In 2019, a number of changes to the current legislation is planned, which may change the usual rules of business conducting, and, accordingly, there will be necessity to consider them when doing business. This review has been prepared by the general commercial practice of SBH Law Offices, and its head – advocate Anastasiya Malakhova.
Civil Code: the conclusion of contracts in a new way
In February 2019, amendments to the Civil Code will come into force with regard to the procedure for concluding transactions in writing. It will enable to sign contracts not only by hand signing by each of the parties, but also by signing using communication tools and other technical means, computer programs, information systems or information networks, if such method of signing allows to establish reliably that the corresponding text document is signed by the person or persons conducting the transaction.
Tax Code: new edition and new rules
As of January 1, 2019, the new version of the Tax Code has been introduced. Among the most significant changes for business could be considered the following:
- Terms for offsetting and tax refund increase from 3 to 5 years.
- The amount of penalties accrued for non-payment of tax is limited: the amount of the penalty will not exceed the amount of the tax liability (now the amount of the penalty is not limited and may in fact exceed the amount of unpaid tax in several times).
- The possibility of paying taxes at the expense of the debtor-debtor of the individual entrepreneur is settled. Previously, this possibility was only available in relation to legal entities.
- For foreign companies providing services in electronic form to individuals in Belarus, the obligation to keep record of special tax and accounting records for activities in Belarus is introduced.
- The obligation is introduced for Belarusian organizations to provide information to the tax authorities not only about opening accounts in foreign countries, but also reporting on cash flows on these accounts.
- The size of the investment deduction for taxpayer-organizations of income tax increases by 1.5 times.
- This provided to reduce the income tax rate in respect of dividends paid from retained earnings: within three years – to 6%, within five years – to 0%.
- Normalized costs for income tax purposes are introduced, which can be taken into account as part of costs in the amount of not more than 1% of revenue, including VAT for the previous year.
- Transactions with related parties or with organizations (individual entrepreneurs) applying special tax regimes will be subject to the control of transfer pricing. In addition, 20% deviation from market prices is excluded, which is consistent with international approaches.
- From January 1, 2019, large payers will be able to conclude pricing agreements (for up to three years) with the Ministry of Taxes and Duties, in which the method for determining the market price will be agreed applied to controlled transaction.
Decree No. 488: reincarnation in the Tax Code
The norms of the repealed Decree No. 488 are included in the Tax Code (paragraphs 1.16 of paragraph 1 of Article 22 and 33 of the Tax Code), while the grounds for the additional assessment of taxes are expanding. In particular, the tax amounts may be assessed not only when the primary accounting document is recognized as legally invalid (as it was in Decree No. 488), but also on the fact of the operation focus on tax evasion (non-payment / incomplete payment, unreasonable offset / refund taxes). The conclusion about the focus of the operation will be made by the tax authority during the audit and can be challenged by the taxpayer in court.
Rules for conducting foreign exchange transactions: without the permission of the National Bank
From March 1, 2019, the rules for conducting currency transactions will be changed. Currency transactions that previously could only be performed with the permission of the National Bank will be made according to the registration procedure without the need for prior permission. In this case, registration will be subject to all loans raised by a resident from non-residents, regardless of the terms of the loan agreement.
The Law “On Investments”: investor’s protection
The change of the Law of the Republic of Belarus “On Investments” is possible in 2019 with the view to determine the amount of compensation to be paid to the investor in the event of nationalization or requisition of property, that is being an investment or formed as a result of investment. The introduced changes are aimed at protecting rights of the investor when concluding investment contract and during its execution.
The Law “On Copyright and Related Rights”
In 2019, a change in the Law “On Copyright and Related Rights” is possible. The procedure for concluding and executing licensing agreements for objects of copyright (including software), including on the terms of open licenses, may be adjusted. The changes will contribute to the development of the IT industry, but will require IT companies to develop policies that define the rules for working with open licenses and their usage in developing their own products.
