Belarus has suspended the application of key articles of double tax avoidance agreements (DTAs) with 27 foreign states, including most EU countries, the United Kingdom, and the United States. In particular, provisions related to the taxation of dividends, interest, and income from the disposal of property — such as shares and stocks — have been suspended.
At the same time, the Belarusian Tax Code has also introduced an increased tax rate of 25% on dividends received in Belarus by non-residents from “unfriendly” jurisdictions, replacing the previous rate of 15%. Thus, Belarusian tax rules have become significantly stricter for foreigners, especially regarding profit distributions and payments on debt obligations.
Official representatives emphasize that these restrictions were introduced as retaliatory measures in response to sanctions, and the restrictions are calculated to remain in effect until December 31, 2026, unless the conditions that led to their adoption are changed. At the same time, DTA provisions concerning royalties, service provision, and credits for taxes already paid abroad remain in force. However, a number of double taxation avoidance agreements have been cancelled without specifying the duration of such cancellation.
This creates a new reality for Belarusian and foreign companies: previous contractual tax guarantees are partially losing their force, which may result in additional tax burdens when transferring profits, paying interest, and transferring assets. In response to this, some foreign states have already suspended the application of corresponding agreements on their territory.
In this article, we will look into:
- Which DTA provisions have been suspended, and which continue to apply
- How the tax burden on foreigners will change when paying dividends, interest, and when selling assets
- What risks arise in international payments and tax planning when receiving income from abroad
- Possible ways to minimize costs and compensate for business consequences
Which DTA Provisions Have Been Suspended and Which Continue to Apply
Since June 1, 2024, Belarus has temporarily suspended the application of certain provisions of double tax avoidance agreements (DTAs) with a number of states recognized as “unfriendly.” This decision affects 27 countries, including all EU states, the USA, Canada, the United Kingdom, Norway, Switzerland, and others. The suspension is introduced for a period until December 31, 2026.
The following provisions have been suspended:
Article 10 “Dividends” The reduced dividend tax rate (usually from 5 to 15% depending on the participation share) is no longer applied. Instead the domestic rate established by the Tax Code of the Republic of Belarus is applied — 25% for residents of unfriendly states.
Article 11 “Interest” The application of reduced tax rates on income in the form of interest on debt obligations has been suspended. Such payments are now also taxed at a rate of 25% (unless otherwise provided by domestic legislation).
Article 13 “Income from the disposal of property” When selling shares, stocks, real estate objects, and other property, the limitation on taxation in the source country ceases to apply. Belarus has the right to tax such income according to its legislation.
In summary, those DTA provisions that concern the distribution of taxable rights between two states for key passive income (dividends, interest, capital gains) have been suspended.
DTA provisions that continue to apply:
Article 12 “Royalties” Provisions concerning the taxation of royalties remain in force. Previous reduced rates (usually from 0 to 10%) apply.
Article 14 “Dependent personal services” and Article 15 “Independent personal services” Taxation of income from service provision and activities of individuals in cross-border format remains regulated by DTAs.
Article 23 “Elimination of double taxation” The mechanism for crediting tax paid abroad (foreign tax credit) remains in effect. Belarusian taxpayers can still credit tax paid abroad if its withholding is documented.
Definitions of residence and dispute resolution mechanisms. Provisions concerning the determination of tax residence, information exchange procedures, and settlement of disputes between tax authorities have not been suspended.
Thus, the suspension doesn’t equal full treaty termination. It limits cross-border capital extraction via dividends and interest but leaves licensing, service payments, and foreign tax credits intact.
How the Tax Burden on Foreigners changes for dividends, interest, and asset sales
After the suspension of key DTA provisions, the potential tax burden on foreign companies and individuals receiving income from Belarus has increased significantly.
1. Dividend payments
Previously, with DTAs in place, the tax rate on dividends paid to a foreign participant (for example, a parent company) typically ranged from 5% to 15%. In some cases, if the participation share exceeded a certain threshold (usually 25% and above), the rate could be reduced to 5% or even 0%.
Since June 1, 2024, DTA provisions regulating dividend taxation have been suspended, and domestic legislation provisions have come into force:
- The tax rate on income in the form of dividends for residents of unfriendly countries is 25%, regardless of the size of the participation share and ownership conditions.
Thus, the burden on cross-border payments has doubled or more, which is particularly sensitive for companies that previously optimized their ownership structure through the EU.
2. Interest on loans and other debt obligations
Previously, tax on income in the form of interest on loans, credits, and debt instruments in favor of non-residents was also taxed at reduced rates — usually within 5-10%, and sometimes at zero rate (for example, regarding intra-group loans).
Now, under the conditions of suspended DTA provisions:
- The tax rate on interest is 25%, without any exceptions, if the interest recipient is a resident of an unfriendly state.
This makes intra-corporate financing from abroad through such jurisdictions significantly less profitable.
3. Sale of shares, stakes, and other assets
Previously, DTA provisions often limited Belarus’s tax rights when a foreigner sold assets located in the country, especially if transactions were carried out outside the jurisdiction.
Now, with the suspension of Article 13 of DTAs:
- If the buyer or seller is a non-resident of an unfriendly country, Belarus has the right to tax income from the disposal of assets, including shares, stocks, and even indirect participation in Belarusian companies.
This means that transactions between foreign structures for the sale of assets related to Belarus may be subject to tax at a rate of 12% on income or another rate, depending on the type of property and form of ownership.
Under these conditions, it becomes critically important to timely review the corporate structure, study alternative jurisdictions and possible optimization paths, including reorganization, transfer of functions, or change of financial flows. This can be addressed with the support of experienced lawyers who will consult on all issues related to cross-border taxation and matters of preparing necessary documents.
