Effective 1 January 2017, the Belarusian government introduced a general restriction on the deductibility of expenses. To be deductible, the expenses (including the cost for production of goods, works, and services) must be economically justified as determined on the basis of accounting documents with possible adjustments in line with the Tax Code.

Expenses/ costs will not be considered economically justified if any of the following conditions are met:

• The goods were not shipped, the works were not performed, the services were not rendered, or the property rights were not transferred;
• The works were performed or the services were rendered by an individual entrepreneur that has an employment relationship with the taxpayer, and such works or services are related to the employment obligations of the individual;
• The works were performed or the services were provided to the taxpayer (other than a JSC), by the taxpayer’s parent company, or its subsidiary, and such works or services are related to the employment obligations of an individual that has an employment relationship with the taxpayer; or
• The property is not leased (financial lease) and continues to be used by the lessor.

The following expense types are not deductible for Belarusian tax purposes:

• Interest charges incurred on controlled debt exceeding the debt-equity ratio of 3:1 are not deductible, subject to certain conditions (see Sec. 12.2.1.);
• Any expenses not incurred in relation to the taxpayer’s business activities are not deductible;
• Start-up expenses are not deductible;
• Construction, maintenance, and repair of assets not used solely for the purpose of earning income are not deductible;
• Default interest, fines, or other sanctions paid are not deductible;
• Dividends paid and similar distributions are not deductible;
• Contributions to share capital are not deductible;
• Expenses incurred on the purchase or creation of depreciable assets are not deductible;
• Depreciation of assets not used in business or not in operation is not deductible;
• Environmental tax levied on the transport of oil is not deductible (see Sec. 8.1.2.);
• Expenses incurred abroad in relation to the permanent establishment in Belarus, if they are not substantiated by reports of foreign tax auditors or consultants, are not deductible for tax purposes;
• Exchange rate differences generated on expenses incurred for earning exempt income or that are non-deductible for tax purposes are not deductible for the period 1 January 2021 to 31 December 2022;
• Contribution in excess of 10% of gross profit given to health, education, social welfare, culture, and sports state institutions; religious organizations; social services institutions; and public associations or spent for acquisition of goods, works, or services for the benefit of the said institutions is not deductible; and
• Effective 1 January 2019, other expenses as listed below in excess of 1% of revenue, inclusive of VAT, are non-deductible for tax purposes:
  • interest on overdue loans;
  • certain payments under employment contracts (e.g., annual bonuses, certain types of vacation compensation); remuneration paid to members of the board of directors (supervisory council);
  • costs for holding certain events (e.g., official ceremonial events arranged to celebrate state holidays);
  • representation expenses;
  • membership fees; and
  • other advertising expenses effective 1 January 2023 are not deductible except for the following advertising expenses that can be deducted in full:
    • advertising in mass media;
    • printed advertising, not related to mass media;
    • advertising through information and telecommunications networks;
    • outdoor advertising; and
    • advertising at exhibitions and fairs, including the provision of samples.