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Main / Investment / Legal Regulation of Investment Activities in Belarus. Benefits and Preferences. / THE MAIN PREFERENTIAL LEGAL REGIMES OF INVESTMENT IN THE REPUBLIC OF BELARUS

THE MAIN PREFERENTIAL LEGAL REGIMES OF INVESTMENT IN THE REPUBLIC OF BELARUS

1.Investment Agreement with the Republic of Belarus

Implementation of investment projects on the territory of the Republic of Belarus can be done by concluding an investment agreement between the investor or investors and the Republic of Belarus (hereinafter - the Investment Agreement) on such terms and conditions determined by The Law of the Republic of Belarus On Investments, this Decree and other acts of legislation (Decree of the President of the Republic of Belarus of 06.08.2009 No. 10 (as amended on 06.06.2011) "The development of additional conditions for investment activities in the Republic of Belarus").

In order to implement the Decree the "Investor" means "the investor and (or) organization, founded in the established order in the Republic of Belarus by this investor or his participation".

The mechanism of investment contracts minimize the costs of investors in the initial phase of the project to create a comfortable working environment regardless of the territory, in which the project is implemented, allows the investor to establish additional safeguards to protect their capital and also get preferential treatment and incentives for the investment project.

There are two levels of the investment contract:

1. The investment agreement is concluded on the basis of the decision of the republican body of state administration, other state organizations subordinated to the Government of the Republic of Belarus, the Office of the President of the Republic of Belarus (hereinafter - the state agency), regional (Minsk City) executive committee (hereinafter - the government body), if such investment agreement is not provide the investor, additional benefits and privileges, except for in this Ordinance, other decisions of the President of the Republic of Belarus and the acts of legislation;

2. The investment agreement is concluded on the basis of the decision of the Council of Ministers in consultation with the President of the Republic of Belarus, if this contract involves the provision of investment investor, privileges and preferences, not by legislative acts, this Decree and other decisions of the President of the Republic of Belarus.

The decision of the Council of Ministers determined the order of confirmation of the use of these privileges and preferences, as well as the state agency authorized to sign an investment agreement and coordination of its implementation.

For the conclusion of the investment agreements:

  • First level does not require a business plan for the investment project implemented in the framework of the investment contract hereinafter - the investment project), and conduct a comprehensive examination of the state of the project;
  • Second level of the business plan of the investment project and the implementation of a comprehensive examination of public investment projects.

The business plan of the investment project and the implementation of a comprehensive examination of public investment projects are only required in case of providing the investor and (or) organization, created in the established order in the Republic of Belarus this investor or with his participation, additional benefits and privileges, not by legislative acts, the present Decree and other decisions of the President of the Republic of Belarus.

Projects of investment contracts are subject to mandatory legal review, legal services carried out by the relevant government bodies and executive committees, the decision on the conclusion of investment agreements, and Ministry of Justice, if the decision on the conclusion of investment treaties adopted by the Council of Ministers.

The Concluded investment contracts are subject to state registration in the state register of investment agreements with the Republic of Belarus, which is determined by the conduct of the "Regulations for conducting the State register of investment agreements with the Republic of Belarus", approved by the Council of Ministers of the Republic of Belarus of 06.08.2011 No. 1058 "On Measures of the Implementation of the Decree of the president of the Republic of Belarus of  June 6, 2011 No. 4".

The investment contract as mandatory conditions must be defined:

  • object, the amount and timing of investments, as well as the timing of the investment project and the investment agreement;
  • rights and responsibilities of investor (s) and the Republic of Belarus - the parties of the investment agreement;
  • responsibilities of the parties of the investment contract for failure to comply the terms and conditions, including compensation for investor (s) to actual damages suffered as a result of unlawful actions (inaction) of government officials, and (or) executive committees or other public body (organization), and the right the unilateral renunciation of the Republic of Belarus to fulfill its obligations under the investment agreement for non-compliance or inadequate compliance with investor (s) of its obligations;
  • The Investment agreement is made in Russian or Belarusian. If a party of an investment contract is a foreign individual or legal entity, an investment contract is made in Russian or Belarusian language, as well as a foreign language agreed by the parties.

For investment attraction, conclusion of investment agreements and implementation of investment projects, the investor can interact with government agencies and executive committees, the state agency "National Agency for Investment and Privatization," either by natural or legal persons authorized to represent the interests of the Republic of Belarus in attracting investments to the Republic of Belarus.

