The Belarusian authorities once again extended the tax credit for customers of licensed forex dealers. This time the tax credit purports indefinite and complete exemption from personal income tax. However, starting from the beginning of the new year, the profit tax on forex dealers in Belarus was increased from 18% to 25% as reported by Forex Magnates.
According to subparagraph 4.1. of clause 4 of the Decree enacted by President of the Republic of Belarus on 31st of December 2019, income tax benefits have been extended in respect of income received by individuals on non-deliverable OTC financial instruments under agreements on transactions with non-deliverable OTC financial tools with brokers (legal entities registered in the Republic of Belarus and included by the National Bank of the Republic of Belarus in the forex register).
At the same time, subclause 4.2. of the corresponding Decree set the tax rate on profits received by the Forex companies, the National Forex Center (OJSC “Belarusian Currency and Stock Exchange”) from operations related to non-deliverable OTC financial instruments to 25%.
The Ministry of Taxes of the Republic of Belarus reminds that a preferential rate of 9% for forex companies and the NFC was in effect until March 1, 2019. But from March 1 to January 1, 2020, the tax rate for this category of taxpayers changed to a commonly established rate of 18%.
Market participants, represented by Belarusian forex dealers, regarded the indefinite exemption of their current and potential customers from taxes as a step aimed at developing the national forex sector and attracting new traders on the background of tightening regulation in neighboring and other regions. “This initiative, of course, makes the Belarusian jurisdiction even more attractive for traders and investors from other countries. This is a very important step towards the interests of traders, which speaks of a deep understanding of the market and progressive tax system,” commented Alpari Eurasia on the new tax legislation in the Belarussian forex market.
Making such amendments, the regulator took into account statistics, according to which approximately 80% of OTC market users lose their money. Accordingly, it is more rational to rely on the profit of the companies than on a small fraction of profitable customers. And the development of the sector by attracting customers as a whole will serve the interests of both parties, regardless of who is charged the tax. Thus, as a result of the exemption from tax on average of every fifth client and a 7% increase in income tax for 16 current forex dealers, more likely will benefit state treasury even more.