Tax Implications of Bankruptcy in Belarus

1) What taxes are due during bankruptcy proceedings?

During bankruptcy proceedings, the debtor is required to pay current tax obligations. Tax liabilities that arose before the commencement of bankruptcy proceedings are included in the register of creditors' claims upon submission of a claim by the tax authority, which is forwarded to the insolvency administrator. 

2) What happens to outstanding tax liabilities during bankruptcy proceedings?

Unpaid tax obligations that arose prior to the commencement of bankruptcy proceedings are included in the register of creditors' claims. These obligations are satisfied in the third priority in accordance with the register of creditors' claims and the schedule for satisfying creditors' claims.

If the tax obligations are not fully satisfied due to the insufficiency or absence of the debtor's assets, they are deemed to be discharged.

3) Are the founders (shareholders) of the bankrupt enterprise liable for the tax debts on a subsidiary basis?

The founders (shareholders) shall be jointly and severally liable for tax debts in the event of insufficient assets, but only if the bankruptcy was precipitated by the culpable (intentional) actions of the founders (shareholders). Specific provisions apply to residents of the Hi-Tech Park and residents of the Chinese-Belarusian Industrial Park “Great Stone”.

4) What are the tax consequences of the sale of the bankrupt's assets?

The general taxation procedure for transactions remains in effect. However, during liquidation proceedings, certain tax exemptions are provided, such as exemption from VAT on the sale of assets, the enterprise as a property complex and the transfer of assets to creditors.

5) What tax risks do purchasers of the bankrupt's assets face?

The tax risks associated with acquiring a debtor's assets in bankruptcy are linked to the potential invalidation of the transaction, particularly in the absence of approval from the creditors' committee. In such a situation, the buyer's tax obligations, such as VAT, will be adjusted.

Author: Polina Sachava