Changing the investment agreement and its termination by agreement of the parties shall be carried out in accordance with "Regulations on the conclusion, amendment and termination of investment agreements with the Republic of Belarus", approved by the Council of Ministers of the Republic of Belarus of 06.08.2011 No. 1058 "On measures on realization of Decree of the President of the Republic of Belarus of June 6, 2011 No. 4".

The investor after the investment agreement for the investment project shall be entitled to:

The investment agreement may be entered with both national and foreign investors to the country's institutions, without limitation of the investor.

The investor after the investment agreement for the investment project shall be entitled to:

  • construction of facilities provided for the investment project, in parallel with the development, examination and approval in due course the necessary project documentation for each of the stages of construction while the design of subsequent phases of construction. In the case of project documentation developed in accordance with international norms and standards in the design of the building, entered into force on the territory of the Republic of Belarus, the work is done by linking objects to their place of accommodation in the light of technical specifications for engineering and technical support, and the results of geologic and geodetic surveys. In other cases, the use of project documentation developed abroad, it is adjusted to conform to the requirements of legal and technical regulations of the Republic of Belarus;
  • Leasing of land without the required size of the auction for the right to lease land in the proposed location for the placement of its construction, provided by the investment project (hereinafter - the plot), with registration of documents required for the allotment of land concurrently with work on construction.In this case the investor to state registration in the prescribed manner to create objects, provided by the investment project, and the emergence of rights they are not entitled to the data objects and (or) with the provided land transactions which involve the transfer of rights (providing the possibility of transfer of rights) to other persons;
  • Construction of facilities provided for the investment project, with the right to remove the flora without making compensation payments to the cost of removed objects of flora. Obtained in this timber is implemented in the manner prescribed by law;
  • deduct the full amount of value added tax (except for the amount of tax is not deductible under the law) paid by the acquisition of (imported into the territory of the Republic of Belarus) goods (works, services), property rights used for the design, construction (reconstruction), equipment facilities, provided the investment project, regardless of the amount of value-added tax, calculated on the sale of goods (works, services), property rights. The sum of value-added tax, are deductible in full, are determined by separate accounting of tax deductions, depending on the uses purchased (imported into the territory of the Republic of Belarus) goods (works, services) property rights. The reason for such a deduction is a list of goods (works, services), property rights acquired (imported into the territory of the Republic of Belarus) and used for the design, construction (reconstruction), equipment facilities, provided the investment project, with an indication of the amounts of VAT submitted by the investor and (or) organization, created by the investor or with his participation in the established order in the Republic of Belarus.
  • This list, unless otherwise established by the President of the Republic of Belarus, for agreement concluded an investment agreement or a state agency or authorized by the executive committee of the Council of Ministers on approval of his government body (organization). Procedure for approval of this list of defined "Regulations on the harmonization of the list of goods (works, services), property rights acquired (imported into the territory of the Republic of Belarus) and used for the design, construction (reconstruction), equipment facilities provided for in an investment project, implemented in accordance with an investment agreement with the Republic of Belarus", approved by the Council of Ministers of 06.08.2011 No. 1058" on measures to implement the Decree of the President of the Republic of Belarus of June 6, 2011 No. 4";
  • determination without holding a general contractor bidding the project organization, the general contractor, subcontractor design, construction and other organizations for the construction of facilities provided for the investment project, as well as their repair, renovation, restoration and improvement.

Exempt from:

  • payment for the right to contract land lease that is transferred to the national or local budget, or fund the development of the corresponding to  free economic zone;
  • land tax or rent for the land under public ownership, provided for the construction of facilities provided for the investment project for a period of design and construction of such facilities until December 31 of the year following the year in which completed the construction of said facilities;
  • recovery of losses of agricultural and (or) forestry production, caused by the seizure of land;
  • contributions to the innovation funds for the duration of the investment agreement;
  • customs duties (with the international obligations of the Republic of Belarus) and the value added tax is levied by the customs authorities upon importation into the territory of the Republic of Belarus processing equipment (components and spare parts) for use in the territory of the Republic of Belarus within the framework of the investment project . Confirming document for the application of benefits is a list of goods imported by an investor for realization of investment projects. This list, unless otherwise established by the President of the Republic of Belarus, to be agreed concluded an investment agreement in the public body in accordance with the "Regulations on the harmonization of the list of technological equipment (components and spare parts) imported investor and (or) organization, duly established in the Republic of Belarus this investor or with its participation, for use in the territory of the Republic of Belarus to implement the investment project under the investment agreement with the Republic of Belarus", approved by the Council of Ministers of the Republic of Belarus of 06.08.2011 No. 1058 "On Measures to Implement Decree of the President of the republic of Belarus of June 6, 2011 No. 4".

