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Business associations warn government against VAT hike

Business associations have warned the government against moving ahead with plans to raise the rate of value added tax in 2014.

The authorities plan to increase the rate of value added tax from 20 to 22 percent and lower the profit tax rate from 18 to 12 percent next year.

In their joint letter to the prime minister and finance and tax ministers, the associations suggest that the coming VAT hike is designed to increase budget revenues, as well as restrict imports and promote exports.

However, the associations warn that the measure will push up the prices of foreign-made equipment and materials used by Belarusian exporters, as well as lead to a higher inflation rate.

In the last 20 years the VAT rate in Belarus varied from 28 to 18 percent.

The letter says that the tax hike will be eventually passed on to end consumers. It also says that the rate of value added tax is 12 percent in Kazakhstan and 18 percent in Russia.

The letter has been signed by the leaders of the Belarusian Union of Entrepreneurs, the Kunyawski Business Union of Entrepreneurs and Employers, the National Confederation of Enterprise, the Belarusian Scientific and Industrial Association, and Minsk Capital Union of Entrepreneurs and Employers. //BelaPAN