Investment legislation in Belarus: key laws and updates.
LEGISLATION – FOR INVESTORS
Relations connected with carrying out investment activities on the territory of the Republic of Belarus are regulated by the Investment Code, regulatory legal acts of the Republic of Belarus, civil and other legislation of the Republic of Belarus, including international treaties of the Republic of Belarus, as well as investment agreements with the Republic of Belarus.
(Investment Code of the Republic of Belarus, Article 6)
Decree of the President of the Republic of Belarus No. 108 of February 27, 2007 “On certain measures to involve unused state property in economic circulation”:
- provides for the sale of unused and inefficiently used objects of state property at auctions with a starting sale price equal to one basic unit, the transfer of such objects into free use for specific investment projects for the term of implementation of those projects and in accordance with the terms of the gratuitous use agreement. Upon expiry of the term of gratuitous use, if individual entrepreneurs and non-state legal entities have fulfilled the terms of the agreement, the object may be transferred into ownership free of charge.
Decree of the President of the Republic of Belarus No. 1 of January 28, 2008 “On stimulating the production and sale of goods (works, services)”.
Commercial organizations established from April 1, 2008 in settlements with a population of up to 50,000 people (in Brest Region all settlements except the cities of Brest, Baranovichi, Pinsk), when operating in those settlements and fulfilling certain conditions established by the Decree, have the following preferences:
- for 7 years from the date of their establishment they are exempt from paying profit tax with respect to the sale of goods (works, services) of their own production;
- for 5 years from the date of their establishment they are exempt from paying a number of other taxes and contributions to innovation funds.
For such organizations, when purchasing raw materials, components and materials for their own production, as well as when carrying out foreign trade in goods of their own production, the following do not apply:
- the requirement to conclude transactions on the exchange trading floor of the open joint-stock company “Belarusian Universal Commodity Exchange”;
- the establishment of minimum import prices and maximum export prices for goods;
- special procurement procedures, deliveries or tender procedures carried out by authorized state bodies or commissions;
When conducting economic activity on the territory of the Republic of Belarus for the production of goods (works, services) of their own production and their sale, these organizations have the right to:
- independently determine the conditions, volumes and types of purchased raw materials, components and materials, as well as the conditions, volumes and types of sale of produced products, goods (works, services) of their own production;
- independently establish and apply free prices (tariffs) for goods (works, services) of their own production, except for socially significant goods listed by the Council of Ministers of the Republic of Belarus;
Technological equipment imported by commercial organizations into the customs territory of the Republic of Belarus as a contribution to the charter fund (classified according to the Unified Commodity Nomenclature of Foreign Economic Activity of the Customs Union under certain commodity positions) is exempt from import customs duties and value added tax.
For commercial organizations with foreign investment, the Decree also establishes a 5‑year guarantee against deterioration of legislation relating to the status of these organizations and the conditions of their activity.
Decree of the President of the Republic of Belarus No. 9 of December 20, 2007 “On certain issues of regulation of entrepreneurial activity in rural areas” .
Organizations and individual entrepreneurs located (residing) in rural areas, when carrying out in rural areas activities for the production of goods (provision of works, services), are entitled to apply a special procedure for taxation, payment of mandatory budget contributions, issuance of special permits (licenses), and for making changes and/or additions to them.
In particular, organizations and individual entrepreneurs entitled to apply the special procedure, upon fulfillment of certain conditions set by the Decree, receive the following preferences:
- during 2008–2012 they are exempt from paying profit tax and property tax;
- a reduced fee for obtaining special permits (licenses) is provided for them;
- until 2011 they are exempt from paying contributions to innovation funds when operating in the fields of construction and production of building materials;
- they are exempt from customs duties and value added tax when importing technological equipment as a contribution to the charter fund;
- banks are granted the right to issue loans to organizations and individual entrepreneurs implementing investment projects in rural settlements in an amount equivalent to no more than EUR 20,000, without collateral for fulfillment of obligations under the loan agreement.
In addition, the Decree grants the right to switch to payment of a unified tax for organizations whose revenue from sales of produced products from crop production, animal husbandry, fish farming and beekeeping amounts to at least 50 percent of revenue calculated from all activities.
