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Incentives

In Belarus there are a number of preferential regimes which could be of use for foreign companies, including from the point of view of their taxation planning and optimization.

 

1 High-Tech Park (HTP)

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

Unlike many parks in Europe or Asia, Belarus HTP is a virtual hi-tech park. It means that the legal conditions of Belarus Hi-Tech Park are valid within the whole territory of Belarus. This principle enables the resident companies to use educational, scientific, professional and infrastructural potential of the whole country.

There are more than 150 resident-companies at Belarus Hi-Tech Park, who have been engaged in high-end software development, customization and IT-services providing for clients in more than 50 countries of the world. 87,4 % of the software produced in the Park account for exports. 39 % account for the USA and Canada, 48 % account for the European countries, 12% — for Russia and CIS countries.

The resident companies of Belarus Hi-Tech Park are exempted from:

  • profit tax and VAT on goods (works, services) produced in the territory of the Republic of Belarus;
  • customs duties and VAT on technical equipment imported for realization of investment projects;
  • obligation of compulsory sales of foreign currency;
  • land tax on land plots within the HTP throughout the period of construction but  not exceeding three years;
  • real estate tax (except for leased real estate).

Furthermore, a reduced tax rate of  personal income (only 9%)  is applied to employees in the HTP. Moreover, income received by a foreign entity from a High Technology Park resident is subject to withholding tax at a rate not exceeding 5%.

 

2 Industrial park

Industrial Park is a special economic area which has a special legal status of granting  tax privileges which was created in order to attract national and foreign investments for the development and organization of high-tech and competitive production in the sphere of electronics, fine  chemistry, biotechnology, engineering,  industry and new materials.

Tax benefits

Park residents are exempt from all corporation taxes during the first 10 years since the registration day. Tax rates are reduced by 50% during the subsequent 10 years. They are:

  • profit tax;
  • real estate tax, concerning buildings and constructions on the Park  territory;
  • land tax, concerning private land  parcels  on the Park territory.

Individual income tax rate (for employees) is 9%.

Residents of the park and their employees are exempt from compulsory insurance contributions from wage and salaries fund.

Full scale deduction of the VAT paid for purchase of commodities (works, services, rights) for projecting, constructing and equipping buildings and facilities of the park.

Exemption from dividend income tax for 5 years since the first year of profit reporting.

Royalty income tax rate as remuneration for license, patent, useful model, know how, process, is 5 %.

Customs preferences

Park residents are exempt from customs duties and VAT on goods imported to the territory of the Republic of Belarus for the purpose of investment projects implementation.

Duty-free zone regime – import of commodities without payment of customs duties in case of further processing and export outside the Customs Union

Policy in respect of foreign labor

Exemption from fees for extension of permit to engage foreign labor, special work permits, residence permits.

One stop servise

On the Park territory administrative management is carried out by the Administration functioning according to “one stop service” principle which provides comprehensive and comfortable service for Park residents.

The Administration fulfills the management function on the Park territory, registers legal entities on the Park territory as well as provides the whole package of administrative  procedures.

Additional guarantees

Investors will be guaranteed a free transfer of the profits, obtained on the territory of the Republic of Belarus as a result of investment activities in the Park, outside the country.

Geographical location

The Industrial Park is located only 25 kilometers to the east of Minsk, the capital city of Belarus (1,9 mln people) in close vicinity to Minsk National Airport, railways; it is on the crossing of the internal highway M1 which extends to Moscow on the north (the distance of 700 km) and to Berlin on the south (the distance of 1100 km). The distance to the closest seaport in Klaipeda (the Baltic Sea) is 500 km.

Excellent ecology

Park is surrounded by forests.

Administrative and residential areas will be on the shoreline of Petrovichskoe  reservoir.

There is a part of wild life preservation with uniqe species of animals and plants on the Park territory.

Others

Grant of privileges, concerning payment of state dues for various administrative procedures.

Possibility to design and construct according to the technical regulations of foreign states.

Land plots on the park territory are either granted to investors for use (rent) for up to 99 years or can be purchased.

Investor gets ready transport and engineering infrastructure.

Upon establishing new taxes and fees in Belarus, residents of the park are not obliged to pay them.

 

3 Free economic zones (FEZ)

The Republic of Belarus has created six free economic zones, providing residents with significant benefits for the organization of its own production. As their residents on October 1, 2015  there were registered 443 organizations.

  1. FEZ “BREST” 
  2. FEZ “VITEBSK”
  3. FEZ “GRODNOINVEST”
  4. FEZ “GOMEL-RATON”
  5. FEZ “MINSK”
  6. FEZ “MOGILEV”

Businesses wanting to register with a FEZ must make a minimum investment of $1 million, but receive the following benefits:

  • Tax free profits on all goods and services for five years, then a 50% discount;
  • 50% discount on VAT on import substitution goods manufactured within an FEZ;
  • No taxes on real estate owned or leased in the FEZ;
  • Exempt from payments to National Agriculture Support Fund;
  • No tax on purchasing vehicles;
  • No customs duty on raw materials and equipment imported from outside Belarus;
  • Guarantee that legislation governing firms will not change for seven years.

 

4 Small and medium-sized towns.

In total 184 urban settlements in Belarus are categorized as small and medium-sized towns. Commercial organizations  which  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:

  • profit tax on sale of goods (works, services) of own production;
  • state fee payments for granting a special permit, its correction and (or) extension;
  • payment of other taxes and 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);
  • mandatory 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. 

 

5 Investment agreement

Investment activity can be carried out by signing an investment agreement with the Republic of Belarus.  On January 1, 2016  1844 investment agreements  are registered and operate in Belarus (including 493 signed with foreign investors).

The main activities of the companies, signed  investment agreements are: trade, construction, hotels and restaurants, food production, recreation and entertainment, telecommunications, chemicals, machinery and equipment manufacturing, agriculture.

Conclusion of investment agreement gives an investor the opportunity to receive additional legal guarantees and preferential conditions for the realization of an investment project  including:

  • construction of the objects provided by the investment project, in parallel with the development, expert examination and approval of the subsequent  stages of the construction;
  • simplification of obtaining land, which includes leasing of a land plot without holding of an auction;
  • exemption from payment of import duties and VAT on importation of equipment and spare parts for the realization of the investment project;
  • exemption from  the compensation for losses of agricultural and  forestry production, caused by the seizure of the land plot;
  • exemption from  the payment of the state duty for the issuance of permits to attract the foreign labour force into the Republic of Belarus;
  • exemption from  the  targets fees to the local budgets.

Moreover Belarusian legislation provides additional individual benefits and preferences, taking into account the specifics of the project.