Belarus is concerned about potential losses from Russia’s tax manoeuvre
The Belarusian authorities have assessed the potential economic losses from Russia’s tax manoeuvre at USD 1 billion. Russia has not yet made a decision, but is considering various options, inter alia, increasing the tax on minerals extraction while reducing export duties on petroleum products, which will lead to higher oil prices on the domestic market and may reduce refineries’ profits, including Belarusian ones. In the event that Russia adopts tax changes, she might envisage a re-compensation mechanism, for example, partially or completely abandon the transfer of duties to the Russian budget. That, in turn, will require Belarus to revise her 2015 budget. In addition, Russia may allocate additional credit resources at a good discount to compensate for higher oil prices for Belarus. Russia may also revise the share of customer-owned oil refining in Belarus and increase refining costs for Russian companies. Russia may postpone implementation of the tax manoeuvre indefinitely, if so, Belarus will withdraw her claims.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.