belarus: investment tax incentives€¦ · belarus –key facts & trends market entry |...

Belarus: Investment tax incentivesSergey Odintsov,Certified Legal & Tax Advisor, Head of Tax & Legal, SCHNEIDER GROUP (Belarus)

Webinar “Debunking the myths: Why is Belarus better than other CIS countries for investment?

June 03, 2020

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Belarus – key facts & trends


Emerging market: Facts & Advantages

Western approach to doing business

Competitive investment conditions as compared to neighboring CIS countries

Direct access to the markets of Russia, Ukraine, Kazakhstan and other CIS countries

(282 m. consumers)

Good technical & logistical infrastructure

Authorities are finally taking a look at implementing reforms

No sanctions against Belarus

4market entry | accounting | ERP | import | legal | tax

„In the heart of Eastern Europe…“

Most promising industry sectors to consider

LogisticsWhere IT

Forestry

to

Machinery

InfrastructureAgriculture

Retail & Consumer

invest? Industrial Manufacturing


How Belarus deals with Covid-19

outbreak?


Measure / Restriction Put in place / Proclaimed

State of emergency, borders not proclaimed yet, borders are open

Self-isolation “14 days quarantine upon arrival” - for persons

infected with Covid-19 and persons who had

contacts with infected ones

Remote work recommended for companies in Minsk (except for

state owned)

Business supporting measures Tax holidays, loan & rent holidays, moratorium on

tax & other audits put in place

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Investment tax incentives & supporting tools


Belarusian Tax Map

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Tax Tax rates & comments

VAT 20% - standard rate

25% (communication services)

0% and 10% - preferential rates

Corporate Income Tax 18%, 12%, 10% (technology parks), 6% & 0% (dividend income)

25% (on banking and finance)

Withholding income tax Rates depend on income and vary from 0% - 15%.

Exemption can be provided under the DTT

Property (Real Estate) Tax

Objects specified by the Tax Code

1% - standard rate

Offshore Tax 15% - exemptions are available

Land Tax Tax rates are generally determined pursuant to cadastral value or

total area (m2) of a land plot

Payroll taxes 35% in total – social & pension insurance

0,6% - accidents at work insurance

Personal income tax (PIT) 13% standard rate

9% - preferential rate (HTP & Great Stone)


Investor’s considerations – choosing the right tax

benefits

If a Foreign Investor focuses on…. It may consider benefiting from tax

treatment of…

IT analysis, engineering and SW development, DLT &

crypto currency mining, AI, IoT Hi -Tech Park

set up of export-oriented production facilities

(green field projects)FEZ

(localization, min EUR 500K)

electronics, thin chemistry, biotechnology, mechanical

engineering and nanotechnologiesIndustrial Park “ Great Stone”

(localization, min. EUR 500K)

producing goods, performing works or services in small

townsRural areas

(midsize & small business)

Infrastructure facilities Investment or PPP agreement

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Hi-Tech Park in Belarus

• Virtual Park, created in 2005 (Decree No 12) for programming & IT services based

on Outsourcing & Product models

• Currently more than 818 residents with approximately 61,000 employees

• In 2019 exports reached USD 2,2 billion (USD 1,4 bln. in 2018)

• Investments of US/EU/Ru firms and local business, 90% of the produced SW and

services - exported to EU & USA

• Approval process is rather straightforward - attention to the business plan

• Agreement with HTP Administration should be concluded

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"The Belarus Hi-Tech Park could serve to showcase to other countries how

to promote the IT sector…”


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Current Tax Exposure

Tax Standard rate in Belarus High Tech Park benefits

Corporate Income Tax 18% exempt

VAT 20% / 10% exempt

Personal income tax 13% 9%

Social Tax 35% (on wage cap of 5 circa EUR 2,000) 35% (on wage cap of circa USD 495)

Dividend withholding tax Max. 12% exempt

Withholding tax on services of E-

platforms, datacenters, etc.15% or exemption under the Treaty exempt

Customs duty and import VAT VAT 20%, customs duty 5-20%Exemption on technological

equipment imported by HTP resident

Offshore tax 15% exempt (on dividends only)

Tax in HTP N/A 1% on revenues

HTP provides significant tax benefits to its residents by replacing all corporate

taxes with only one single tax payable (1%)

