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12.4.1. Main Rules

Scope of Application

Belarus' initial transfer pricing (TP) provisions were introduced from 1 January 2012 and became effective from 1 January 2016. They were updated by new TP rules  effective 1 January 2019.

The TP rules require transactions between related and specified parties to be conducted in accordance with the arm’s length principle. When a transaction is deemed non-compliant, the tax authorities may make an adjustment.

The transfer pricing rules are applicable to the following transactions:

  • The sale or acquisition of goods between resident and related non-resident parties (including through intermediaries) or with related resident entities which are exempt from tax as a result of a special tax regime , where the value of the transaction (or of all transactions with the same party during the relevant year) exceeds BYR 2 million for large taxpayers (BYR 1 million previously) and BYR 400,000 for other taxpayers. The list of large taxpayers has been published by the Belarus Ministry;
  • The sale or acquisition of goods between resident and non-resident entities located in low-tax jurisdictions, where the value of the transaction exceeds BYR 400,000;
  • Foreign trade transactions relating to strategic goods, such as oil and oil products, if the transaction amount exceeds BYR 2 million. The list of goods is published by the Belarus Ministry; and
  • Immovable property transactions.

In contrast, the transfer pricing provisions do not apply to the following transactions:

  • Intra-group financing;
  • Sale or purchase of goods/ services or property rights if the price of the transaction is determined in an international treaty signed by the Belarus;
  • Alienation of the pledged real estate to the bank;
  • Transactions of securities and financial future instruments, traded on the stock exchange; and
  • Effective 1 January 2021, transactions with owners of international payment systems such as VISA, MasterCard, or American Express registered in offshore zones.

Definition of Related Parties

Related parties include legal entities whose relations directly or indirectly influence the business conditions or economic results of other entities, including relations:

  • Between shareholders;
  • Where the direct or indirect participation of an entity, in another entity is at least 20%;
  • Where one party is subordinated to the other or is under the direct or indirect control of the other party; and
  • Where related individuals together hold at least 20% participation in a company.

Effective from 1 January 2019, Belarusian Courts are empowered to consider legal entities as related parties on grounds other than those outlined by the Tax Code.

Transfer Pricing Methods

The transfer pricing methods used by the tax authorities when determining an arm's length price can include:

  • Comparable uncontrolled price (CUP) method;
  • Resale price method;
  • Cost-plus method;
  • Transactional Net Margin Method; and
  • Profit Split Method.

Effective 1 January 2019, the best method rule applies for the determination of the arm’s length price. For calculating an arm’s length range, the financial information of the year in which the controlled transaction was performed or for the 3 preceding calendar years can be used. Where information for multiple years is used, the weighted average of profit margin values must be calculated.

Effective 1 January 2021, the interquartile method can be used for determining the arm’s length range of prices or profit margins, which involves the exclusion of upper and lower quartiles from the data set.

Effective 1 January 2021, in case of a one-off transaction, if the arm’s length price cannot be determined using the current TP methods, data from an independent valuation can be used to determine the arm’s length price. A transaction is classified as a one-off transaction if it occurs once in a tax period and is not related to the company’s main activities.

Use and Availability of Comparables

Effective 1 January 2021, local comparables must be used first if the tested party is a Belarusian company. However, if the arm’s length range cannot be determined based on reporting data of local comparable companies, then companies from EAEU member countries (Armenia, Russia, Kazakhstan and Kirgizia) should be considered, followed by companies from other foreign countries.