A discount system for foreigners will come into effect in the republic from the new year.
Two years ago, while in Sweden, I witnessed a curious spectacle. A friend of mine, who had bought a leather jacket in Stockholm, was processing a Tax Free refund at the airport just before her flight to Minsk. After spending about 10 minutes on everything (filling out forms, presenting receipts) and receiving 40 euros, Nadezhda explained: "They simply returned the value-added tax to me..."
It is no secret that the price of any product includes certain taxes. This is how the state replenishes its treasury to address budget issues – construction of roads, hospitals, schools, etc. If a person who does not reside in a particular country buys a product, it turns out that they are spending this money "in vain," receiving nothing in return. If, by fairness, a foreigner is not obligated to pay such taxes. But what sense does it make for the state to refuse extra money? There is a point. Refusing to collect these taxes makes the product significantly cheaper for foreign visitors, stimulating their desire to buy. Thus, the export of local manufacturers' products increases, and, moreover, the country becomes more attractive to tourists.
This is precisely why a number of states have adopted relevant legislative acts that allow for the phenomenon known as Tax Free. Here are just a few of them: Latvia, Lithuania, Estonia, Singapore, Germany, Holland, Greece, Austria, Argentina, Luxembourg, Belgium, Great Britain, Hungary, Denmark, Ireland, Iceland, Spain, Italy, Korea, Cyprus, Norway, Poland, Portugal, Slovakia, Slovenia, Turkey, Croatia, Czech Republic, Finland, France, Switzerland, Sweden, and others.
It should be noted that VAT varies in different countries, so from 7 to 25 percent of the purchase price is refundable. However, in some states, to use the Tax Free system, you must purchase goods for at least a certain amount. There is a minimum purchase amount for tax refund on Tax Free receipts. If it is less, no bank will work with your receipts.
For example, if we take the dollar as an equivalent, the purchase amount should be: in Germany – from 30, Denmark and Norway – from 45, Great Britain – from 50, Israel – from 53, Portugal – from 70, Slovenia – from 80, Austria, Croatia, Luxembourg, Turkey – from 85, Spain – from 105, Belgium, Hungary – from 145, Finland, Greece, Canada – from 150, Netherlands – from 160, Italy – from 180, Sweden – from 205, France – from 210, Liechtenstein and Switzerland – from 340.
At the same time, you can only get a tax refund when purchasing in a store where there is a special sticker on the display and/or at the checkout indicating participation in the Tax Free system. In addition, VAT is not refunded to citizens of that country, or those who work or conduct business in that state. There may also be age restrictions (for example, in the Czech Republic, tourists over 15 years old can use this service). The easiest way when planning a trip to a particular country is to find out about the Tax Free rules in advance, as in some places the validity period of the check is limited to 30 days, but mostly it is 3 months, and in other places the goods must be unopened.
Three conditions
It is gratifying to note that from January 1, 2013, a similar discount system will be in effect in our republic. At the end of October, the head of state Alexander Lukashenko signed the Law "On Amendments and Additions to the Tax Code of the Republic of Belarus". We asked the Deputy Head of the Inspectorate of the Ministry of Taxes and Duties of the Republic of Belarus for the Vitebsk Region, Tatyana Lipskaya, to comment on the innovation.
– For a foreign guest to be able to get a VAT refund, several conditions must be met, – explains Tatyana Viktorovna. – Firstly, the goods must be purchased from a retail organization that operates under the Tax Free system, i.e., one that has concluded an appropriate agreement with a Belarusian operator organization authorized to carry out VAT refunds. Secondly, VAT will not be refunded to guests of our country for a number of items. These include goods exempt from VAT, as well as products subject to VAT at a rate of 10 percent (children's goods and food products), and excisable goods (alcoholic and tobacco products). Thirdly, the cost of the purchase including VAT must exceed 800 thousand rubles per day (100 dollars as of October 2012). When purchasing goods, the store issues a VAT refund check with the mandatory details established by the code.
Upon leaving Belarus, the foreigner will need to confirm the export of goods by presenting it to customs officers, who will affix an export mark on a copy of the VAT refund check. The VAT amount refund is carried out by the Belarusian operator organization. After receiving the check with the customs mark from the foreign guest and verifying it, the operator refunds the funds minus their commission.
It should be noted that over the past few years, foreigners have formed a peculiar list of preferences among Belarusian goods. These include knitwear, footwear, artistic ceramics, souvenirs, decorative cosmetics, and household items made from natural materials. You must agree, these products are not expensive at all. Perhaps the VAT refund will encourage thrifty foreign guests to make more significant purchases…
Regarding other matters
It is worth noting that the specified law provides for other innovations. According to Tatyana Lipskaya, from January 1, 2013, tax rates for the simplified tax system will be reduced: if today the tax rate is 7 percent without VAT, then from the new year it will be 5 percent. In cases where VAT is applied, it will decrease from 5 to 3 percent. That is, the rates under the simplified tax system will be reduced by two points.
The annual revenue for applying the simplified tax system without value added tax will also change: if it is currently 3.4 billion rubles, then from January 1, 2013, it will be 8.2 billion.
– But the most important thing that all business communities have asked for is an increase in the number of hired employees from 15 to 50, – Tatyana Viktorovna clarifies. – In addition, all those who use the simplified tax system and own land plots of more than 0.5 hectares will become payers of land tax from January 1, 2013. The same applies to property tax. If the area of the premises exceeds 1.5 thousand square meters, then the owner of this area also becomes a payer of property tax.