On January 1, 2018, Belarus becomes the latest tax jurisdiction to amend its Value-Added Tax (VAT) legislation so as to level the playing field between domestic and international digital service suppliers.
New rules for taxing the foreign supplies of digital services to consumers in Belarus were first revealed back in August 2016 when the Ministry of Finance published a draft law that included amendments to the Belarus Tax Code. By October 2016 the upper house of the Belarus parliament (the Council of the Republic) had adopted these proposed amendments into law. This meant that from January 1, 2018, a 20% VAT would apply to these foreign supplies of digital services.
Services that are now in scope of the Belarus tax authority for VAT purposes include services which are provided by the foreign company via the Internet in an automated fashion by means of information technologies, including with the assistance of a foreign intermediary for the transactions.
Impact on foreign digital businesses
As a result of these VAT law amendments foreign businesses with customers based in Belarus must now register for, collect, and remit VAT to the Belarus tax authority. This, of course, is in addition to foreign exchange and bespoke invoicing requirements.
Not complying with the new VAT rules on digital sales in Belarus is risky as the penalties are quite severe.
For example, repeated late payments can potentially result in a penalty of up to 25% of the VAT that is due.
Luckily, here at Taxamo we do all the heavy lifting for digital businesses with customers in Belarus. Taxamo acts as the Intermediary in the supply chain and assumes the VAT liability. As a result digital businesses do not have to register for VAT in these States.
The fact that the new rules in Belarus extend to foreign-supplied digital services is a contemporary approach to indirect taxation.
Belarus is following a trend set by over 40 jurisdictions worldwide. Indeed on January 1, 2018, Saudi Arabia and the United Arab Emirates also introduce new VAT systems with its scope extended to cover foreign-supplied digital services.
Learn more on the international trends to taxing the digital economy in the Taxamo blog here.
How Taxamo helps
Taxamo, the global digital VAT/GST compliance expert, is at the forefront of a revolution in international taxation.
Across the globe tax jurisdictions continue to amend consumption tax legislation - be it, as is the case in Belarus, a Value-Added Tax (VAT) or a Goods and Services Tax (GST) system - to account for the phenomenal growth of the digital economy. Taxamo exists to take on the risk of complying with these ever-evolving global rules.
Taxamo’s software solution enables us to take on the liability for digital businesses’ international VAT/GST obligations in global markets. As a result businesses do not have to collect, register, file, and settle VAT/GST in multiple tax jurisdictions.
Taxamo delivers businesses up to 40% reduction in compliance costs when compared with in-house solutions.
For all their transactions with customers from impacted countries (such as Belarus) Taxamo forms part of the supply chain, issuing these customers with a fully compliant invoice from Taxamo.
Taxamo also validates Business-to-Business sales in compliance with Belarusian requirements. As a result, the business can continue to concentrate on what they do best. This allows them to grow internationally with confidence safe in the knowledge that Taxamo is taking care of its global digital VAT/GST compliance.
Taxamo: Peace of mind assured.