CONDITIONS FOR INVESTMENT IN THE REPUBLIC OF BELARUS

The Republic of Belarus offers investors a favorable legal environment for doing business.

At the international scale:

• international law;
• over 60 bilateral agreements on avoidance of double taxation;
• about 60 bilateral agreements on assistance in implementation (promotion) and mutual protection of investments;
• Convention establishing the Multilateral Investment Guarantee Agency (Convention MIGA);
• Convention on the Settlement of Investment Disputes between States and Individuals and Legal Entities of Other States (ICSID);

other international agreements.

National legislation

Constitution of the Republic of Belarus (fundamental law of the Republic of Belarus)

The Law of the Republic of Belarus of July 12, 2013 ”On Investments“ (adopted in 2013) provides foreign investors with equal business conditions and no less favorable regime than the corresponding one for individuals and legal entities of the Republic of Belarus.

According to the Law of the Republic of Belarus ”On Investments“, investments are any property and other objects of civil rights that belong to the investor by right of ownership, other legal basis, allowing him to dispose of such objects invested on the territory of the Republic of Belarus by the methods provided for in this Law, in order to make a profit (income) and (or) to achieve other significant results or for other purposes not related to personal, family, household or other similar use, in particular:

movable and real property including stocks, shares in the registered capital, equity interests in the property of the commercial organization established on the territory of the Republic of Belarus, monetary funds, including the attracted, among them loans and credits;

• the rights of claim with assessment of their value;
• Other objects of civil rights, with an assessment of their value, except for the types of objects of civil rights, the circulation of which is not allowed (objects taken out of circulation).

On the territory of the Republic of Belarus investments shall be made by the following methods:

• creation of a commercial organization;
• acquisition, creation, including by means of construction, of objects of immovable property, except determined by paragraph 4 of Article 2 of the Law;
• acquisition of rights on the objects of intellectual property;
• acquisition of stocks, shares in the registered capital, equity interests in the property of the commercial including the cases of increase of the registered capital of the commercial organization;
• on the concession basis;
• Other methods, except for those prohibited by the legislative acts of the Republic of Belarus.

Under the Law of the Republic of Belarus «On Investments” investors are guaranteed:

• free transfer outside the Republic of Belarus of the profit (income) and other legally obtained monetary funds related to making investments on the territory of the Republic of Belarus, as well as the payments made in favor of the foreign investor, and related to making investments, after the payment of taxes and levies (duties) and other obligatory payments established by the law of the Republic of Belarus to the national and local budgets, state non-budgetary funds;
• the right to sell their property and non-property rights in accordance with the law of the Republic of Belarus;
• the exclusive rights to the objects of intellectual property;
• the right to use land plots, rent, property in accordance with the law of the Republic of Belarus on the protection and use of land;
• The right to create commercial organizations on the territory of the Republic of Belarus with any volume of investments, in any organizational and legal forms stipulated by the law of the Republic of Belarus, subject to the restrictions established by Article 6 of the Law of the Republic of Belarus «On Investments».
• the right for benefits and preferences when making investments into the priority types of activities (sectors of economy), and in other cases established by the legislative acts of the Republic of Belarus and (or) international legislation that are mandatory for the Republic of Belarus;
• the right for the attraction to the Republic of Belarus of foreign citizens and stateless persons for work;
• the right for the conclusion of the agreement (agreements) with the Republic of Belarus;
• the right for protection of property against nationalization and requisition;
• free transfer of the compensation for foreign investors outside the Republic of Belarus;

The right to pre-trial settlement agreement.

Benefits and policy preferences are implemented in the Republic of Belarus, especially in free economic zones, small and medium towns, rural area, High-Tech Park.

Additional guarantees and incentives are provided to investors for investment projects implementation in free economic zones, HTP, special tourist and recreation park "Avgustov Canal", Industrial Park, small and medium towns, rural areas, as well as to small and medium businesses.

For reference:

Tax Code of the Republic of Belarus,

Decree of the President of the Republic of Belarus as of 22.09.2005 № 12 (ed. 02.12.2013) ”On High-Technology Park“,

Edict of the President of the Republic of Belarus as of 26/05/2011 № 220”On creation of a special tourist and recreation park ”Avgustov Canal“,

Edict of the President of the Republic of Belarus as  of 05.06.2012 № 253 (ed. 13.06.2013) ”On China-Belarus Industrial Park“,

Decree of the President of the Republic of Belarus as  of 07.05.2012 № 6 (ed. 11.09.2013) ”On stimulation of entrepreneurial activity on the territory of small and medium towns, rural areas“.

