Information message on liability measures for paying wages "in envelopes" Effective January 1, 2021, the Law of the Republic of Belarus dated December 29, 2020 No. 72-Z "On Amendments to the Tax Code of the Republic of Belarus" introduced provisions into the Tax Code of the Republic of Belarus (hereinafter referred to as the Tax Code) aimed at preventing evasion of personal income tax (hereinafter referred to as income tax) by paying income to individuals without reflecting it in the accounting accounts and in the financial statements. Thus, paragraph 5 of Article 216 of the Tax Code provides that upon detection of a fact of failure to withhold (incomplete withholding) of income tax, the tax agent is obliged to withhold such tax from any funds upon their actual payment to the payer or, on his instructions, to third parties. It also establishes the procedure for the tax authority to take if it is impossible to withhold income tax due to the lack of payments to the payer in cash. At the same time, effective January 1, 2021, Article 216 of the Tax Code was supplemented by paragraph 51, according to which the income tax withholding procedure stipulated in paragraph 5 of Article 216 of the Tax Code does not apply to cases where the regulatory authority establishes the fact of unlawful failure to withhold and transfer the said tax to the budget by the tax agent, with the exception of the case specified in part two of this paragraph. For reference: the term "unlawful failure to withhold and transfer to the budget of income tax" is provided in Article 195 of the Tax Code. Therefore, if the tax authority establishes the fact of unlawful failure to withhold income tax amounts, such tax will be collected exclusively from the tax agent (without its subsequent withholding from the individual who actually received the income). In light of the above, we would like to highlight the changes to tax legislation regarding the withholding and transfer of income tax that came into effect on January 1, 2021. If employees provide testimony regarding the payment of wages "under the table," income tax will not be withheld or charged from the individual. Such tax will be collected exclusively from the tax agent (without any subsequent withholding from the individual who actually received the income). If an individual refuses to provide testimony, they will be subject to tax authorities' scrutiny and will be subject to income and property declaration controls. A tax return will be requested, and the value of the property and other expenses incurred will be verified against the income declared in the return. Stolin District Tax Inspectorate