The Law "On Labor Protection"
In 2019, amendments to the Law of the Republic of Belarus “On Occupational Safety” are planned, including the introduction of a state examination of working conditions, the expansion of provisions on training, internship, briefing and testing knowledge on labor protection issues. The planned changes are aimed at reducing the control powers of the state examination bodies, some of the functions in the field of labor protection belong to the exclusive competence of the employer (they are implemented by the employer independently). It is planned to allow in certain cases to issue conclusions for employers to make decisions on the use of women's labor in jobs included in the list of heavy jobs and jobs with harmful and (or) dangerous working conditions in which the employment of women is currently prohibited (women may be allowed). It is planned to eliminate the obligation of the employer to assist in the training of persons authorized for labor protection in the organization (this becomes the personal responsibility of the persons concerned), while the employer checks the knowledge.
Code of Administrative Offenses: illegal audit
In 2019, amendments to the Code of the Republic of Belarus on Administrative Offenses and to the Procedural-Executive Code of the Republic of Belarus on Administrative Offenses are planned. Changes will be made to the article 12.31 of the Code on Administrative Offenses, which establishes the responsibility for evading from mandatory audit. Officials of the bodies of the Ministry of Finance of the Republic of Belarus and financial departments (departments) of local executive and administrative bodies are given the right to draw up protocols on an administrative offense under Part 2 of Art. 12.7 of the Administrative Code "Illegal entrepreneurial activity", because in accordance with the draft Law of the Republic of Belarus "On Amendment of the Law of the Republic of Belarus" On Auditing Activities", conducting of auditing activities by legal entity, individual entrepreneur not included in the State Register of Audit Organizations, auditors-individual entrepreneurs will be illegal.
Criminal Code: defamation, bribery and credit taking
On December 20, 2018, a draft law on amendments introduction to the Criminal Code of the Republic of Belarus and the Criminal Procedure Code of the Republic of Belarus was approved. In accordance with the planned changes, criminal liability shall be increased for libel and insult, including for committing such actions on the global computer network Internet. As part of criminal prosecution in connection with the commission of crimes against property (theft, fraud, theft), fine is provided instead of property confiscation. The wording of article 237 of the Criminal Code of the Republic of Belarus is changed from “Looting a loan or subsidy” to “Illegal obtaining of loan or subsidy”, while the individual entrepreneur or official of legal entity will be held liable only on the condition of actual receiving a loan or subsidy on known to be false documents.
Liability for committing an act that qualifies as official negligence is specified (art. 428). Acceptance of a bribe (art. 430) will be considered the acceptance by an official of material values or the acquisition of property benefits for himself or for third parties (including if such material values are transferred, and property benefits are provided to third parties as an official remuneration), in this confiscation is replaced by a fine.
Introduction of an Annex is considered to the Criminal Procedure Code, which establishes a list of property that cannot be seized in order to ensure compensation for damage (harm) caused by a crime, recovery of the proceeds obtained by criminal means, a civil claim, and other property penalties. In particular, it provides the exclusion of seizure on residential buildings, where the permanent resident is a person who’s property is being arrested and his family; land where the house and outbuildings are located.
Thus, in 2019, the focus on simplifying the rules of doing business and protecting its interests will remain, as well as legislation improving aimed at maximization of the usage of IT for the development of entrepreneurship and the economy of the country.
“Sysouev, Bondar, Khrapoutski” (SBH Law Offices) is one of the largest in Belarus team of advocates and lawyers with twenty six years of professional practice experience. Offices in Minsk and Kiev provide high-quality legal assistance in such areas as: dispute resolution, mergers and acquisitions, international arbitration, banks, finance, insurance, real estate and construction, transport and logistics, IT, fintech, hardware, etc. SBH Law Offices expertize is confirmed by international legal rankings such as IFLR1000, Chambers and Partners, The Legal 500, WWL, Best Lawyers, etc.
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