1 February 2001 № D-106/2001
The Constitutional Court of the Republic of Belarus, comprising of the Presiding Officer — Chairman of the Constitutional Court G.A. Vasilevich, 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 grounds of Article 40 and part one of Article 116 of the Constitution petition trade-union committee of Production Association “Belaruskalyi” on the issue of taxation of retirement benefits specified in collective agreement and paid in case of discharge due to expiration of the term of contract validity with an employee who has been granted the right to retirement pension or to disability pension, established the following.
Part one of Article 48 of the Labour Code stipulated that retirement benefit shall be paid in instances specified in the Labour Code and in other acts of legislation, in collective agreement, arrangement. Besides the instances of pay of retirement benefit specified in the Labour Code and in other acts of legislation thus, the legislation gives the right to solve that issue at local level — in collective agreements and arrangements of parties. The complaints to the Constitutional Court shall signify, that collective agreement which is effective at the Production Association “Belaruskalyi” shall envisage the pay of retirement benefit, depending on uninterrupted service in the association while discharging due to expiration of the term of contract validity, for employees (except for those who combining jobs) who have been granted the right to retirement pension. In practice there have been emerged the issue on the lawfulness of taxation of retirement benefits envisaged in addition to collective agreements.
According to sub-point 1.36 of point 1 of Article 3 of the Law of 21 December 1991 “On income tax from natural persons” (in wording of the law of 9 March 1999) retirement benefits paid in instances specified in legislation of the Republic of Belarus shall not be liable to income tax. Sub-point 2.1.36 of Methodical instructions on calculation and pay of income tax from natural persons approved by order of the State tax committee of the Republic of Belarus of 6 April 1999 No. 62 (with alterations and addenda thereto of 23 October 2000 No. 95) has given the exhaustive list of instances with the coming of which paying retirement benefits are liable to no tax. It is also determined, that retirement benefit shall not be liable to tax to the tune exceeding minimum size established by the acts of legislation of the Republic of Belarus on condition that local enforceable enactments (collective agreement, arrangement and others — Article 7 of the Labour Code) shall stipulate such an exceeding. However, that list comprise no pay of retirement benefits envisaging in accordance with the legislation (Article 48 of the Labour Code) by collective agreements.
Retirement benefit shall be guaranteed sum of money paying for employee in case of discharge on the initiative of employer for his innocent actions for the reasons beyond control of employee, as well as for the circumstances beyond the will of the parties. The aim of the retirement benefit is to ease consequences for employee as a result of the loss of the job.
The Constitutional Court of the Republic of Belarus notes contradictoriness of the effective legislation in the sphere of regulation of relations due to establishment and pay of retirement benefits, as well as due to their liability to tax. In accordance with Article 48 of the Labour Code the rate of retirement benefit may be exceeded without restrictions in instances of discharge on the grounds directly specified in Article 48 of the Labour Code included.
On the one hand retirement benefits according to the Methodical instructions are not liable to tax to the tune exceeding the size established directly by the acts of legislation provided that local enforceable enactments shall stipulate that exceeding, on the other hand, taxation shall be carried out by establishing retirement benefits in other instances on the basis of local enforceable enactments in accordance with legislation (Article 48 of the Labour Code).
Article 3 of the Law of 20 December 1991 “On taxes and dues collected into the budget of the Republic of Belarus” (with alterations of 22 December 1992) envisages that insertion of the provisions regulating issues of taxation in other acts of legislation shall not be admissible. At the same time, according to Article 109 of the Labour Code it is inadmissible to deduct from retirement benefit of compensatory and other payments against which under the legislation recourse shall not be taken. It is possible to make the conclusion that retirement benefits in question are both those exceeded at local level to the tunes as compared with minimum rates specified in the Labour Code and those established by collective agreement of by the arrangements of parties.
In accordance with Article 10 of the Law “On enforceable legal acts of the Republic of Belarus” the Code shall have the higher legal force than the law. New enforceable legal act shall have more legal force in relation to previously adopted enforceable enactment on the same issue of the same state body. According to Article 71 of the given Law in case of collision among enforceable legal acts the subjects of law relations should be guided by the norm of the act of higher legal force. In that connection the provisions of the Labour Code should take priority thereof.
Therefore, the Constitutional Court deems that there are no legal grounds for the specification in by-laws of the procedure of tax deductions from one type (size) of retirement benefits and no deductions from other types (sizes) of retirement benefits. That right shall belong to the lawmaker and it may be realized with the necessity of ensuring the relations of enforceable enactments and their legal force taken into account.
In the opinion of the Constitutional Court there is no exclusion of the right of the lawmaker to envisage taxation of the payments which shall considerably exceed generally established rates or of the retirement benefits establishing at local level. However, solution of the given issue shall be carried out with the requirements of Article 137 and other Articles of the Constitution of the Republic of Belarus oriented towards making in the Republic of Belarus of social state taken into account.
Moreover, the Constitutional Court points out the contradictory nature of the terms and notions used in enforceable enactments with regard to guaranteed and compensatory payments.
Based on the aforestated and guided by Article 40, part one of Article 116 of the Constitution, by Articles 7, 36, 38, 40, 401 of the Law “On the Constitutional Court of the Republic of Belarus” the Constitutional Court
RULED:
1. To find to be lawful the establishment in collective agreements of retirement benefits envisaging on the ground of Article 48 of the Labour Code (besides retirement benefits directly specified in that Article).
2. To propose the National Assembly of the Republic of Belarus, the State tax committee of the Republic of Belarus to take urgent measures on elimination existing collisions in the legislation. At the same time, due to obvious contradictory nature of the norms of various legal acts, in the opinion of the Constitutional Court, there shall be no responsibility of an employer, no material responsibility of officials who have made no deductions from retirement benefits specified in collective agreement or arrangement of parties, as well as there shall be no recovery from employees of the sums non-deducted from those retirement benefits for the purposes of 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
of the