A large market of around 182 million consumers along with a rich endowment of natural resources—especially oil—has focused investors’ attention to the markets of the Commonwealth of Independent States (CIS) countries, including Armenia, Belarus, Russia, Kazakhstan, Kyrgyzstan.
Significant differences in the regulatory regime of States remain relevant to the location of investments, and the beneficial investment conditions of Special Economic Zones (SEZ) make them the first areas to be considered by investors. Considering this, we will start our series of articles devoted to the SEZs of the three countries of this region, namely Belarus, Russia and Kazakhstan.
As the first country in our list, Belarus offers several types of zones providing preferential treatment to investors, most notably of which, according to our experience, are the “basic” SEZs and the Industrial Park, which differentiate based on the targeted industry of the investor.
- Special Economic Zones
Belarus has 6 Special Economic Zones (SEZ), one for every region of the country. In 2015, their regime was unified and currently general legislative benefits provided to investors by SEZs are almost equal applied.
- Resident Requirements
To become a SEZ resident, an investor shall be domiciled within the territory of a SEZ, have an investment plan for a minimum of 1 000 000 EUR or at a decreased rate of 500 000 EUR with a maximum investment period of 3 years and not be within one of the industries restricted of enjoying the SEZ preferential regime (e.g. banking, insurance, nuclear energy, alcohol and nicotine, military industries).
- Major Benefits
- Reduced expenses and ease in the renting of land: The SEZ regime provides for the total relief from rent payments and a significant ease in the procedure of entering into rent agreements, excluding the mandatory tender procedure.
- All SEZs provide a guaranteed tax holiday, namely
0% profit tax,
0% land tax (in cases where a plot is rented for the purpose of construction relief, this shall be limited to a 5 year period),
0% real estate tax (for subjects located outside of the FEZ, such exemption is limited to a 3 year period).
- Industrial Park
The Chinese-Belarus Industrial Park “Great Stone” is aimed to promote high-tech industries and was estimated by China’s Ministry of Commerce as the biggest Chinese project abroad.
- Resident Requirements
Similar to the SEZ, residents of the Park shall be domiciled within its territory and exceed the investment threshold of 5 000 000 USD or a decreased rate of 500 000 USD, where it proposes to execute R&D activities.
The park is open to investors without differential treatment based on country of origin, but limited to industrial production businesses (e.g. electronics, fine chemistry, biotechnology, mechanical engineering).
- Major Benefits
- The park guarantees the following tax reliefs to its residents:
0% land tax,
0% profit tax for a 10 year period and a 50% decrease of the current tax rate in the following period,
0% real estate tax (limited to the subjects located within the territory of the Park),
0% dividend tax (limited to a 5 year period).
Decreased income tax of 9% instead of the general 13% can help to mitigate investor’s labor expenses.
- Most of Belarus’ bilateral agreements prescribe for a 30 days visa-free regime, while Park residents and their employees enjoy an extended visa-free period of 180 days.
- Residents are also significantly relieved from the currency law requirements. This includes their right to open a bank account in a foreign bank and execute transactions with the absence of preapproval from the Central Bank, absence of mandatory Belarus terms for the execution of import-export contracts (basically 90 days for import and 180 days for export) and other relaxations of related provisions.
In cases in which SEZ and Industrial Park residents successfully apply for the Free Custom Zone regime, they also will get total relief from the VAT for imported products and the final commodities to be exported out of the Custom Union (inclusive of all of the abovementioned CIS countries).
If you are looking to establish a business in a SEZ or in Belarus, we at D’Andrea and Partners Legal Counsel, have a team of experts to advise you.
D’Andrea and Partners Legal Counsel in cooperation with the Belarus Consulate General in Shanghai previously published the Guide on Foreign Direct Investment in Belarus. We will be glad to share its digital version for free with the first ten people who contact us through email@example.com.