In the case of non-purpose use of the goods imported to the provision of incentives, customs duties and value added tax are levied in accordance with law:

  • paying the state fee for issuance of permits for the Republic of Belarus of foreign workers, special permits for work in the Republic of Belarus and foreign citizens and stateless persons, attracted by the investor and (or) organization, created in the established order in the Republic of Belarus that investor or with his participation, to implement an investment project - for the issuance of permits for temporary residence in the Republic of Belarus. At the same time the decision to grant (or refusal to issue a) special permits for work in the Republic of Belarus for foreign citizens and stateless persons engaged by the investor for the investment project may not exceed seven calendar days, and the deadline for the conclusion of the possibility of (inability) to attract foreign citizens, stateless persons - two working days;
  • value added tax and income tax which arise in connection with the gratuitous transfer of capital structures (buildings, constructions), isolated premises, assets under capital construction and other fixed assets transferred in the manner prescribed by law for the investment project for property investors.

 

2. High-Tech Park

High-Tech Park (HTP) is the name of a special tax and legal regime, which aims to create favorable conditions for development of software, information and communication technologies in the Republic of Belarus to enhance national competitiveness.

Residents of the High Technologies Park are exempted from all corporate taxes including value added tax and income tax.

Individual income tax for employees, residents of the Park has a fixed rate of 9%.

Residents of the High Technologies Park are exempt from import duties and VAT for the hardware and software and hardware systems that are required to carry out their activities.

The first resident companies were registered in the Park in June 2006. As of January 1, 2012 106 companies operates in HTP. More than half of the companies in HTP are foreign companies or joint ventures.

In 2011, six companies in HTP are included in top-100 of the world's best providers of IT services, according to one of the largest IT publication "Global Services", publishes an annual list of the leading providers of IT outsourcing and business process outsourcing.

The Fifth consecutive year, the company - HTP resident on the list of the largest developers and software vendors, "Software 500", published by the influential publication of the global IT industry, Software Magazine.

According to Software 500 "EPAM Systems”  is leader in the Central and Eastern Europe among the world's largest companies of software developers and suppliers of IT services.

The share of exports in total production of High-Tech Park is more than 80 percent. HTP resident companies successfully compete in the high-tech markets in North America and Western Europe. Today, the customers are the companies of the Park from 52 countries worldwide.

Belarusian consumers of software, created by residents of the HTP, are well-known global corporations ( such as Microsoft, Coca-Cola, Colgate-Palmolive, Citibank, MTV, Expedia, Google, British Petroleum, Reuters, British Telecom, London Stock Exchange, the World Bank and other.



3. Free Trade Zones

There are six free economic zones (FEZ) in the Republic of Belarus: "Brest", "Vitebsk", "Gomel-Raton", "Grodnoinvest", "Minsk" and "Mogilev", providing residents with significant benefits for the organization of its own production. As of January 13, 2017 there are 411 registered residents.

3.1. FEZ "Brest"

FEZ "Brest" (operates since 1996, 73 residents).

3.2. FEZ "Vitebsk"

FEZ "Vitebsk" (operates since 1999, 36 residents).

3.3. FEZ "Gomel-Raton"

FEZ "Gomel-Raton" (operates since 1998, 79 residents).

l3.4. FEZ "Grodnoinvest"

FEZ "Grodnoinvest" (operates since 2002, 73 residents).

3.5. FEZ "Minsk"

FEZ "Minsk" (operates since 1998, 112 residents).

3.6. FEZ "Mogilev"

FEZ "Mogilev" (operates since 2002, 38 residents).


4. The territory of medium-sized and small towns, rural areas

Commercial organizations/individual entrepreneurs which/who are registered since July 1, 2012 and located in medium and small towns, rural areas and carrying out activities on the production of goods (works, services) on their territory are exempted within seven calendar years since the date of state registration from:

  • income tax payments for the sale of goods (works, services) of own production;
  • state fee payments for granting a special permit (license), its correction and (or) extension;
  • payment of other taxes, dues (duties) (excluding value added tax, excise duties, stamp and offshore duties, state fees, patent fees, customs duties and charges, land tax, environmental tax and a number of other taxes);
  • Obligatory sale of foreign currency from the sale of goods (works, services) of own production, including the lease of property, received from transactions with non-resident legal entities and non-resident natural persons.

Commercial organizations of the Republic of Belarus may not calculate and pay within seven calendar years since the date of adoption of the decision to establish a separate division on the territory of medium-sized and small towns, rural areas:

  • income tax on profits earned by the separate division from sales of goods (works, services) of own production;
  • property taxes on the value of buildings (structures), parking spaces, which are on the balance of the separate units and are located in the middle-sized, small towns, rural areas;

Expenses for the innovative funds, formed in accordance with legislative acts and calculated from the cost of goods (works, services) produced by the separate division.