This Decree significantly increases the attractiveness of free economic zones for investors, simplifies the procedure for registering SEZ residents, and establishes additional guarantees of the stability of SEZ legislation:
- organizations that are residents of SEZs of the Republic of Belarus pay profit tax at a rate reduced by 50 percent of the rate established by law, but not more than 12 percent;
When applying the special legal regime, organizations—SEZ residents—are exempt from taxes on:
- property tax on fixed assets (objects of unfinished construction) located on the territory of the respective SEZs, and on vehicles regardless of the intended use of those fixed assets (objects of unfinished construction) and vehicles. At the same time, property tax is levied on vehicles used in activities or recorded on the balance sheets of branches, representative offices or other separate subdivisions of an SEZ resident located outside the territory of the respective SEZ;
- acquisition of motor vehicles regardless of the purpose of acquisition.
- the special legal regime established for SEZ residents registered before April 1, 2008 remains unchanged from April 1, 2008 to March 31, 2015, and for SEZ residents registered after April 1, 2008—for a period of seven years from the date of registration as SEZ residents;
- financing of expenses for creation of engineering and transport infrastructure required for implementation of an SEZ resident’s investment project with a declared investment volume equivalent to more than EUR 10 million is carried out from funds provided in the State Investment Program and local budgets for the relevant SEZ in the next fiscal (budget) year, as a priority;
- the Council of Ministers of the Republic of Belarus annually, before January 1, develops and determines, in agreement with the President of the Republic of Belarus, the list of import-substituting goods. Goods included in the list of import-substituting goods in the first year are required to be included in the lists of import-substituting goods applicable for the subsequent two years, counted for each good from the year of its inclusion in the list of import-substituting goods.
Decree of the President of the Republic of Belarus No. 10 of August 6, 2009
“On creating additional conditions for investment activity in the Republic of Belarus”.
The Decree provides each investor with the opportunity to obtain additional legal guarantees for the protection of their investments while implementing their investment project under more favorable conditions.
Concluding an investment agreement with the Republic of Belarus is an integral part of this Decree. Investment agreements may be concluded at different levels:
- if the investment project is implemented within the territory of one region or in one sector, the investment agreement is concluded on the basis of a decision of the regional executive committee or the respective sectoral ministry or department.
- if the investor is granted only those preferences already provided for by legislative acts and decisions of the President of the Republic of Belarus, including on privatization of property, the investment agreement is concluded on the basis of a decision of the Government of the Republic of Belarus.
- if the investor is granted any privileges and preferences, and separate issues of privatization of property are resolved, the investment agreement is concluded on the basis of a decision of the Government of the Republic of Belarus in agreement with the President of the Republic of Belarus.
Concluding an investment agreement entitles the investor to receive additional conditions for implementation of the investment project:
- the right to construct facilities under the investment project in parallel with the development, examination and approval of the necessary design and estimate documentation for each construction stage while subsequent stages are still in design;
- simplification of the procedure for obtaining land plots;
- exemption from compensation for losses of agricultural and forestry production;
- exemption from payment of import customs duties and VAT when importing into the customs territory of the Republic of Belarus equipment and spare parts for the facilities of the investment project (the list of such goods must be preliminarily coordinated with the same state authority that makes the decision to conclude the agreement, or with the state authority authorized for its coordination by the Government);
- exemption from payment of state duty for issuing work permits to foreign citizens and stateless persons, and those foreign citizens and stateless persons are exempt from payment of state duty for issuance of a permit for temporary residence in the Republic of Belarus.
Regional Councils of Deputies are recommended to additionally exempt investors implementing investment projects under investment agreements with the Republic of Belarus from payment of targeted charges to local budgets.
Decree of the President of the Republic of Belarus No. 667 of December 27, 2007 “On withdrawal and provision of land plots”
The Decree sets out the procedure for providing investors with land plots for construction and maintenance of real estate objects:
- provisions are defined for providing land plots without holding auctions;
- it is provided that the lease term of a land plot in state ownership granted for purposes related to construction and/or maintenance of capital structures (buildings, constructions) must be no less than the normative period of their construction and/or operation. Granting a land plot for a shorter period may be carried out only with the consent of the persons to whom the land plot is provided. The total lease term of a land plot must not exceed 99 years;
- the principle of simultaneous sale of real estate in state ownership and the right to conclude a land lease agreement necessary for servicing that property as a single auction item is provided. It is applied in settlements with a population of over 50,000 people. In other settlements, when selling real estate owned by the state as a result of an auction, an additional fee for the right to conclude a land lease agreement is charged to the auction winner.