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, G.A. Vorobei, K.I. Kenik, V.V. Podgrusha, A.A. Sarkisova, A.G. Tikovenko, R.I. Filipchik, G.B. Shishko, V.Z. Shuklin, having examined on the basis of Article 40, part one of Article 116, part four of 122 of the Constitution of the Republic of Belarus complaint of a citizen - an inhabitant of the city of Minsk on the application of the fixed rate of incomes tax while taxation of incomes from renting out a room in a living accommodation (flat), found the following. Taxation of incomes earning by natural persons under the contracts of rent (sub-rent) of a living accommodation shall be carried out in accordance with Article 16 of the Law of the Republic of Belarus "On income tax from natural persons" (hereafter is referred to as Law), as well as other incomes of natural persons which are not listed in other Articles of the Law.

According to point 2 of Article 6 of the Law under the certain types of the activities, which shall be subject to determination by the President of the Republic of Belarus and (or) by the Government of the Republic of Belarus, the Government of the Republic of Belarus shall specify the procedure and the terms for payment of the fixed sums of incomes tax. Oblasts and Minsk city Councils of deputies under each type of the activities depending on goods turnover, range of products (goods, works, services), quantity of the employees engaged therein and on other peculiarities of the activities shall set the rate of the fixed sums of incomes tax. The list of types of entrepreneur activities carrying out by the citizens without forming a legal entity under which oblasts and Minsk city Councils of deputies may set the rates of incomes tax from the citizens in stable sums has been approved by Resolution of the Cabinet of Ministers of the Republic of Belarus of 27 April 1995 No. 228 "On approval of the list of types of entrepreneur activities carrying out by the citizens without forming a legal entity under which oblasts and Minsk city Councils of deputies may set the rates of incomes tax from the citizens in stable sums, and the procedure of collection of incomes tax from the citizens in stable sums" (effective with alterations and addenda made by Resolutions of the Government of 20 June 1995 No. 312, of 28 February 1996 No. 149, of 20 February 1997 No. 107, of 5 September 1997 No. 1182, of 9 June 1999 No. 864).

The given List shall include renting out by the citizens living and not fit for living-in accommodation. Minsk city executive committee in its Decision of 22 June 1995 No. 400 "On approval of types of entrepreneur activities carrying out by the citizens without forming a legal entity, and the rates of incomes tax in stable sums" has approved the List of types of entrepreneur activities carrying out by the citizens without forming a legal entity under which there have been set the rates of incomes tax in stable sums. Item 14 of the given List (addendum 1 to the Decision shall specify renting out living accommodation and the tax rates: one-room flat - 12 monthly minimum wages, two-room - 24, three-room - 36. In accordance with point 1.3 of the Decision the specified rates are applicable while renting out not only the flats but also the houses and other detached living accommodation; while renting out a part of premises (share) rates shall be reduced to 50 per cent. Decision of Minsk city executive committee of 28 March 1996 No. 207 (hereafter referred to as Decision No. 207) has approved the given List in its new wording.

Tax rate while renting out living accommodation were not subject to alteration (item 25 of the List). Point 5 of Decision No. 207 shall also stipulate the application of the specified rates while renting out by the citizens not only the flats but also detached living accommodation and reduction of the rates to 50 per cent while renting out a living accommodation. The Constitutional Court pays attention that the given Decisions of Minsk city executive committee have been adopted with going beyond the powers. Under the Law of the Republic of Belarus of 29 December 1994 "On making alterations and addenda into the laws of the Republic of Belarus on the issues of taxation" which has contained the instruction for the Government to specify the types of entrepreneur activities carrying out by the citizens without forming a legal entity under which oblasts and Minsk city Councils of deputies may set the rates of incomes tax from the citizens in stable sums and the procedure of the tax collection and according to the adopted in the fulfilment of the given Law Resolution of the Cabinet of Ministers of the Republic of Belarus of 27 April 1995 No. 228 those powers have been given only oblasts and Minsk city Councils of deputies. Minsk city Councils of deputies has specified the List of types of entrepreneur activities carrying out by the citizens without forming a legal entity and yearly income taxes in stable sums in its Decision of 19 November 1997 No. 111 "On approval of the List of types of entrepreneur activities carrying out by the citizens without forming a legal entity".