Such commercial organizations are exempted from the obligatory sale of foreign currency received from the sale of goods (works, services) of own production, produced by the separate division from transactions with non-resident legal entities and non-resident natural persons.

Such commercial organizations and individual entrepreneurs are exempted from levied by the customs authorities payment of import customs duties and value added tax on technical equipment, components and spare parts imported into the territory of the Republic of Belarus as a contribution to the authorized capital.

Investors who are willing to conduct investment activities on the territory of medium-sized and small towns, rural areas may determine independently the terms, volumes and types of raw materials, components and materials, and the terms, volumes and types of realization of products, goods (works, services); have the ability to determine independently the suppliers or buyers of products, goods (works, services) as well as to insure their property interests in insurance companies, insurance brokers, established outside the Republic of Belarus.

Also such commercial organizations and individual entrepreneurs are exempted from compulsory exchange transactions in the "Belarusian Universal Commodity Exchange" when acquiring raw materials, components and materials for own production, and when conducting foreign trade in own-produced goods.

In addition, local budgets can finance expenditures for the construction of engineer and (or) transport infrastructure for the service of real estate, created by investors on the territory of medium-sized and small towns, rural areas.

 

5. Development of roadside service

Attraction of investments for creation of objects of services on the roads of the republic attaches great importance.

The priority is to provide roadside service, combining a range of services to road users:

 

  • objects of the first level - a platform to rest the parking of vehicles and landscaped area (walkways, summer house, heated sanitary and living room, tables with benches and small architectural forms);
  • objects of the second level - the object of the catering facilities in addition to the first level;
  • Objects of the third level - the gas station sites in addition to the second level.

At the sites of the second and third levels it is possible an additional placement of hotels, tourist offices, service stations, guarded parking, washers and other objects.

Preferences

In addition to the general benefits, established by the Government of the Republic of Belarus for investment projects of foreign partners in the territory of the republic, it is necessary to allocate preferences regarding the construction of new roadside service at national highways. Since the Decree of the President of the Republic of Belarus of May 15, 2008 No. 270 "On measures on development of roadside service" contained the following benefits:

- Construction and reconstruction of roadside service and engineering infrastructure to them are carried out without compensation of losses of agricultural and forestry production, caused by the seizure of farmland and forest land for purposes not connected with agriculture and forestry;

- Commercial banks, authorized to serve state programs are invited to provide loans to organizations and individual entrepreneurs for building and reconstruction of roadside service and engineering infrastructure for them for up to five years at the following rates:

 

  • for loans in Belarusian rubles - at a rate 2/3 of refinancing rate of the National Bank;
  • for loans in foreign currency - at 8 percent per annum.

Roadside service facilities shall be exempt from taxation on real estate within two years from the date of their commissioning (Tax Code of the Republic of Belarus (Special Section), December 29, 2009 No. 71-3, Article 186 Paragraph 1.16.)

- From the profits tax exempt profits earned from the sale of goods (works, services) on the objects of roadside service - within five years from the date of commissioning of these facilities. The objects of roadside service are located on the roadside of national highway capital structures (buildings) and intended to service road on the route (motels, hotels, campgrounds, service stations, the objects of trade and public catering, cleaning) (Tax Code of the Republic of Belarus (Special Section), December 29, 2009 No. 71-3, Article 140 Paragraph 1.12.)

Exempt from income tax on individuals income taxpayers - individual entrepreneurs received from the sale of goods (works, services) in the objects of roadside service for five years from the date of commissioning of such objects (Tax Code of the Republic of Belarus (Special Section), December 29, 2009  No. 71-3, Article 163 Paragraph 1.47.).

For investors, favorable conditions are created in terms of possible use of existing rest areas as driveways and parking facilities near the planned service items.  The location of such item is on the lands adjacent to the areas and allocated by the local executive committees on the rights of long-term lease.

On the official websites of the regional executive committees and the State Property Committee formed and continually updated lists of pre-identified land for the placement of roadside service.

The owners of highways set billboards "There can be constructed your object of roadside service" in order to inform road users of the proposed locations for the placement of roadside service objects.

Full particulars, including regulatory, for roadside service is available on the official website of the Department "Belavtodor". We present typical construction projects service facilities. Take into accountcontact details and email addresses of owners of national highways, regional executive committees, the State Property Committee. The website contains general scheme of development of roadside service until 2015 with visual maps of existing and proposed for construction services.