131-1 Clause. Characteristics of interest charge on bonds and certain types of expenses (costs) to expenses (costs) that are taken into consideration during taxation process.

1. Since January 1, 2016 amendments of costs in accordance with the standards of 131-1 clause are made not only in case when one Belarusian entity for the tax period specified in 1-1.5 subparagraph of 1-1 paragraph of this clause is in debt of:

   Another Belarusian or foreign entity, regarded to be in accordance with 20 clause of this Code   related party of this foreign founder (partner), but also in case if it is in related individual entity debt.

2. Amendment is made, in accordance with which:

   «If amount of equity is negative or zero, the payer is not entitled to take into account certain types of costs when calculating the tax base on profit tax.".

3. Since 2016, in accordance with prescribed manner specified in this clause, they will calculate the limit amounts of costs of intermediary services, search services and (or) staff recruiting, hiring staff,  providing staff for carrying out activity in the Republic of Belarus.

Accordingly, 1311 clause of the Tax Code of the Republic of Belarus is introduced as a new edition, which includes restriction on introduction in a list costs (expenses) taken into account by the payer for calculating profit tax, not only the interest on lends (loans), but also on the fee for engineering services, marketing services, consulting services, information provided, management services, depreciation charges on industrial property rights, costs on acquisition of ownership (use) trademarks and service marks, forfeits (fines, penalty taxes), if calculation of the specified payments is carried out along with founders.   

In particular, this restriction covers calculations with foreign partners (in relation to which the payer is a related party), as well as cases when foreign founder himself is not a party in accordance with the agreement, on the basis of which they accommodate with a loan, sold or provided services or industrial property rights objects, but at the same time acts as a guarantor or in the other way undertake to ensure paying off of Belarusian entity by above listed payments.

When settling up accounts with the Belarusian founders (in relation to which the payer is a related party) the same limitation of costs is stipulated by the payments for engineering services, marketing services, consulting services, information provided, management services, payments for acquisition of ownership (use ) of industrial property rights.

In so doing the maximum amount of above listed costs (expenses) for reduction of the tax base on profit tax  is calculated by dividing amount of each payment referred to as expenses (costs), into capitalization ratio, the amount of which depends on the ratio of debt that is owed to the founder to the sum of equity (relevant to the of founder contribution).