tax system or the general taxation system?

- If this is trade and large-scale production and revenue exceeds costs by only 20% or less, then you need to think about the general taxation system. If the costs are less than 80% of the revenue, then it is more profitable to use a simplified system,- explains Ekaterina. - Therefore, small and medium-sized businesses, as a rule, are interested in applying the simplified tax system without paying VAT. Especially if we are talking about developers, services, and so on. In this case, it is easier to keep accounting records, the company is not so tied to confirming costs, since in the end it does not affect the final tax amount. Therefore, there is less risk of accounting errors, and hence financial losses (fines, penalties, and so on).

Our partner "Belarusbank" has developed loans that provide attractive conditions for small businesses with an interest rate of 5% per annum. An entrepreneur can choose the appropriate option depending on the goals and size of the business. See the table on our partner's website.

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