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Minsk Seminar Conducted by US International Tax Lawyer & Attorney

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On June 9, 2017, Mr. Eugene Sherayzen, an international tax attorney and owner of Sherayzen Law Office, was the keynote speaker at a seminar “Introduction to U.S. Tax Compliance for U.S. Citizens and Green Card Holders Residing and Doing Business in Belarus” in Minsk, Republic of Belarus (the “Minsk Seminar”). The attorney conducted the entire Minsk Seminar in Russian, because he speaks this language fluently.

The Minsk Seminar was presented before the Minsk City Lawyer’s Association. It was a historic event, because it appears that this was the very first time that a practicing US international tax attorney conducted a seminar on this topic in Minsk. The Minsk Seminar was well-attended by close to 25-30 persons (despite the fact that it was conducted on a Friday afternoon); it appears that virtually all attendees were practicing lawyers in Minsk.

Mr. Sherayzen decided to make his presentation as broad as possible, but attended to details only as necessary. As a result, this more than two-hour presentation covered the main topics concerning US international tax reporting requirements of a U.S. citizen living and/or doing business in Belarus.

The tax attorney started the Minsk Seminar with the definition of a U.S. tax resident, emphasizing that a U.S. citizen and a U.S. Permanent Resident who reside in Belarus should be considered U.S. tax residents. Then, Mr. Sherayzen discussed the worldwide income reporting requirement and broadly covered various topics concerning specific income recognition.

The tax attorney continued the Minsk Seminar with an overview of the U.S. international information returns concerning individuals who have foreign assets, including an ownership interest in a foreign business. The severe FBAR penalties caused consternation among the attendees. As part of this discussion, he also explained the common-law concept of a “trust”.

The last part of the Minsk Seminar was devoted to the discussion of the U.S. anti-deferral regimes, such as Subpart F and PFIC rules. Mr. Sherayzen explained the potential tax consequences of income recognition under both of these regimes.

Throughout the Minsk Seminar, the Belarussian attorneys asked many questions and readily engaged in a lively comparison of the Belarussian tax rules to the U.S. tax rules. Overall, it was a very friendly seminar. Mr. Sherayzen looks forward to future presentations on this and other U.S. international tax topics in Eastern Europe.

Belarus-Hong Kong Tax Treaty Signed | MN International Tax Attorney

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On January 16, 2017, the Belarus-Hong Kong Tax Treaty was signed by government officials from both countries – K.C. Chan, Hong Kong’s secretary for financial services and the treasury, and Sergei Nalivaiko, Belarusian minister of taxes and duties. Let’s explore the most important provisions of the new Belarus-Hong Kong Tax Treaty.

Elimination of Double-Taxation Under the Belarus-Hong Kong Tax Treaty

The new tax treaty will provide real benefits to businesses and individuals in both countries. In the absence of the treaty, the profits of Hong Kong companies earned through a permanent establishment in Belarus would be taxed in Belarus and Hong Kong. Similarly, prior to the treaty, the income earned by Belarusian companies in Hong Kong would be subject to both, Belarusian and Hong Kong taxation.

The Belarus-Hong Kong Tax Treaty will now eliminate the risk of double taxation by allowing Belarusian companies to claim a tax credit for taxes paid in Hong Kong. Similarly, Hong Kong companies will be able to claim tax credit for taxes paid in Belarus.

Belarus-Hong Kong Tax Treaty: Taxation of Dividends, Interest and Royalties

The new treaty establishes a 5% maximum tax rate for dividends and interest payments. This is a large reduction from the current highest rate of 13%. Moreover, in certain cases (mainly Hong Kong or Belarusian government-owned entities), dividends and interest are entirely exempt from taxation.

Additionally, under the new treaty, the royalties will generally be taxed also at 5%. However, if the royalties are paid for the use of (or the right to use) aircraft, then the tax withholding rate is further reduced to 3%. Again, this is a major reduction from the current highest rate of 15%.

Belarus-Hong Kong Tax Treaty: Concessions to Hong Kong Airlines

The special reduction for aircraft-related royalties is a major concession to Hong Kong Airlines, but it is not the only one. Additionally, Belarus agreed that Hong Kong Airlines operating flights to Belarus will be taxed at Hong Kong’s corporation tax rate. Furthermore, the profits from international shipping transport earned by Hong Kong residents that arise in Belarus (and which are currently taxed in Belarus) will now fully escape Belarusian taxation.

Belarus-Hong Kong Tax Treaty: Other Provisions and Entry into Force

The new treaty contains a number of other provisions regulating taxation of capital gains, pensions, government salaries and other income. Additionally, Article 25 of the treaty provides for exchange of tax-related information between Belarus and Hong Kong. This provision may have an unintended consequence for US tax residents who operate in Belarus and Hong Kong, because some information exchanged between Belarus and Hong Kong may be further provided to the United States under Hong Kong’s FATCA tax information exchange obligations.

The Belarus-Hong Kong Tax Treaty will enter into force once both sides complete their own ratification procedures.