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 Article 122 of the Constitution of the Republic of Belarus collective motion of leaders of taxis fleets of Brest, Vitebsk, Gomel, Mogilyov oblasts and of the city of Minsk, found the following.

The motion specifies that at present many citizens are illegally in carrier in the Republic of Belarus. Moreover, attention is paid to the fact, that certain state bodies exercise no due control over both the persons who have no licence to deal with intrepreneur activities and over those who have licences but who are hiding income from taxation. That situation leads to the fact that the state is damaged in receiving less taxes. In the opinion of applicants, local bodies of power which shall set fixed tax rates for those categories of tax payers 5—10 times less than for legal entities, shall contribute to that. All their application to the relevant bodies gave no positive reply to the issues raised.

Subjects of entrepreneur activities under Articles 22, 46 of the Civil Code of the Republic are for-profit organizations and individual entrepreneurs. At the same time, an entrepreneur shall have the right to deal with any economic activities which are not prohibited in the Republic of Belarus. An entrepreneur shall be obliged, in accordance with the established procedure, to obtain special permit (licence) of the activities in the spheres which are subject to licensing under the legislation of the Republic of Belarus (Articles 6, 7 of the Law “On entrepreneurship in the Republic of Belarus”). Passenger transportation is included in the List of types of activities which need special permit (licence) and bodies which shall issue those permits (licences) approved by Resolution of the Cabinet of Ministers of the Republic of Belarus of 21 August 1995 No. 456.

Taxation of the subjects of entreprenuer activities shall be regulated by tax legislation of the Republic of Belarus depending on the organizational legal form they choose.

Taxation of the income of individual entrepreners shall be carried out on the basis of the Law of the Republic of Belarus of 21 December 1991 “On income tax from natural person” (in wording of the Law of 9 March 1999 with further addenda). According to point 2 of Article 6 of the given Law the Government or the bodies it authorizes, under specification of the President of the Republic of Belarus and (or) of the Government of the Republic of Belarus of certain types of activities, shall ascertain fixed (stable) sums of income tax, as well as the procedure for their collection by each type of activities depending on trade turnover, assortment of goods (works, services), strength of manpower engaged and on other peculiarities of activities. Transport service of citizens according to 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 carried out by citizens without making legal entity, under which Councils of deputies of oblasts and of Minsk city Council of deputies may fix income rates from citizens in stable sums, and of procedure of collection of income tax from citizens in stable sums” with further alterations and addenda, shall be related to those types of activities.

Current effective rates have been fixed by Councils of deputies of oblasts and by Minsk city Council of deputies, as a rule, in 1996 — 1998. Comparative analysis of the rates points to their significant difference through regions: from 3 minimum wages per month in Minsk oblast to 12 minimum wages — in Brest oblast. Monthly income tax paid by individual entrepreneurs who carry out passenger traffic, based on minimum wage 5,700 roubles, is from 17,100 to 68,400 roubles.

Taxation of legal entities, taxis fleets included, shall be made under other acts of tax legislation which, equally with income taxes and profit taxes, shall pay other taxes (Vat, land tax, real-estate tax etc.)

According to assertion of representatives of taxis fleets the fixed rate of income tax collected from individual entrepreneurs who render transport services shall be about 65 per cent of tax load on taxis enterprises per one worker.

The aim for fixing rates of income tax in strong sums shall be, on the one hand, simplification of accounting for individual entrepreneurs, and ensuring tax collection — on the other hand.

While paying tax in strong sums, receipts and expenditure from those activities shall not be taken into consideration by calculating aggregate yearly income. However, according to the specified Resolution of the Cabinet of Ministers of the Republic of Belarus of 27 April 1995 No. 228 and on the basis of point 15.2.4 of the Methodical instructions on calculation and pay of income tax from natural persons approved by order of State tax committee of the Republic of Belarus of 6 April 1999 No. 62 if, actually earned income for accounting quarter half as much outruns the sum of income which is relevant to the fixed tax rate, income tax shall be paid under generally established procedure.

It is necessary to take into account that legal entities — taxis fleets and individual entrepreneurs, who render people transport services, are in different conditions of economic activities. Thus, driver — an individual entrepreneur shall carry out activities at his risk, provide maintenance and buy fuel and lubricants for his own account. At the same time, drivers of taxis fleets shall have maintenance facilities, management personnel, bear no direct responsibility as owners of a source of heightened danger. There are other differences in their activities.

Under Article 13 of the Constitution of the Republic of Belarus the State shall grant equal rights to all to conduct economic and other activities, other than those prohibited by law, and guarantee equal protection and equal conditions for the development of all forms of ownership, as well as equal opportunities for free utilization of abilities and assets for business and other types of economic activities which are not banned by the law. The State shall regulate economic activities on behalf of the individual and society, and shall ensure the direction and co-ordination of state and private economic activity for social purposes.

In the opinion of the Constitutional Court, guarantee of equal rights to conduct economic activities shall not exclude the necessity to take into account objective different conditions for economic activities. However, different taxation should not restrict the possibilities of bona fide competition of subjects of business acting in different economic legal conditions, since it may inflict injury on the rights, freedoms and lawful interests of citizens — users of taxis transport services.

The motion also points to inadequate control on the part of tax bodies, State motor licencing and inspection department (GAI), Committee of financial investigations and of other state bodies over transportation of passengers by individual entrepreneurs and over observance of legislation.

On the results of study of the practice of rendering transport services for population, the Constitutional Court pays attention of control bodies to strengthening control over correct calculation and collection of taxes from tax payers who deal with transportation of passengers.

Guided by Article 40, part one of Article 116 of the Constitution, part four of Article 122 of the Constitution, by Articles 7, 11, 36, 38, 40, 40¹ of the Law “On the Constitutional Court of the Republic of Belarus” the Constitutional Court 

RULED: 

1. To propose the Council of Ministers of the Republic of Belarus to analyze economic validity of the established by Councils of deputies of oblasts and by Minsk city Council of deputies fixed rates of income tax collected from individual entrepreneurs who render people transport services in accordance with Resolution of the Cabinet of Ministers of 27 April 1995 No. 228 and, in case of necessity, to recommend Councils of deputies of oblasts and Minsk city Councils to elaborate those rates taken into account comparability of tax load per one worker of a taxis enterprise for the purpose of non-putting down economic activeness of various subjects of economic activities.

2. To propose tax bodies, bodies of State motor licencing and inspection department (GAI), Committee of financial investigations and other control bodies to strengthen control over activities on rendering people transport services and proper application of the measures of responsibility for non-observance of the legislation in entrepreneurship and taxation.

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

4. To publish the present Decision in accordance with effective legislation.

Presiding Officer —

Chairman of the Constitutional Court

of the Republic of Belarus                                                                                               G.A. Vasilevich