On the Procedure of Creation and Activity of the Representative Offices of Foreign Companies and Organizations on the Territory of the Republic of Belarus
Updated January 2009
1. The Procedure of Creation
The principle legal acts regulating the procedure of opening and functioning of Representative Offices of foreign companies and organizations, their branches and subsidiaries (hereinafter "Representative Offices or RO") on the territory of the Republic of Belarus are Article 51-1 of the Civil Code of the Republic of Belarus (entered into force by the Law No. 7-3 dated 03.05.2001) and the Provision "On the Procedure of Opening and Functioning of Representative Offices of Foreign Organizations in the Territory of the Republic of Belarus ", approved by the Resolution of the Council of Ministers of the Republic of Belarus No. 929 dated 22.07.1997 with further changes and amendments, hereinafter referred to as the "Provision".
Foreign companies and organizations interested in having Representative Offices in the territory of the Republic of Belarus, may open them only upon receiving permission of the Ministry of Foreign Affairs of the Republic of Belarus (accrediting body).
In accordance with the above-mentioned Provisions, Representative Office of foreign company may be established for the purposes of conducting activities for and on behalf of the foreign company it represents, the name of which is indicated in the Permit for opening of the Representative Office.
Purposes, for which Representative Office may be established, are determined in the new edition of the Provision, depending on the type of the legal entity creating a Representative Office, whether it is commercial or non-commercial one.
Representative Office of a foreign commercial organization may be established for achieving the following aims:
- effective promotion of implementation of international treaties of the Republic of Belarus concerning cooperation in the sphere of trade, economics, finance, science and technology, transportation; search for opportunities of further development of such treaties, improvement of forms of such cooperation, determination and increase of economic, commercial, scientific and technical information;
- The
- research of opportunities for the investment activity in the
- incorporation of foreign companies and joint ventures;
- promotion of development of trade and economic relations between countries;
- representation and protection of interests of commercial organization;
- sale of tickets and reservations of aviation, railway, automobile and sea transportation companies;
- activities in order to reach other goals, including socially useful ones, not prohibited by the legislation of the Republic of Belarus for such Representative Offices.
Representative Office of a foreign non-commercial organization may be established for achieving the following aims:
- social support and protection of citizens, including improving welfare standards of poor people, social rehabilitation of the unemployed, invalids and other persons, who due to the physical or intellectual peculiarities or due to other circumstances can not independently exercise their rights and legal interests;
- training population to overcome consequences of spontaneous disasters, ecological, industrial and other catastrophes as well as any other accidents;
- providing for relief action to the victims of spontaneous disasters, ecological, industrial and other catastrophes, social, ethnic, religious conflicts, repressive measures, refugees, forced migrants;
- promoting strengthening of peace, friendship and a mutual consent of the nations, as well as preventing social, ethnic and religious conflicts;
- promoting strengthening of prestige of the family values in the society;
- promoting protection of childhood, motherhood and fatherhood;
- promoting activities in the sphere of education, science, culture, art, enlightenment, intellectual development of the personality;
- promoting activities in the sphere of preventing and protecting the citizens’ health, as well as promoting healthy life-style, improving of morally-psychological state of the citizens;
- promoting activities in the sphere of physical culture and mass sport;
- protection of the environment and animals;
- protection and proper maintenance of buildings, other objects and territories presenting historical, cultural, spiritual or environmental value, and storage sites;
- other socially useful purposes.
Approval for opening a Representative Office conducting other socially useful purposes is granted by the Ministry of Foreign Affairs upon receiving concordance of the concerned state agencies.
Representative Offices of foreign educational organizations may be opened in the Republic of Belarus as well for purposes of advertising and informational activities, study of the experience of the Belarusian educational organizations, promotion of conclusion of the agreements on cooperation between educational organizations, and exchange of experience and information in the sphere of education and science.
Representative Office is established for a certain period of time specified in the Permit of the foreign firm for opening the RO.
This period may be extended by the Ministry of Foreign Affairs of the Republic of Belarus upon the Company's application (to prolong the term, the Company should apply for the permission not later than one month before the expiry of the previous permission).
Foreign company interested in opening its Representative Office in the Republic of Belarus submits to the Ministry of Foreign Affairs a written application stating the purposes of the opening of Representative Office and other data relating to the creation and activities of Representative Office.
The following documents must be attached to the application:
- Copies of constituent documents of the foreign organization, legalized in the established order;
- Copy of the document, verifying state registration of the foreign organization in the authorized agency of the applicant's country (extract from the trade register, registration certificate, etc), legalized in the established order;
- Power of Attorney on the head of the Representative Office, legalized in the established order;
- Power of Attorney on the person, empowered to take actions connected with establishment of Representative Office, legalized in the proper manner;
- Provision of Representative Office;
- Original of the document, verifying payment of state duty for Permit for opening of the Representative Office;
The practice shows that to open the Representative office of the foreign company it is necessary to render to the notarial and taxation bodies as well the following documents:
- a copy of the decision of the company’s authorized administrative body on the establishment of the Representative Office in the territory of the Republic of Belarus, legalized in the established order;
- guarantee letter, issued in the
If in order to establish a RO legislation of the country where the foreign company is located demands special permit of state agencies of this country, the copy of such permit, duly certified, must also be attached to the application.
