The choice of taxation system for a trading company depends on the business form and individual characteristics of the future company. In the Republic of Belarus, founders of trading companies have a choice between general and simplified systems or a single tax. The simplified system can be split into two subtypes: with VAT or without VAT.
A single tax can only be paid by sole traders when carrying out retail trade of a group of products defined by legislation.
For the simplified taxation system, several criteria must be met:
The average number of employees is no more than 100;
For the switch from January 1, 2021, the amount of revenue for 9 months, cumulative from the beginning of 2020, has been set at no more than 1,538,843 Belarusian rubles for organizations and 330,750 Belarusian rubles for sole traders.
This simplified system can only be used if it was originally used to create the company or at the beginning of a new year.
The advantages of the simplified taxation system are as follows:
Reports and payment of tax occur on a quarterly basis (except for taxpayers under the simplified system with VAT);
No local taxes or fees;
As a rule, the general taxation system provides for the payment of the following taxes:
18% income tax.
Other taxes in accordance with the law (land, real estate, environmental, etc.)
When choosing a taxation system for your company, it is necessary to find out whether such a company falls under the criteria for the simplified system and which system will be more profitable, taking into account the specifics of the trading facility.
Trade without goods entering the territory of Belarus
Trade without goods entering the country is a method of selling goods, when the seller provides the goods to the buyer not in the country where the warehouse of the former is located, but in another country, for example, the country of the supplier or manufacturer.
Such a sale must be shown in the accounting records, just like a regular sale from the Belarusian warehouse. Goods that belong to an organization but are stored in third-party warehouses must be entered into the books as normal.
In this situation, the day of the arrival of goods at the retail facility is considered the day specified in the shipping documents that confirm receipt of the corresponding goods.
Obtaining the permit from the National Bank and the Executive Committee
The above-mentioned transactions for the sale and receipt of goods from foreign warehouses are imports. Such transactions are possible only after obtaining the permit of the National Bank of the Republic of Belarus to conduct settlements under the foreign trade agreement that provides for the import of goods without their arrival on the territory of the Republic of Belarus.
This permit is not necessary when paying for goods required by the Belarusian trade organization to carry out construction work on the territory of a foreign country.
As for the necessary approvals for trade companies with executive committees, the city executive committees develop and approve schemes for setting up retail facilities, other public catering facilities, shopping centres, taking into account state social standards in the field of trade and catering, favorable location of shops in walking distance, modern-format stores, large stores, requirements of legislation on architectural, urban planning and construction activities.
These schemes solve the issue of opening stores with a retail area of 400 square meters or more, because the creation of stationary retail facilities with such a trading area is carried out in accordance with the schemes for placing such facilities on the territory of an administrative-territorial unit.
Another necessary agreement with the Executive Committee is the mode of operation of the trading facility.
Before starting the company’s trading activity, it is also mandatory to enter it in the trade register. Such registration is carried out by submitting an application to the Executive Committee at the place of registration of the company or online.
Authorized capital of trading companies
The authorized capital of trading companies is directly related to the business form in which such a company was created.
As a rule, the minimum size of the authorized capital is not established by law, but for a CJSC the minimum limit will be 100 basic units, and 500 basic units for an OJSC (open joint-stock company).
For most business forms, an organization is given 1 year to form the authorized capital. The exceptions are commercial organizations with foreign investments. In their case, an authorized capital must be formed by at least 50% within the first year after state registration, and in full – within 2 years.
Forms of trade business organization in Belarus
The most convenient and most popular business form of organizations in the Republic of Belarus is a limited liability company. One or more people can become founders of such a company.
The peculiarity and advantage of an LLC is the option to exit from business at any time (except bankruptcy) by filing an application.
There is no such option in a closed joint-stock company or an open joint-stock company. The only option to get rid of shares in that case is to sell them. Moreover, to open a joint-stock company, it is necessary to have a decent amount of money to form the established authorized capital minimum.
The easiest way to register and run a business is to become a sole trader. However, this option has many limitations and is not suitable for large retail outlets.
Each situation must be considered individually and the business form must be chosen based on the specifics of a particular trading company. However, by analyzing the characteristics of each form, it can be concluded that OJSCs and CJSCs are more suitable for large or medium-sized chain stores, while an LLC can become an excellent business form for both large and small companies, and sole trader and unitary enterprise will be the best options for small trading facilities.
Founders of trading companies in Belarus
Any individual or legal entity that has any kind of connection to the formation of a new legal entity (e.g.: has any benefit from the company’s property or disposes of part of it, controls the legal entity or has a direct influence, and so on) can become a founder.
Founders in the Republic of Belarus have their own rights and obligations, which are stipulated in the founding document, as well as the current laws.
Founders have the right to:
Manage the established organization or appoint another person to the position of manager;
Receive dividends (part of the company’s net profit, usually for the year) proportional to their share in the authorized capital, unless otherwise stipulated in the Charter;
Receive their share after the company’s closure, unless otherwise stipulated in the Charter.
As for the responsibility that the founders bear, if a founder violates (or violated, if the organization has already been created) the law during the creation and registration of the organization, then the activities of such an organization are recognized as invalid, and the founder is subject to administrative or criminal liability.
In situations where an organization owes debt to creditors, and the property of this company is not enough to repay it, the founder of such an organization can be held vicariously liable.
In practice, it is not necessary to participate in the events that led to bankruptcy directly. It is enough to confirm that the founder wasn’t exercising sufficient control over the activities of such a company and did not file for bankruptcy in a timely manner.
Our lawyers have extensive experience in registering trading companies in the Republic of Belarus. During 2019-2020 we registered more than 80 trading companies in Belarus, half of which are foreign. If you decide to open a trading company, please contact us, we will be happy to help.