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Trade regimes

Free Economic Zones (FEZ)

In the territory of Belarus there are six free economic zones (in every regional center, including the capital) for residents who are provided with a more favorable than generally established investment and business climate.

FEZs were created to attract investments into the creation and development of export-oriented and import-substituting industries based on new and high technologies. In this regard the scope of a special tax regime which spreads to the realization of own-produced FEZ goods (works, services) by residents was specified:

  • outside the Republic of Belarus to foreign legal entities and (or) individuals; 
  • in the territory of the Republic of Belarus to other FEZ residents;
  • in the territory of the Republic of Belarus if these goods (works, services) are import-substituting as specified in the List established by the Government of the Republic.

The allowances act towards the following taxes and receipts:

  • own product profit tax is not charged – within 5 years after profit is declared;
  • then, upon the expiration of 5 years from the day of the date of profit declaration, the profit tax is paid in the amount of 50% of the normal standard. Owing to the reduction of the profit tax rate in 2012 from 24% to 18%, FEZ residents will calculate a profit tax at the rate of 9%;
  • import-substituting goods are liable to VAT at the rate of 10%;
  • real estate tax on buildings and constructions (including excessive construction in process) located in the territory of corresponding FEZs is not charged;
  • land tax from building estates for the period of design and construction (but no more than 5 years) is not charged;
  • exemption from contributions to the innovation fund of the Ministry of Architecture and Construction of the Republic of Belarus is provided;
  • customs and VAT exemption in importing equipment and goods for purposes of own production.

An additional point is that FEZ residents have some other preferences:

  • the right to freely dispose currency earnings is granted;
  • favorable terms on paying rent for plots of land used to execute investment projects (moreover, residents registered after January 1, 2012, are exempted from paying for the right to conclude an agreement on the lease of a plot of land and from rent collection for the period of design and construction) are provided;
  • products are provided with the status of import-substituting goods over a period of 3 years from the date of putting it on the List of such goods;
  • the state renders assistance in the financing of construction and development of infrastructure facilities necessary for the execution of investment projects priced at from more than 10 million Euros;
  • compensatory payments for removable and transplantable objects of the vegetable world in construction within the FEZ boundaries as well as for losses and damages inflicted on the previous land user and the state by withdrawing a plot of land. 

In order to become a free economic zone resident, a legal entity (an individual entrepreneur) enters into an agreement for with its administration the Contract on operational conditions within FEZ for a period of realizing an investment project. This project should provide for investment volume in the amount of the equivalent of at least 1 million Euros.

The legislation provides for restrictions on certain types of activity. So, production of tobacco products, alcoholic beverages except for champagne, grape wines and beer; production of securities, bank notes and coins, stamps; lottery activities; preparation and translation of radio and television programs and so forth are forbidden in the territory of FEZ. Besides, there are types of activity to which concessional taxation is not applied. Among these are foodservice sector activities, gambling business activities, commercial activities, operations of banks and insurance companies, securities business and so forth.

Hi-Tech Park (HTP)

The HTP was created in Minsk in 2005 to boost the development of high technologies. Legal entities and individual entrepreneurs of the Republic of Belarus (including commercial organizations with foreign investments), carrying out or planning to carry out one or several following types of activity can be registered as residents of the Hi-Tech Park:

  • analysis, design and programming support of information systems;
  • data processing activities with the application of consumer’s software or own software;
  • basic and applied research, experimental development in the field of natural and technical sciences and research and development utilization.

Moreover, a Resident of the Hi-Tech park do not have the right to carry out other types of activity.

When being registered as a HTP resident it is necessary to provide the administration of the park with a business project which contains specific measure grounds to which contains specific measures for the carrying-out of the above mentioned types of activity, types and volumes of goods (works, services, property rights) to be realized, realization need statement, estimated income rescue from this realization.

A HTP resident makes contributions in the amount of 1% of revenues to the administration of the park.

The HTP resident status allows collecting essential benefits:

  • exemption from profit tax (except for profit tax calculated, withholding and transferred in the prosecution of tax agent’s duties);
  • exemption from value-added tax on turnover from marketing goods (works, services, property rights) in the territory of the Republic of Belarus;
  • exemption from land tax of plots of land within the boundaries of the Hi-Tech park – for a period of constructing buildings and structures on them (but no more than for 3 years);
  • exemption from real estate tax on buildings and constructions located in the territory of HTP (except for buildings and constructions leased), being a property or being managed or administered by HTP residents;
  • exemption from customs duties and value added tax, goods collected when imported to the territory of Republic of Belarus to carry out activities as a resident of the Hi-Tech Park;
  • reduction of tax rates of income gained by foreign organizations not carrying out activity in the Republic of Belarus via permanent establishment, as per dividends, debts, royalties, licenses if a source of payment of such income is a HTP resident, up to 5% if a more privileged regime is not established by international agreements of the Republic of Belarus;
  • exemption from offshore levy when paying dividends to founders (participants) of HTP residents;
  • application of a decreasing coefficient 0,5 against the base rental rate regarding immovable estate located in the territory of HTP and rented by HTP residents;
  • exemption from surrender of foreign exchange proceeds;
  • reduction of the rate of income tax on individual persons (except for the workers who are carrying out service and protection of buildings, rooms, land plots) and residents of the Park — individual entrepreneurs up to 9%;
  • possibility of exemption from paying required premiums to a fraction of worker’s revenue exceeding a single monthly average wage rate of workers in the republic.

State support is also rendered to HTP nonresidents who registered their business projects in the sphere of new and high technologies. Business entities which registered such projects have a number of benefits existing for residents of the Hi-Tech park. 

In particular, exemption from profit tax payment is provided, value added tax on turnover from sales in the territory of the Republic of Belarus is not paid; foreign currency is not liable for surrender requirements. Income of persons taking direct part in realizing a registered business project is liable to income tax at the rate of 9%; an opportunity not to pay required premiums to a fraction of worker’s revenue exceeding a single monthly average wage rate of workers is offered.

By the decision of the President of the Republic of Belarus HTP nonresidents are individually exempted from paying customs duties and value added tax charged when importing goods to the customs territory of the Republic of Belarus to perform work (to render services) in accordance with a registered business project. 

Overview "Belarus Hi-Tech Park: tax exemptions and regulations for entry", prepared by Revera Consulting Group

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