Tax holidays until 2023 on new “digital” activities - disposal / acquisition / exchange / of

tokens (crypto currencies)


Tax Benefits in “Great Stone”

The special tax treatment is applicable for 50 years (2062) and provides

the following tax benefits to Park residents:

• CIT exemption - for 10 years, 50% of tax rate (9%) – next 10 years

• VAT reverse-charge exemption (on IP rights, some services)

• Real Estate & Land Tax exemption

• WHT – exemption for 5 years (on dividends,), on royalties - 5% until 2027

• 9% - reduced Personal Income Tax, 0% on dividend income

• Payroll Taxes 35% (on wage cap of circa EUR 400), no tax on excess

• Customs duties & import VAT – 0% on imported equipment & spare parts


60 residents

FEZ – as a good place for localization

A Free Economic Zone (FEZ) is a territory on which special customs,

registration and tax incentives are provided

1. FEZ Minsk

2. FEZ Brest

3. FEZ „Gomel-Raton“

4. FEZ Mohilyov

5. FEZ „Grodno-Invest“

6. FEZ Vitebsk

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6

≈ 420 residents

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1

5

3

2

Tax Benefits in Free Economic Zones

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Tax Benefits

Corporate Income Tax (CIT) Full exemption

(until investment project completion)

Real Estate Tax Full exemption

(on objects located within FEZ)

Land Tax Full exemption

(for the period of design & construction)

Customs duties & VAT Full exemption

(on imported equipment & raw material)

Tax benefits are granted, if the goods:

Were actually produced in FEZ, or

Are further exported outside Belarus / sold outside the country, or

Are sold to residents within the same or other FEZ


Secondary towns & rural areas

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Tax Benefits

Corporate Income Tax 0%(for 7 years after Co set up)

Customs duties 0% (for 7 years on imported technological equipment / spare

parts for contribution to the charter capital)

Real Estate 0%(within 7 years after Co set up)

Requirements: BY legal entity/sole trader located on the territory of a rural

area, small or medium-sized town (the list is approved)

Eligible activity: manufacture of goods, works or services within a particular

territory, supported with a certificate issued by the BelCCI


Separate Investment Agreement

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Foreign legal entity or its Belarusian subsidiary that

is planning to make an investment in Belarus

The business plan of the project and state complex

expertise are generally required

An investment agreement is concluded on the basis

of a decision of BY local state authorities or Council

of Ministers (depending on the project)

General requirements:


Public-Private Partnership – a new option for

an investor to consider

The Law on PPP in effect as from 02.07.2016

Purpose – development of infrastructure facilities

Priority sectors:

• Agriculture, oil & gas

• Road management & transportation

• Municipal services & healthcare

• Light & power industry

• Science & technology & other sectors


Top 100 PPP projects as per the National

Infrastructure plan

Project share per type

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Infrastructure type Project

quantity

Public roads & Transportation 15

- highway transportation 14

- air carriers 1

Energy (Water Power Plants on rivers) 10

Social infrastructure 48

- education 29

- healthcare 9

- culture, sports & tourism 10

Housing & public utilities 12

Building & Structures 15

15%10%

48%

12%15%

Transport

Energy

Social

Housing & utilities

Other

http://pppbelarus.by/projects


http://pppbelarus.by/projects

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Thank you for being with us!

“Instead of loosing a time explaining a foreigner where

Belarus is on the map, your may just point out that it is a

home to Viber and World of Tanks…”


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and parts of it, in any way, as well as the rights to the company’s logo and name SCHNEIDER GROUP, in existing and future publications in printed or

electronic form, and the ability to confer rights to a third party belong to SCHNEIDER GROUP.

The reproduction, alteration, transmittal or any distribution or usage of this presentation or parts of it, as well as of the company’s logo or name

SCHNEIDER GROUP in any way, need the written permission of SCHNEIDER GROUP in advance and shall be accompanied with the link to the

SCHNEIDER GROUP website and reference to the copyright permission. © SCHNEIDER GROUP www.schneider-group.com

Sergey Odintsov

Certified Tax Advisor, Head of Tax & [email protected]


http://www.schneider-group.com/

mailto:[email protected]

www.schneider-group.com

armenia

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germany

kazakhstan

russia

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uzbekistan

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