Taxes on individuals: regional overview
The crisis has exacerbated the problem of increasing budget revenues from taxation. In order to increase volume of collected taxes the authorities invented new types of tax inspections to reveal tax evasion cases. However the main problem is how to reach out for about one million people who are not officially employed and not registered as unemployed.
The Belarusian taxation system as a whole (compared to other former Soviet countries) is highly disciplined. The IMF data shows the Belarusian tax authorities collect almost 100% of due taxes, out of which, 97% are paid to the state budget voluntary.
At the heart of the Belarusian taxation system are indirect taxes, collected by organizations and enterprises. Income taxes on individuals are calculated and paid by organizations’ and enterprises’ accountants automatically, prior to wages’ disbursement. Only individual entrepreneurs and other self-employed citizens pay taxes on their own.
In Q1 2012 Belarus’ consolidated budget received almost Br 34.2 trillion. That is higher than during Q1 2011 in comparable prices by 7.6%. Organizations have replenished the budget with Br 22.9 trillion (109.4% of the same period last year). Individual entrepreneurs paid to the country’s budget Br 481.2 billion in Q1. On April 1st, 2012 there were 223 thousand 582 individual entrepreneurs registered with the tax authorities.
Simultaneously, the crisis has exacerbated the problem of raising budget revenues. In terms of tax collection, the authorities focus on increasing income tax collection from individual entrepreneurs and free-lancers. In this regard, their main problem is how to identify the incomes of about one million adult citizens who are not employed or officially listed as unemployed.
For reference. According to the National Statistics Committee of Belarus, in January 2012 4.557 million people have been employed in the Belarusian economy, which is 2.8% less than in January 2011. In 2011 the population was 9.5 million people, out of which 5.8 million people in working age.
Experts estimate that nearly 1 million people live off an informal income: either doing business illegally, or due to the labor migration.
Studies carried out by the National Statistics Committee show that in 2010 8.4% of GDP was generated in the informal sector.