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6.2. Main Differences between Commercial and Tax Accounting

Taxable income is based on the financial statements prepared according to the accounting standards of Belarus. The profits reported in the financial statements are then adjusted by items stipulated by the Tax Code. Adjustments relate to special income and expense items and usually act to restrict tax-deductible expenses.

The Tax Code also provides for deferred recognition of certain expenses – such as start-up expenses. To elaborate, the Belarusian Ministry of Taxes and Duties, has issued a guidance on the recognition of start-up expenses. As per the said guidance:

  • Start-up expenses (i.e. expenses incurred by newly established businesses prior to commencement of their operations or by existing corporate taxpayers for new business activities), may not be recognized until such new operations or business activities have begun;
  • New operations or business activities are deemed to have begun on the day income is first recognized from the sale of goods, services, or property rights in connection with such newly established operations or business activities;
  • In determining income from such new operations or business activities, any income derived from bank deposits or positive exchange rate difference in connection with revaluations of foreign currency or other assets, are not considered;
  • Deductibility of any general expenses incurred by existing taxpayers, is not limited even if such expenses may be indirectly related to the new business activity. However, specific expenses incurred by an existing taxpayer in connection with new business activities, may not be deducted in a period where only income unrelated to the new activities is recognized