Specifics of application of Double Taxation Treaties in Belarus

1) Which principal Double Tax Treaties (DTTs) are currently in force in Belarus?

Belarus has concluded over 70 Double Tax Treaties (DTTs). These treaties are in force with countries including, among others, Austria, Azerbaijan, Armenia, Bangladesh, Bahrain, Belgium, Bulgaria, the United Kingdom, Hungary, Venezuela, Vietnam, Georgia, Denmark, Egypt, Zimbabwe, Israel, India, Indonesia, Iran, Ireland, Spain, Italy, Kazakhstan, Qatar, Cyprus, China, Hong Kong (China), the Democratic People’s Republic of Korea, the Republic of Korea, Kyrgyzstan, Kuwait, Laos, Latvia, Lebanon, Libya, North Macedonia, Moldova, Mongolia, the Netherlands, the United Arab Emirates, Oman, Pakistan, Poland, Russia, Romania, Saudi Arabia, Serbia, Singapore, Syria, Slovakia, Slovenia, Sudan, the United States, Tajikistan, Thailand, Turkmenistan, Turkey, Uzbekistan, Finland, France, Germany, Croatia, the Czech Republic, Switzerland, Sweden, Sri Lanka, Ecuador, Equatorial Guinea, South Africa, and Japan.

From June 1, 2024, to December 31, 2026, the application of DTTs with the United States and EU countries has been suspended in respect of income derived from dividends, interest, and capital gains. Certain countries, such as the Czech Republic and France, have also mutually suspended the application of DTTs with Belarus.

Some countries, such as Lithuania and Estonia, have permanently terminated their DTTs with Belarus, effective from January 1, 2026.

2) What types of income are covered by Double Taxation Treaties? 

DTTs generally govern the taxation of the following types of income: 

• Dividends;
• Interest;
• Royalties;
• Capital gains;
• Business profits;
• Gains from the alienation of property;
• Income of individuals.

3) How is tax residency determined for DTT purposes in Belarus?

According to Article 17 of the Belarusian Tax Code, an individual is recognized as a tax resident of Belarus if they are physically present in the country for more than 183 days in a calendar year.

If an individual qualifies as a tax resident of both Belarus and another state, the applicable DTT determines the individual's residency status.

An entity is recognized as a Belarusian organization if its place of incorporation is Belarus, i.e., the place of its state registration. If the entity is not operating at its registered address, the location of its supreme governing body (i.e., the place where it exercises its powers in accordance with the charter) is used to determine residency. If there is no activity at that location either, the place where the permanent executive body exercises its powers shall be used.

Most DTT determine residency based on the following criteria:

• place of habitual residence, permanent home (for natural person);
• legal registration, place of effective management (for entity).

If dual residency remains unresolved, the following criteria may be applied:

• Centre of vital interests;
• Habitual abode;
• Nationality;
• Mutual agreement between competent authorities.

4) How to properly prove tax residency status to apply treaty benefits?

To claim treaty benefits under a DTT, the taxpayer must provide a certificate of tax residence. Belarus provides an official platform to verify such certificates: https://nalog.gov.by/international/double_taxation/.

In most DTT , there is also a requirement to submit a beneficial ownership declaration in the prescribed form, along with supporting documentation.

5) How to determine which Double Taxation Treaty applies to a specific transaction? 

The applicability of a Double Taxation Treaty is determined with reference to the tax residence of the transaction parties, including that of the beneficial owner of the income.

6) Do the provisions of the DTT take precedence over domestic tax law?

Belarus recognizes the primacy of universally accepted principles of international law and ensures the conformity of its tax legislation with these principles.

If a DTT provides for tax rules that differ from those established under domestic legislation, the provisions of the DTT shall prevail. However, if the Tax Code and/or other legislative acts of the Republic of Belarus provide for more favorable tax treatment than that provided under the DTT (with the exception of international treaties constituting part of the law of the Eurasian Economic Union), the provisions of the Tax Code and/or such legislative acts shall apply.

7) What tax obligations does a resident have when receiving income from abroad under a DTT? 

As a general rule, if a Belarusian resident receives income that is subject to tax in a foreign jurisdiction, the amount of foreign tax paid may be credited against the Belarusian tax liability. To apply the credit method, documents confirming the receipt of income and the payment of foreign tax must be submitted to the Belarusian tax authorities.

8) How are tax rates on dividends, interest, and royalties applied under a DTT?

Each DTT provides specific withholding tax rates applicable to dividends, interest, and royalties.

Some Double Tax Treaties (DTTs) provide for a reduced withholding tax rate on dividends, subject to a specified threshold of beneficial ownership in the share capital of the distributing company. For example, a 10% rate may apply if the shareholder owns at least 30% of the capital; otherwise, a 15% rate may be applied.

Under the Belarusian Tax Code, the default withholding tax rates are:

• Dividends – 25%
• Interest – 10%
• Royalties – 15%

Due to the suspension of certain DTTs, the domestic withholding tax rates on dividends and interest will apply, regardless of any treaty provisions.

9) What are the mechanisms for eliminating double taxation?

Most DTTs include provisions for the elimination of double taxation. The most common method is the tax credit mechanism, where tax paid in the source country is credited against tax payable in the country of residence.

10) What is the dispute resolution process and Mutual Agreement Procedure (MAP) under a DTT?

DTTs typically include a specific dispute resolution process through the Mutual Agreement Procedure (MAP). Under this procedure, the taxpayer may submit a request to the competent authority in their country of residence. The Ministry of Taxes and Duties will be such an authority in Belarus. The request must be filed within three years from the date of the first notification of the action resulting in taxation not in accordance with the treaty.

Author: Polina Sachava