Small towns with a population under 50,000
A special preferential treatment applies to commercial organizations, which were established after 1 April 2008, which are domiciled and operate in towns with a population under 50,000 in the Republic of Belarus.
Belarus is a country of small towns, where 184 urban communities, or 89% of their total number, are categorized as small and medium-sized towns. Therefore, Belarus is interested in attracting foreign investment into small and medium-sized towns and villages to ensure the comprehensive development of the country’s economy. To this end, these urban communities have been granted a number of benefits to reduce investor’s expenses and simplify operation terms for investors as much as possible.
The main tax incentives in small and medium-sized towns
Commercial organizations are exempt from:
Profit tax on the sale of self-made goods (works, services) for seven years after their foundation;
other taxes and duties, for five years after their foundation, (excluding value added tax, value added tax on the goods imported into the customs territory of the Republic of Belarus, excises, stamp duties and off-shore duties, state duties, customs duties and fees, land tax, rent for public ownership land, environmental tax for the extraction (removal) of natural resources and other taxes that are calculated, withheld and paid as an organization operates as a tax agent), contributions to the innovation support funds.
Commercial organizations are also exempt from customs duties and value added tax levied on the technological equipment imported as a contribution to their authorized capital.
The main non-tax preferences in small and medium-sized towns
Manufacturing and selling proprietary goods and providing services in Belarus, commercial organizations are entitled to:
- determine the terms of the purchase of raw materials, components and materials and also their amount and types, as well as the terms, volumes and types of sale of products, goods (works, services);
- independently establish and apply free prices (tariffs) for their goods (works, services) except for the socially important goods listed by the government;
- choose suppliers or buyers of products, goods (works, services) for their own production and products, goods (works, services) they manufacture;
- set wages for their employees but not below the minimum wages set by the Government;
- insure their property interests in insurance companies, insurance brokers operating outside the Republic of Belarus.
Within five years after the date of founding, commercial organizations are exempt from obligatory sale of foreign currency received for transactions with legal entities – non-residents and individuals – non-residents from the sale of goods (works, services) they manufacture, including the revenues from the lease of property.
The following measures do not apply to commercial organizations as they acquire raw materials, components and materials for their own production and as they export the products they manufacture:
- Non-tariff measures by means of introducing quantitative and (or) other restrictions (except minimum legal prices for exports);
- Exclusive rights to engage in foreign trade in certain goods;
- Mandatory requirement of making deals via the Belarusian Universal Commodity Exchange;
- Special procedures for procurement, supply or tenders which are conducted by authorized government agencies or commissions.
The aforementioned benefits are granted to investors after they register as a legal entity or an individual entrepreneur. The registration is carried out by local authorities on the day the applicant submits the necessary documents. The number of documents for registration has been reduced to the minimum. A denial of registration may be challenged in court.
If the legislative acts adopted after a commercial organization with a share of foreign investment in its capital has been set up deteriorate the status and terms of operation of the commercial organization, i.e. impose additional obligations or increase the number of obligations, or restrict the rights of commercial organizations or deprive them of their rights, then a commercial organization with a share of foreign investment in its capital falls under the legislation that was in force on the date of state registration of this commercial organization. This measure is applicable within five years after acquiring the status of a commercial organization with a share of foreign investment in its capital.