Since 2009 the concept «investment agreement with the Republic of Belarus has been operating successfully.

For reference:

Decree of the President of the Republic of Belarus as of 06.08.2009 № 10”On creation of additional conditions for investment activity implementation in the Republic of Belarus“(ed. Decrees of the President of the Republic of Belarus as  of 13.09.2010 № 7, of 06.06.2011 № 4, of 31.01.2013 № 3), Decree of the President of the Republic of Belarus as of 06.06.2011 № 4 ”On introduction of amendments and changes to the Decree of the President of the Republic of Belarus of 06.08.2009 № 10“.

Investment agreement is one of the possible forms of public-private partnership. Investor receives additional guarantees and preferences through signing such an agreement. There is also a possibility to receive individual preferences.

For the aims of its implementation the following regulations were adopted: Regulation on the order of conclusion, change, termination of investment agreement with the Republic of Belarus; Regulation on the order rules of the State register of investment agreements with the Republic of Belarus; Regulation on the coordination order of the list of goods  (works, services), property rights, objects, acquired (imported to the territory of the Republic of Belarus) and used for designing, construction (reconstruction), fitting-out in the investment project which is implemented according to the investment agreement with the Republic of Belarus; Regulation on the order of conditions confirmation for the exemption of import customs duties and (or) VAT in terms of imported manufacturing equipment, component and spare parts,  and (or) materials and raw materials. In order to define the priority types of activity (sectors of economy) the Resolution of the Council of Ministers of the Republic of Belarus of 26.02.2014 № 179”On priority types of activity (sectors of economy) “for benefits appliance according to the Resolution of the Customs Union Commission as of 27.11.2009 № 130”On the single customs and tariff regulation of the Customs Union of the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation“.

For reference:

Resolution of the Council of Ministers of the Republic of Belarus as of 06.08.2011 № 1058 (ed. 19.02.2014) ”On implementation measures of the Decree of the President of the Republic of Belarus as  of 06.06.2011 № 4“ (Regulation on the order of conclusion, change, termination of investment agreement with the Republic of Belarus; Regulation on the order rules of the State register of investment agreements with the Republic of Belarus; Regulation on the coordination order of the list of goods  (works, services), property rights, objects, acquired (imported to the territory of the Republic of Belarus) and used for designing, construction (reconstruction), fitting-out in investment project which is implemented according to the investment agreement with the Republic of Belarus; Resolution of the Council of Ministers of the Republic of Belarus as  of 19.02.2014 № 149 ”On the approval of the Regulation on the order of conditions confirmation for the exemption of import customs duties and (or) VAT in terms of imported manufacturing equipment, component and spare parts,  and (or) materials and raw materials, as well as introduction of changes and amendments to the Resolution of the Council of Ministers of the Republic of Belarus as of 06.08.2011 № 1058 and 17.02.2012 № 156.

According to the results of the annual survey of commercial organization, held by the Ministry of Economy of the Republic of Belarus, the preferential regimes of the Republic of Belarus are highly evaluated by investors.

In order to meet the challenges of previous years and achieve the aims of the new five-year plan, there were made some favorable changes in tax conditions for production of innovative and high-technology products, sales of automobiles and auto parts of the own production, in motorway service, filmmaking, tourism, etc.

In order to increase the inflow of foreign investments, especially direct ones, which are of interest for the republic, the concept «investment agent» has been implemented.

For reference:

Edict of the President of the Republic of Belarus as of 06.08.2009 № 413.

These are individuals or legal entities that have the necessary practical skills and experience in the implementation of investment projects and which will assist the country in search of potential investors.

In order to implement the Edict № 413, there was developed the Regulation on the order of granting authorities to individuals and legal entities in terms of representation of interests of the Republic of Belarus on the issues of investment attraction to the Republic of Belarus, validated by the Resolution of the Council of Ministers of the Republic of Belarus as of 06.11.2009 № 1448 (ed. 27.09.2012).

There is Foreign Investment Advisory Committee of the Council of Ministers of the Republic of Belarus (FIAC) functioning in the Republic of Belarus. It consists of the representatives of foreign companies, state bodies, and scientific institutions. It facilitates the direct dialogue between the Government and investors.

