The tax status of branches of foreign companies is determined

According to the draft of the published Tax Code amendments, the branches of foreign companies in Belarus will have the status of permanent establishments of foreign companies.

Reminder, on 19.11.2024 the Civil Code amendments will come into force according to which it will be allowed to open in Belarus not only representative offices by foreign companies but also branches.

According to the father amendments in part 1 of Article 180 of the Tax Code, a branch of a foreign company will be recognized as a permanent establishment of foreign companies on an equal footing another permanent place of business through which a foreign company is carrying out its business and other activities in Belarus.

Branches of foreign companies will be obliged to:

• open a current (settlement) bank account in Belarus;
• be tax-registered within 10 working days from the date of opening;  
• fulfil the duties of a tax payer of Belarus, including keeping accounting records in accordance with the procedure established, submitting tax declarations (calculations), annual individual reports, accounting policy, paying taxes, fees (duties);
• fulfil the duties of tax agents in terms of payment of income tax from employees and fulfil other duties.

To calculate and pay income tax, the branch's gross profit will be determined as the sum of the foreign company's profit received through the branch from the sale of goods (work, services) and property rights and non-operating income reduced by the amount of non-operating expenses.

The branch's expenses will include expenses (non-operating expenses) incurred in Belarus as well as outside (Foreign expenses). Foreign expenses may include management and administrative expenses as well.

For accounting Foreign expenses, they shall correspond with the following:

• to be directly related to the branch's activities;
• be confirmed by an auditor's opinion issued by an audit organization (auditor) of a foreign state or by a person carrying out tax consulting activities in a foreign state.