OREANDA-NEWS. The tax burden of Belarus' potash-extracting breadwinner Belaruskali is expected to double in 2015 in accordance with the new edition of the Tax Code pending.

The bill suggests that the 12% flat tax on potash production should be replaced with a progressive ad valorem tax, which will vary depending on fluctuations of potash prices so that Belaruskali's profit margin does not exceed 30%. At the moment, Belaruskali's profit margin exceeds 60%.

Potash prices are expected at USD 262 per tonne in 2015, so the minimum tax on potash production will stand at 21%, so that the government could collect USD 50 in taxed per tonne of potash extracted.

The new tax practice will double Belaruskali's tax burden and will yield Br2.2 trillion (USD 212.766 million) in surplus tax proceeds for the government.

As previously reported, Belarus introduced a new mechanism for collecting the tax on potash salt production, in conformity with the president's ordinance #188 of May 2, 2014.

The ordinance says that starting April 1 till December 31, 2014 the tax on potash salt production shall stand at Br32,460 (USD 3.14) per tonne (in terms of 100% potassium chloride); ad valorem tax at 12% of the average weighted price of potash fertilizer sold domestically or exported.

The new tax rate took effect on April 1, 2014. It is worth mentioning that Belarus introduced a zero tax on potash fertilizer exports in 2014. The absence of tax proceeds from potash export will be partially offset by the new mechanism for collecting the tax on potash salt production.

Belarus introduced a combined tax on potash salt extraction on January 1, 2012. The new mechanism for collecting the tax on potash salt extraction is stipulated in the new edition of the Tax Code.

Belaruskali, which controls 16% of the global potash trade, is the only manufacturer of potash salt in Belarus.