Tax rates, the same as in decisions of Minsk city executive committee, have been fixed for the calculation of the tax only in instances of rent flats: one-room, two-room, three-room flats and more (item 25 of the List in question). Moreover, unlike decisions of Minsk city executive committee decision of Minsk city Council of deputies contains no provisions on applications of the given rates in instances of rent other, apart from flats, types of living accommodation or part of living accommodation, including rooms in flats or part of living space. Analysis of law applying practice shall indicate that, since Decision of Minsk city executive committee No. 207 has not been recalled or found to be null and void in the prescribed manner, it is still subject to application by state tax bodies, in particular, while taxation of the incomes from renting detached living accommodation (houses), rooms in flats etc. (point 5 of decision). The Constitutional Court emphasizes that such a practice is not in conformity with Article 58 of the Constitution which shall stipulate the principle of prohibition to be compelled to discharge duties that are not specified in the Constitution of the Republic of Belarus and its laws. Under Article 7 of the Constitution the State and all the bodies and officials thereof shall operate within the confines of the Constitution and the laws enacted in accordance therewith. Law creating activities of state bodies should be in line with the principles and general requirements specified in Articles 7, 9 of the Law of the Republic of Belarus "On enforceable enactments of the Republic of Belarus", including with the requirement on adoption (issue) of an enforceable enactment by the authorized state body within its powers.

The Constitutional Court pays attention that Decree of the President of the Republic of Belarus of 17 May 2001 No. 12 "On introduction of single tax from individual entrepreneurs and from other natural persons, who carry out realization of goods, services, and on some issues concerning those activities" with addenda made by Decree of the President of the Republic of Belarus of 8 November 2001 No. 26 has approved the List of types of activities for realization of which individual entrepreneurs and other natural persons shall pay single tax, as well as basic rates of a single tax. The List in question shall contain a number of types of activities under which previously there have been set the fixed (stable) rates of incomes tax. Due to that, local Councils of deputies in order to avoid collisions between enforceable enactments should differ their competence on setting the rates of single tax on the grounds of the given Decree and on setting the rates of fixed sums of incomes tax on the grounds of the Law "On income tax from natural persons".

In the opinion of the Constitutional Court there is a need of additional legal grounds inclusion into the approved by the Government List of types of entrepreneur activities of the citizens without forming a legal entity under which oblasts and Minsk city Council of deputies may set the rates of income tax from citizens in stable sums of those types of activities which need no state registration and the incomes from them, in accordance with tax legislation, shall not be referred to the incomes from entrepreneur activities. At the same time, the Constitutional Court emphasizes that the Council of Ministers of the Republic of Belarus according to point 2 of Article 6 of the Law "On income tax from natural persons" is vested with the right to specify certain types of both entrepreneur and other activities under which oblasts and Minsk city Councils may set the rates of fixed sums of income tax.

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

RULED:

1. To emphasize that under Article 7 of the Constitution of the Republic of Belarus the State and all the bodies and officials thereof shall operate within the confines of the Constitution and the laws enacted in accordance therewith. Law creating activities of state bodies should be in line with the principles and general requirements specified in Articles 7, 9 of the Law of the Republic of Belarus "On enforceable enactments of the Republic of Belarus", including with the requirement on adoption (issue) of an enforceable enactment by the authorized state body within its powers.

2. Minsk city Council of deputies and Minsk city executive committee shall bring on or before 1 July 2002 their decisions regulating the issues of setting the rates of fixed sums of income tax, including instances of renting out (sub-renting) of living houses, rooms or the space in living accommodation, into line with the Law of the Republic of Belarus "On income tax from natural persons" and with the present Decision.

3. To propose the Council of Ministers of the Republic of Belarus to make, with the present Decision taken into account, the relevant alterations in Resolution of the Cabinet of Ministers of the Republic of Belarus of 27 April 1995 No. 228 "On approval of the list of types of entrepreneur activities carrying out by the citizens without forming a legal entity under which oblasts and Minsk city Councils of deputies may set the rates of incomes tax from the citizens in stable sums, and the procedure of collection of incomes tax from the citizens in stable sums".

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

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

Presiding Officer —

Chairman of the Constitutional Court

of the Republic of Belarus                                                                                               G.A. Vasilevich