OREANDA-NEWS  On 15 October was announced, that the lower chamber of parliament, the House of Representatives, approved after the first read the change to the 12% flat income tax rate for individuals and 15% income tax rate for entrepreneurs.

“We have a progressive tax rate now, ranging from 9% to 30%, but starting next year we will use a flat income tax rate amounting to 12%,” finance Minister Andrei Kharkovets told MPs.

“In order not to allow additional tax load on the citizens, whose incomes are now subject to the minimal tax rate, we plan to increase the standard tax deduction per worker to 250,000 Belarusian rubles (Br) from 35,000 rubles,” the minister said.

“This sum, the same as the minimum subsistence level projected for 2009, will not be subject to taxation. The tax deduction will be available only to citizens with the average monthly income not exceeding 1.5 million rubles,” he said.

The income tax rate for entrepreneurs is expected to rise to 15%.

“This rate corresponds to the level of taxation when entrepreneurs follow the simplified taxation scheme and pay either 10% of proceeds or fixed sums depending on their activity. The average income tax rate for individual entrepreneurs now stands at 16.3%,” Kharkovets said.

Also in 2009, the government will halve transfers to the republican fund of support for farm producers and agrarian science to 1% of revenues. Besides, the “active part” of basic production assets [equipment, etc.] will be exempted from the property tax. The tax will only be applied to real property, like buildings, constructions, etc.

It is also planned to set local sales tax rate at 5%, and the same rate will be applied to taxation of services. Other plans include a reduction in insurance transfers to the Social Security Fund to 34% from 35% of the wage fund and vehicle acquisition tax rate to 3% from 5%.

Belarus will reduce the tax load on the economy by 1.3 percentage points of GDP, thus leaving about 2 trillion rubles to economic entities.