What Risks Arise in International Payments and Tax Planning
The suspension of key DTA provisions has changed the conditions for cross-border settlements and tax planning for Belarusian companies and individual entrepreneurs who receive income from abroad. Let’s examine the main risks:
1. Risk of double taxation
When DTA provisions are not applied, the probability increases that the same income will be subject to taxation both in the source country (for example, EU or USA) and in Belarus — upon crediting to an account or when calculating the taxable base.
If the payer country does not recognize the Belarusian credit system or refuses to apply DTAs, a Belarusian resident may actually pay taxes twice.
2. Restrictions on the application of tax deductions and credits
Even with documents confirming tax payment abroad, Belarusian tax authorities may refuse to grant credit:
- If there is no officially recognized agreement between countries
- If the form and content of documents do not comply with Belarusian legislation requirements
- If the counterparty is from a jurisdiction included in the list of offshore zones or unfriendly states
This increases fiscal risks and creates a burden on accounting and legal services.
3. Blocks and checks on currency and tax control
Transfers from foreign counterparties increasingly fall under scrutiny from banks and controlling authorities:
- Transactions may be suspended until detailed justification is provided
- Tax authorities have the right to request contracts, invoices, correspondence, and proof of actual service provision
- Checks on the “business purpose” (substance) of the counterparty are possible
Lack of transparent structure and proper preparation may lead to income being recognized as unjustified or suspicious.
4. Problems with tax planning and business structuring
Previously popular optimization models using holdings in the Netherlands, Cyprus, Luxembourg, Lithuania, and other EU countries no longer provide tax advantages:
- The tax rate on dividends and interest, in most cases, is 25% regardless of structure
- Tax residence and the actual location of the managing body have become key parameters in assessing the legitimacy of schemes
- Restrictions on deductions for intra-group operations and transfer pricing are applied
This requires a review of the entire group of companies’ functioning schemes, including legal and settlement centres.
What can be done
In the new conditions, it is extremely important for Belarusian companies and individual entrepreneurs to:
- Conduct legal and tax audits of foreign economic transactions
- Analyze the country of income origin and the possibility of applying contractual mechanisms
- Prepare justification for the economic feasibility of the structure
- Develop individual tax credit and optimization schemes, taking into account new realities
To understand the specifics of the DTA application, we recommend seeking consultation from our experienced lawyers specializing in international taxation and currency control.
Possible Ways to Minimize Costs and Compensate for Business Consequences
The suspension of DTA provisions with a number of states has created a new tax reality for Belarusian business: with increased tax rates, limitation of deductions, and growth of fiscal and currency risks. However, there are both direct and indirect ways to mitigate consequences and optimize tax burden.
1. Assessment and review of corporate structure
The first step is a detailed analysis of the existing business structure. Analyze:
- Country of registration of owners and affiliated companies
- Routes of fund movement (dividends, interest, remuneration)
- Features of settlements within the group of companies
In some cases, it may be advisable to transfer the managing company or holding to a jurisdiction with which DTAs continue to operate. This may allow preserving part of the contractual preferences.
2. Changing the direction or form of payments
Instead of dividends and interest, which are taxed at increased rates, companies can:
- Use licensing payments (if economically justified)
- Review pricing policy for intra-group services
- Optimize expense structure through contracting, subcontracting, leasing, and other models
It is important that such actions are justified and comply with legislation requirements and transfer pricing principles.
3. Focus on actual business activities
Foreign counterparties need to prove that the Belarusian company:
- Conducts real economic activity
- Has employees, office, equipment
- Acts for economic purposes, not just for tax optimization
This is particularly relevant when working with banks and in case of tax inspections.
4. Using agreements with third countries
Despite the suspension of many DTAs, several agreements continue to operate, including those with China, UAE, Armenia, Kazakhstan, Turkey, Uzbekistan, and others. In some cases, restructuring the holding or contractual model through such jurisdictions may be justified — provided there is actual presence and compliance with transaction security requirements.
5. Relocation of individual functions or projects
Companies may consider transferring individual functions — development, sales, marketing, project management — to jurisdictions with more favorable tax environments. This may be accompanied by partial relocation of employees, change of settlement currency, and re-registration of intellectual property rights.
6. Strengthening legal and tax control
It is recommended to:
- Regularly conduct tax audits
- Carefully formalize all foreign economic contracts
- Document economic rationale and business purpose for each structure.
- Seek expert guidance from lawyers specializing in international tax and currency controls when making large payments
Conclusion
The suspension of double tax avoidance agreement provisions with a number of states has significantly affected the tax burden and cross-border operations of Belarusian businesses. This is particularly acutely felt when paying dividends, interest, income from asset sales, as well as when receiving foreign income, where there is now a high probability of double taxation and increased fiscal risks.
Under these conditions, companies and entrepreneurs need to review both their corporate structure and approaches to international settlements and tax planning. There is no universal solution — each situation requires individual analysis and adaptation.
AMBY Legal lawyers are ready to assess risks, build an optimal work model, minimize losses, and ensure legal security for businesses. We possess current expertise and a deep understanding of international tax regulation in modern conditions.
The AMBY Legal team offers:
- Comprehensive review of existing agreements and corporate structure
- Customized tax optimization strategies
- Legal support for international transactions and restructuring
- Guidance on working with jurisdictions where DTAAs remain valid
Contact us
If you have any questions related to suspension of double tax avoidance agreement provisions in Belarus we will be happy to help! Our long-term experience will help you choose a lawyer to represent your interests.
- +37529142-27-19 (WhatsApp, Viber, Telegram);
- info@ambylegal.by.
