belarus: investment tax incentives€¦ · belarus –key facts & trends market entry |...
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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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Agenda
Belarus: key facts & current trends
Investment Tax Incentives
Q&A
market entry | accounting | ERP | import | legal | tax
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Belarus – key facts & trends
market entry | accounting | ERP | import | legal | tax
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
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„In the heart of Eastern Europe…“
Most promising industry sectors to consider
LogisticsWhere IT
Forestry
to
Machinery
InfrastructureAgriculture
Retail & Consumer
invest? Industrial Manufacturing
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How Belarus deals with Covid-19
outbreak?
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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
market entry | accounting | ERP | import | legal | tax
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)
market entry | accounting | ERP | import | legal | tax
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…”
market entry | accounting | ERP | import | legal | tax
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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)
market entry | accounting | ERP | import | legal | tax
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
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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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≈ 420 residents
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1
5
3
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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
market entry | accounting | ERP | import | legal | tax
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
market entry | accounting | ERP | import | legal | tax
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:
market entry | accounting | ERP | import | legal | tax
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
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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
market entry | accounting | ERP | import | legal | tax
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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…”
market entry | accounting | ERP | import | legal | tax
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Sergey Odintsov
Certified Tax Advisor, Head of Tax & [email protected]
20market entry | accounting | ERP | import | legal | tax
www.schneider-group.com
armenia
belarus
germany
kazakhstan
russia
poland
uzbekistan
ukraine
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