DECISION OF THE CONSTITUTIONAL COURT OF THE REPUBLIC OF BELARUS
8 December 2004 № D-181/2004

On constitutionality of point 1.5 of Chapter 1 of Instruction on procedure of calculation and payment of due for trading in the territory of the relevant administrative and territorial units approved by Decision of Verkhnedvinsk regional Council of deputies of 29 December 2003 No. 27 "On budget of region for 2004" with alterations and addenda of 27 February 2004 No. 37 and of 25 June 2004 No. 50

     The Constitutional Court of the Republic of Belarus comprising of the Presiding Officer - Chairman of the Constitutional Court G.A. Vasilevich, Deputy Chairman A.V. Maryskin, judges T.S. Boiko, V.V. Podgrusha, A.A. Sarkisova, A.G. Tikovenko, R.I. Filipchik, G.B. Shishko, V.Z. Shuklin, has examined on the grounds of part four of Article 122 of the Constitution of the Republic of Belarus application on the issue of lawfulness of inclusion by Verkhnedvinsk regional Council of deputies of organizations and individual entrepreneurs carrying out realization of saw timber production for outside the Republic of Belarus in the list of the payers of the local due for trading in the territory of the relevant administrative and territorial units.

 

     As a result of making analysis of the relevant provisions of the Constitution, Common part of the Tax Code, Laws "On entrepreneur activities in the Republic of Belarus", "On local government and self-government in the Republic of Belarus", "On trading", "On state regulation of foreign trade activities", "On budget of the Republic of Belarus for 2004" and other enforceable enactments of the Republic of Belarus, the Constitutional Court found the following.

 

     Article 121 of the Constitution shall refer setting in accordance with the law of the local taxes and dues to the exclusive competence of the local Councils of deputies. The Constitutional Court has several times pointed out to strict observance of the specified constitutional norm in its Decisions: of 16 November 2001 "On local due for use of car parks and parking places in specially equipped places"; of 4 December 2001 "On local hunting due"; of 9 October 2002 "On constitutionality of setting of local due from natural persons while crossing by them of the boarder of the Republic of Belarus through control-crossing points"; of 14 February 2003 "On constitutionality of Decision of Pinsk city Council of deputies of 27 December 2001 No. 104 "On budget of city of Pinsk for 2002" in part of setting of local due from users of infrastructure of city" etc.

 

     Taking into account the provisions of Article 10 of the Law "On budget of the Republic of Belarus for 2004", the Constitutional Court pays attention to the competence of local Councils of deputies of based territorial level to set local due from users, including the due from users where the object of it is trading in the territory of the relevant administrative and territorial units (sub-item 1.4 of point 1). According to point 4 of the Article in question the specified Councils of deputies shall impose the local taxes and dues after the enforcement of the Law, specify the payers, objects of taxation, tax base, tax rates in accordance with point 1 of Article 10 of the Law.

 

     Point 7 of Decision of Verkhnedvinsk regional Council of deputies of 29 December 2003 No. 27 "On budget of region for 2004" has set the local due for trading in the territory of the relevant administrative and territorial units and approved Instruction on procedure of calculation and payment of this due which is effective with alterations and addenda made by Decisions of Verkhnedvinsk regional Council of deputies of 27 February 2004 No. 37 and of 25 June 2004 No. 50 (hereinafter is also referred to as Instruction).

 

     In accordance with the Instruction, the payers of the local due for trading in the territory of the relevant administrative and territorial units, in particular, shall be organizations and individual entrepreneurs (except for individual entrepreneurs - payers of a single tax from individual entrepreneurs, as well as individual entrepreneurs who conform to simplified system of taxation), who carry out realization of saw timber production for outside the Republic of Belarus (point 1.5 of Chapter 1). According to point 2 of Chapter 1 of Instruction the object of taxation as applied to the mentioned subjects shall be trading for outside the Republic of Belarus (trading in wood and products thereof), and as the tax base there have been specified the profit from realization of saw timber production off the territory of Verkhnedvinsk region for outside the Republic of Belarus. The rates of the due are fixed in based units and shall depend on the volume of profits (point 2.5 of Chapter 2 of Instruction); calculation and payment of the due shall be made monthly (point 14 of Chapter 3 of Instruction).

 

     The Constitutional Court emphasizes that legal grounds for trading in the territory of the Republic of Belarus shall be specified in the Law "On trading". According to the given Law the trading - entrepreneur activities of trading organizations and individual entrepreneurs where the grounds are the relations as regards selling of produced, processed or acquired goods, as well as concerning the works, services related to the sale of goods (Article 2); subjects of trading shall be trading organizations and individual entrepreneurs which carry out trading in the territory of the Republic of Belarus (Article 5). Under Article 1 of the given Law it shall not cover the relations connected with carrying out foreign trade activities.

 

     The Law "On state regulation of foreign trade activities" shall specify that foreign trade activities - activities of residents of the Republic of Belarus connected with another state, its subjects or international organizations on realization of goods, works services, results of intellectual activities. Export shall be transportation from the customs territory of the Republic of Belarus for abroad with the purpose of permanent location of goods, works services, results of intellectual activities, including exclusive rights to them on the grounds of payable civil legal transactions. The fact of export shall be fixed at the moment of crossing by the goods of the customs boarder of the Republic of Belarus, exercise of works, receiving of services and rights to the results of intellectual activities, including exclusive rights to them (Article 1).

