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12.1. GAAR and General Anti-Avoidance Measures

Effective 23 April 2016, artificial transaction structures have been brought under the tax net. If a financial investigator of the State Control Committee discovers any artificial transaction structures which resulted in an illegal underpayment of tax, then such investigator is authorized to impose relevant taxes.

The Ministry of Taxes and Duties of Belarus published Decree No. 465 which regulates the application of the general anti-avoidance rules (GAAR) for audits conducted after 20 July 2022. By application of the GAAR provisions, adjustments can be made by the tax authorities to the amount of tax payable, refund of tax, or the tax base of a taxpayer if the main purpose of entering into a transaction is to obtain a reduction or avoidance of tax, an increase in a refund of tax, or an increase in losses, i.e., if the transaction lacks commercial substance.

The Decree provides examples of transactions that lack commercial substance, which include the following:

  • Selling goods below cost, resulting in excess input VAT credits;
  • Creating conditions to extend the deadline for the use of tax benefits, including reduced rates and preferential treatment;
  • Concluding contractual contracts with individuals who actually perform the functions as employees;
  • Selling fixed assets and inventory to legal entities or individuals at a price significantly lower than the market value, with such assets and inventory being subsequently resold by such persons at the market value or close to the market value;
  • Registration of multiple entities or intentional division of activities between entities entitled to exploit special tax regimes or tax benefits; and
  • Any other actions or events, the main purpose of which is to obtain a reduction or avoidance of tax, an increase in a refund of tax, or an increase in losses.

Note that the domestic tax law does not override the tax treaties.

For audits conducted prior to 20 July 2022, Presidential Decree No. 151 of 18 April 2019 applies (old Decree). Effective 1 January 2019, the general anti avoidance rules (GAAR) were amended by the old Decree, which provides that the tax base and/or the amount of tax payable by a taxpayer, as a result of an audit, may be subject to adjustment in any one of the following cases:

  • There is a distortion of information/facts on business operations, on taxable items reflected by the taxpayer in accounting, tax records, or tax returns, or in other documents or information necessary for the calculation and payment of tax;
  • The main purpose of a business transaction is the non-payment (partial payment) or offset/refund of tax; or
  • A business transaction is not real, including cases where goods are not actually received, jobs are not actually performed, services are not actually provided, or property rights are not actually transferred.