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Belarus: People Will Be Taxed for Not Working

(Nov. 26, 2013) The Ministry of Finance of Belarus recently proposed legislation that introduces a tax on non-working citizens who do not pay taxes and therefore do not contribute to the budget revenues. If passed, as of January 1, 2015, a tax in the amount of approximately US$280 will be imposed on those who did not work for six months in a calendar year and accordingly did not pay income tax for the same period. A draft of the President’s decree introducing this tax and the implementing regulations, prepared by the Council of Ministers and the Ministry of Labor and Social Protection, were published by the Charter 97 web portal. (“Idler Tax” Will Be Introduced in a Year?,Charter 97 (Oct. 14, 2013).) It is expected that revenues received from the new tax will be used to reimburse the local and regional government for education, health care, and other social services and benefits provided to Belarusians who do not contribute to the national economy. (In Belarus, Bill on Idler Tax Was Introduced[in Russian], BELTA NEWS AGENCY (Nov. 12, 2013).)

Earlier this year,thePrimeMinister of Belarus,Mikhail Myasnikovich, argued thatabout445,000 people of working age, out of the total population of about nine million in Belarus,are not employed and do not contributeto the public good. In order to solve this problem,heproposed the taxation of non-working persons, as well as intensifying work on creating highly productive jobs in the country. (Mikhail Myasnikovich Proposes Tax on Non-Employed Citizens in Belarus[in Russian], EUROBELARUS (July 12, 2013).)

The draft decree defines individuals subject to the tax as “citizens not participating in funding state expenses” and assigns the Ministry of Internal Affairs (the police) the task of creating a nation-wide database of employment-age individuals who are not registered as permanently employed. (“Idler Tax” Will Be Introduced in a Year?, supra.) A similar law aimed against those non-working individuals who receive social benefits while there are job vacancies in the region where they reside was recently introduced in the Russian legislature. (Governor Tuleev Proposed to Reinstate the Law Against Those Who Receive Social Benefits Instead of Salary [in Russian], NEWSRU.COM (Nov. 20, 2013).)

In addition to this tax proposal, the Belarusian President, Alexander Lukashenko, announced his plans to improve the hiring system in the country. According to the President, there are too many people in Belarus who show up at workplaces under the influence of alcohol, while smoking, etc., because they are not afraid to lose their jobs. In order to improve work discipline, Lukashenko is planning to restore the system of mandatory reference letters from the previous employer. During the Soviet period, each job seeker was required to produce such a document when applying for a job. (Tatyana Polezhai, Lukashenko: Hiring System Will Be Improved in Belarus in Near Future [in Russian], BELTA NEWS AGENCY (Nov. 12, 2013).)

Prepared by Svitlana Vodyanyk, Contract Foreign Law Specialist, under the supervision of Peter Roudik, Director of Legal Research.