 

     According to points 1.5 and 2 of Chapter 1 of Instruction the payers of the local due for carrying out trading in the territory of the relevant administrative and territorial units are the organizations and individual entrepreneurs carrying out realization of saw timber production for outside the Republic of Belarus. Trade in wood and in products thereof for outside the Republic of Belarus is determined as the object of taxation, profits from realization of saw timber production off the territory of Verkhnedvinsk region for outside the Republic of Belarus - as the tax base.

 

     Thus, the payers of the given due shall be the persons who do not carry out trading in the territory of Verkhnedvinsk region and who are not the objects of trading in the territory of the Republic of Belarus, and within their entrepreneur activities shall export the production in question for outside the Republic of Belarus, i.e. carry out foreign trade activities.

 

     According to the sense of sub-item 1.4 of point 1 of Article 10 of the Law "On budget of the Republic of Belarus for 2004" foreign trade activities are not determined as the object for imposition by the local due from users. The Constitutional Court deems that the object of the specified local due may be activities of trading organizations and individual entrepreneurs, where the grounds are the relations as regards selling of produced, processed or acquired goods, as well as concerning the works, services related to the sale of goods in the territory of the relevant administrative and territorial units (in the case under consideration - in the territory of Verkhnedvinsk regional Council of deputies).

 

     In accordance with point 2 of Article 10 of the Law "On budget of the Republic of Belarus for 2004" in 2004 oblast, Minsk city Councils of deputies, Councils of deputies of based territorial level shall have no right to set other local taxes and dues, except for those specified in point 1 of the given article, as well as to set the payments and contributions into the relevant local budgets, local purpose budget and extra budget funds which have the features of taxes, dues (duties), unless otherwise specified by the Law in question.

 

     The Constitutional Court shall also emphasize that while making alterations and addenda into Instruction by Decisions of Verkhnedvinsk regional Council of deputies of 27 February 2004 No. 37 and 25 June 2004 No. 50 the rates of the dues within 2004 have been changed twice and for increasing. Thus, initially, since 1 January 2004 there have been fixed the following rates of the due: with sales proceeds up to 5 m. r. (million roubles) - 50 Euros per month; from 5 to 10 m. r. - 75 Euros; more than 10 m. r. - 100 Euros. Since 1 March 2004 two first rates were doubled (100 and 150 Euros per month respectively), as well as further differentiation of the rates was made: from 10 m. r. to 20 m. r. - 300 Euros; from 20 to 30 m. r. - 600 Euros; from 30 to 40 m. r. - 900 Euros; from 40 to 50 m. r. - 1200 Euros; from 50 m. r. to 60 m. r. - 1500 Euros etc. until fixation of the rate with sales proceeds of more than 80 m. r. at the rate of 2500 Euros. The effective rates have been fixed by Decision of 25 June 2004 no. 50 in based units (accordingly 10, 20, 40, 80, 120 etc. up to 355 based units per month with sales proceeds of more than 80 m. r.; moreover, their application has been given retroactivity; under point 4 of Decision they are subject to application since 1 March 2004.

 

     In the opinion of the Constitutional Court, this approach of Verkhnedvinsk regional Council of deputies to fixation of the rates of the local due shall signify about insufficient analysis of economic validity of their size and the absence of timely forecast of the increase in question. The Constitutional Court has paid attention to this in its Decisions of 4 April 2001 "On taxation of subjects of entrepreneur activities in the sphere of transport service of citizens" and of 12 January "On constitutionality of Decisions of Vitebsk, Polotsk and Novopolotsk city Councils of deputies on setting of local due for the right to deal with gambling business (right to locate of a gambling institution)".

 

     Moreover, in accordance with sub-item 1.4 of point 1 of Article 10 of the Law "On budget of the Republic of Belarus for 2004" the tax rates of the dues from users shall be fixed depending on the object of taxation in per cent of the tax base and (or) at the rates multiple of the based unit. Correspondingly, before making by Decision of Verkhnedvinsk regional Council of deputies of 25 June 2004 No. 50 of alterations in the Instruction, its provisions as regards fixation of the rates calculated in Euros were not in line with the Law "On budget of the Republic of Belarus for 2004".

 

     Guiding by part one of Article 116, part four of Article 122 of the Constitution, Articles 7, 36, 38, 40, 40¹ of the Law "On Constitutional Court of the Republic of Belarus", the Constitutional Court

 

RULED:

 

1. To find point 1.5 of Chapter 1 of Instruction on procedure of calculation and payment of due for trading in the territory of the relevant administrative and territorial units approved by Decision of Verkhnedvinsk regional Council of deputies of 29 December 2003 No. 27 "On budget of region for 2004" with alterations and addenda of 27 February 2004 No. 37 and of 25 June 2004 No. 50, as well as other based on this point norms of Instruction to be at variance with Article 121 of the Constitution of the Republic of Belarus and Article 10 of the Law of the Republic of Belarus "On budget of the Republic of Belarus for 2004".

 

2. The present Decision shall come into legal force from the date of adoption.

 

3. To publish the present Decision in accordance with the legislation.

 

Presiding Officer —

Chairman of the Constitutional Court

of the Republic of Belarus                                                                                               G.A. Vasilevich