Government may raise value-added tax in 2015

The Belarusian government considers raising the rate of value added tax from 20 to 22 percent.

The Belarusian government considers raising the rate of value added tax from 20 to 22 percent in 2015, BelaPAN has learned.

The Council of Ministers discussed the possible tax increase at a meeting in July, a government official who asked not to be named told BelaPAN.

The government has reportedly drawn up a bill of amendments to the Tax Code that provides for the tax increase.

Belarusian business associations have voiced opposition to the proposed measure, warning that it could make the country's economy less attractive to domestic businesses and foreign investors.

Kazakhstan and Russia, with which Belarus shares an economic union, have value added tax rates of 12 and 18 percent, respectively.

In addition, the government plans to lower the rate of profit tax from 18 to 15 percent next year, but experts warn that this would not be enough to offset the VAT hike.

The government considered raising the VAT rate in 2014 but eventually abandoned the idea.

Economists predict that the proposed measure would be rejected this time as well, as the government fears that a higher VAT rate could lead to too high inflation shortly before next year's presidential election.