Legal steps made to liberalize economy and raise investment profile
of the Republic of Belarus

In recent months, the Republic of Belarus has passed a number of far-reaching legal acts to radically liberalize economy and raise investment profile of the country. Those measures and the measures to follow are stepped up to achieve the goal assigned by the Head of State – make it to the top 25 countries in terms of doing business under the World Bank ranking.

1. The waiver of the state’s special right to participate in the management of businesses, i.e. “golden share” was decreed by the President of the Republic of Belarus (No. 144 of 4 March 2008) to additionally protect the rights of Belarusian and foreign investors, preclude excessive interference of the governmental bodies with their activities.

2. On 17 December 2007, the Head of State signed into action Ordnance No. 8 that simplified state registration and dissolution of businesses.

Approval-based registration that was in operation previously has been replaced by application-based registration, with twenty days’ registration time cut to five days and minimum statutory funds of legal entities and minimum subsidiary liability of the supplementary liability societies halved. Where legal entities are dissolved and individual entrepreneurs close business down, one-stop shop approaches are employed by the registrar in conjunction with other governmental bodies.

3. To encourage economic development of rural communities, on 20 December 2007 the President issued Decree No. 9 “On certain issues of the regulation of rural entrepreneurship”.

From 1 January 2008 special taxation applies to the organizations and individual entrepreneurs operating in rural areas, as a result. Hence, in 2008-2012, they are exempt of the income tax and real estate tax. Licensing fees are declining. With a view to keep construction costs down tax benefits have been introduced until 2011.

Where manufacturing equipment is imported as input into the statutory fund, the organizations operating in rural areas enjoy exemption from customs dues and VAT which would allow tax exemption of investments that are required to re-equip the current manufacturing facilities and create new capacities.

With minimum paperwork, the banks will issue cheap loans to the tune of below 20,000 Euro to the businesses who carry out investment projects in rural communities.

4. Similarly, this approach is employed in Ordnance No. 1 of 30 January 2008 signed by the Head of State to provide a number of benefits and special conditions to businesses started in smaller towns (with a population of below 50 thousand). The benefits and special conditions cover all investments including those foreign-originated.

The manufacturing facilities that are set up in smaller towns after 1 April 2008 will be exempt during five years of income tax and mandatory sale of revenues in foreign currency. Pricing and labour remunerating policies are at their complete discretion. They are also exempt of dues in support of agricultural manufacturers.

Besides, the equipment to be imported by an investor as input into the statutory fund is exempt of customs duties and VAT. Such companies may insure their property interests with foreign insurers.

5. On 27 December 2007, the Head of State signed Decree No. 667 “On the seizure and allocation of land plots” that simplified the existing procedures dramatically. The document was passed to make sure that a decision to allocate a land plot in favour of any citizen wishing to purchase it is made in an approachable, simple and real-time manner. The decree assigned relevant powers to the local executive authorities.

To add more, the document will considerably lessen investment risks for those interested in the allocation of land plots which pertain to the expensive construction paperwork and the likelihood of allocation denial.

6. On the last day last year, the President adopted Decrees No. 699 and 700 that on a permanent basis set rates of import and export customs duties accordingly. Both documents not only address compliance of the customs tariff with the updated version of the Commodity Classification of Foreign Economic Activity but also allow to continue unifying duty rates with those applied in the Russian Federation, in keeping with the international commitments of the Republic of Belarus. The first document introduces zero rate of the import customs duty in relation to 775 ten-digit codes of commodities falling under manufacturing equipment. The second document abolishes export customs duties in relation to 82 ten-digit codes.


7. On 28 January 2008, the Head of State signed a number of documents with a view to continuous and consistent liberalization of foreign trade. Decree No. 40, in particular, introduced status of “bona fide participant of foreign economic activity”. Its holders will be entitled to the simplified import of commodities to meet their own production needs and, where necessary, use them immediately in the production without customs clearance. The customs formalities are handled on the application-based principle, without presentation of the commodities to the customs.

8. To upgrade and re-equip current manufacturing facilities, from 1 January 2008 Decree No. 41 established zero import customs duty for the period of 9 months in relation to a list of commodities involving 172 ten-digit codes of manufacturing equipment.

9. Decree No. 42 expands a list of benefits for the residents of free economic zones and provides guarantees that the special legal regime of taxation will not change. For the registered residents of free economic zones such guarantees will be effective till 31 March 2015, for those yet to register – within seven years of the registration date. The Decree gives more powers to the FEZ administrations, enabling them to make independent decisions about the registration of legal entities and individual entrepreneurs as FEZ residents when they are implementing projects involving over 1 million Euro-worth declared investments.

10. Decree No. 703 of 31 December 2007 signed by the Head of State expands a list of benefits exempting residents of the High Technology Park of customs duties for their imports.