Permanent working groups of the Committee deal with the improvement issues of investment legislation, tax and customs terms of work at the Belarusian market and other issues.

In order to protect the rights and legitimate interests of investors there was developed and adopted the Regulation on pre-trial settlement agreement. According to the Regulation, investors under investment agreement have the right to appeal to a state body for protection of their rights and settlement agreement before appealing to the court.

For reference:

Resolution of the Council of Ministers of the Republic of Belarus as of 14.02.2012 № 146 (ed. 11.12.2013)”On the adoption of the Regulation on pre-trial settlement of disputes (disagreements) referred to investments“.

In order to improve the work on the attraction of foreign investment, raise the efficiency of privatization processes in the Republic of Belarus and facilitate the interaction between investors and state bodies, state institution «National Agency of Investment and Privatization” was established in the Republic of Belarus.

For reference:

Edict of the President of the Republic of Belarus of 25.05.2010 № 273 (ed. 21.02.2014) ”On creation of state institution ”National Agency of Investment and Privatization“.

The Agency facilitates the implementation of foreign direct investment, including the privatization of state property. The Agency participates in the implementation of state policy in the sphere of investments and privatization, monitoring and maintenance of investment projects and privatization of state property, creating a positive investment image of the country, providing a full package of services to investors.

Active cooperation with international organizations creates important prerequisites for the attraction of foreign investments. Focused efforts are made to include the Republic of Belarus in international economic processes.

In order to create the conditions for covering risks of foreign investors on the territory of our country, attract foreign financial resources without granting government guarantees to foreign investors, and accordingly without the increase of external public debt of the republic, the Government has taken some measures to join the Multilateral Investment Guarantee Agency (MIGA). Having signed and ratified all the necessary documents, in 2012 Belarus has become a full-fledged member of MIGA.

For reference:

MIGA is a member of the World Bank Group. Its main tasks are to cover political risks and grant guarantees for damage recovery in terms of non-commercial risks, promote foreign direct investment (FDI) into developing countries, help to support economic growth, reduce poverty and improve people's lives.

It confirms the readiness of our country to follow the norms and standards of international economic cooperation.

In order to create favorable conditions for investments made by investors of one state at the territory of another state, and acknowledging that the mutual assistance in implementation and protection of such investments facilitate the development of business initiative and increase of welfare of both countries, the Republic of Belarus signed about 60 agreements on assistance in implementation (promotion) and mutual protection of investment.

The agreements provide the following guarantees:

• national regime (each party provides investors of the other country with the regime no less favorable than it provides to investors of any other third country in the same situation);
• minimal standards (each party provides the investments of other country with the regime according to international law, including fair and equal regime, protection and security, etc.);
• expropriation and compensation (none of the party has the right to expropriate or nationalize investments both direct and indirect through measures which are similar to expropriation or nationalization,with the exception of cases that are of public interest; on nondiscriminatory basis; correspond to the proper legal procedure; under the condition of compensation payment, etc.);
• other guarantees.

State investment policy is focused on mobilization of all the efforts to attract investors, stimulate reinvestment and create new high-technology production.

The Strategy for foreign direct investment attraction until 2015 has defined the priority sectors for foreign direct investments (pharmaceutics, biotechnology, nanotechnology, new materials, information and communication technologies).

For reference:

Resolution of the Council of Ministers of the Republic of Belarus, National Bank of the Republic of Belarus as  of 18.01.2012 № 51/2 (ed. 11.12.2013) ”On the adoption of the strategy for foreign direct investment attraction to the Republic of Belarus till 2015“.

The Attraction of foreign direct investments is also meant to traditional types of economic activity. Clusters for pharmaceutical and flax production should be developed.

Nowadays the main direction to achieve the stated aims is to implement the policy of further liberalization of business conditions, to improve the investment protection mechanisms, which facilitate the investment activities, creation of equal nondiscriminatory conditions of investment implementation for all investors.

Significant steps have already been made in this direction, which is reflected in evaluations of international experts.

The Formation of favorable investment climate and stimulation of foreign direct investment attraction to the Republic of Belarus is held to achieve transparency of state bodies’ activity, adherence to the principle of competitiveness, equal business conditions, protection of the legitimate interests of investors and other individuals.