The specified documents should be submitted in one of the state languages of the Republic of Belarus - Russian or Belarusian. The translation of the documents shall be certified in the established order by notary or by diplomatic or consular departments of the Republic of Belarus abroad.
The following state duties are established for issuing permits for opening RO and permits for continuing activities of RO:
Duty for issuing the permit for establishment and continuing activities of RO of the commercial foreign companies
| 65 basic values for each year of validity of the permit
|
Duty for permission for opening and continuing of activities of ROs of non-commercial foreign companies, and ROs of foreign companies, practicing charitable activities only, for the term of one year | 20 basic values |
** 1 (one) basic value equals to approximately 13 US dollars or approximately 10 euro |
|
Representative Office is considered to be established and may exist in the territory of the Republic of Belarus from the date the permission for its opening was issued.
Representative Office must register as a tax-payer with the local tax authorities and as payer of compulsory insurance and other payments with the local department of State social insurance fund within 10 days from the date the Permit was issued.
Representative Office must also register with local department of Belarusian state insurance agency as the insured on compulsory insurance against accidents at work and occupational diseases.
The Permit for opening the Representative Office becomes invalid in the event the foreign company has not exercised its right to set up a Representative Office within 6 months from the date the Permit was issued.
The activities of Representative Office shall be terminated in the following cases:
a) in the case of liquidation of the foreign company;
b) in case of termination of the international agreement by virtue of which the Representative Office was set up, provided this is stipulated by such an agreement;
c) in accordance with the decision of the foreign company which opened Representative Office;
d) in accordance with the judgment of the court in cases of violating laws of the Republic of Belarus;
d) in the case of the termination of the permission for opening the RO or prolongation of activity of the Representative Office.
2. Legal Status
Representative Office is not a legal entity, but it performs legal acts in the name and on behalf of the company that it represents, including entering into agreements, acquiring property and personal non-property rights and fulfilling obligations, being plaintiff and defendant in court.
As a rule Representative Office concludes contracts in order to ensure material, technical and informational provision of the activities of Representative Office in the territory of the Republic of Belarus. The scope of authority of Representative Office is not determined by the Belarusian legislation and is established by the foreign company that opened it.
In accordance with the current legislation, Representatiму Offices shall be entitled to engage in the territory of the Republic of Belarus in any activities including business ones only for and on behalf of the company that opened its Representative Office. Types of activities, exercising of which requires receiving of a special permit (license), can be carried out by RO only on the grounds of the license received by the foreign company in order stipulated by the legislation.
The activity of the Representative Offices in the generally useful purposes must be carried out on the bases of programs and projects that correspond to the priority orientation of activity of the organization, that are approved by its superior administration body.
Issuing of grants (financial, material and other resources, granted on the competition basis) by the Representative Offices outside the scope of the realized programs and projects is prohibited. According to the Para. 4 clause 5.1. of the Presidential Decree No. 24 dated 28.11.2003 "On receipt and use of foreign donations" (as amended) granting to Representative Offices of foreign companies gratis aid for the purposes prohibited by the legislation (including publishing and distribution of agitation materials, conducting of seminars and other forms of mass agitation work among population) can cause termination of the activities of the Representative Office mentioned above.
Representative Office fulfills its activities in compliance with the legislation of the
In order to organize the activity of the Representative Office, foreign company may provide it with property and/or monetary funds, at company’s discretion.
Import of the property for ensuring functioning of the Representative Office is classified as the regime of temporary import accompanied by the obligation of the return removal of the property. For the use of the property in the customs territory of the Republic of Belarus within the customs regime of temporary import per each complete and incomplete month of the temporary import term, set by the customs authorities, customs duties and taxes is charged in the amount of 3% from the sum of, which were due to payment if the property have been imported for free circulation.
And moreover property and monetary founds can be acquired by the Representative Office in the Republic of Belarus.
Irrespective of the source of acquisition, all property and monetary funds of the Representative office is the ownership of the foreign company that opened the Representative Office.
Representative Office is entitled to open dollar and ruble accounts in the banks of the Republic of Belarus.
Opening of the accounts takes place after rendering to the bank a number of documents in accordance with the Direction of the National Bank "On the procedure of opening by banks and non-bank financial organizations of bank-accounts" adopted by the Resolution of the Board of the National Bank of the Republic of Belarus No. 127 from 20.06.2007 as amended.
Legal regime of dollar and ruble accounts of the Representative Office is established in accordance with the "Regulations on currency transactions" adopted by the Resolution of the Board of the National Bank of the Republic of Belarus No. 72 dated 30.04.2004 as amended.
Under these Regulations Representative offices are able to open in the resident banks the following kinds of foreign currency accounts:
- current (settlement) account;
- card accounts;
- supplementary (deposit) accounts;
- other accounts stipulated by the legislation of the Republic of Belarus.
Transactions on the current (settlement) foreign currency account are carried out by the Representative Office without limitations in relation to the types of transactions (including currency exchange operations connected with purchase and sale of foreign currency under the procedure established by the National Bank).
A Representative Office is able to use foreign cash currency with the following views:
- for paying salaries for the employees of the Representative office, for paying expenses connected with the business trips of employees abroad;
- for making currency transactions in the sum no more than 50000 USD in the equivalent (for the determination of the equivalent the official rate of exchange of the Belarusan ruble against corresponding foreign currency, which is established by the National Bank on the date of taking cash from the account is used) during the legal year.
Means from the currency accounts may be freely transferred by Representative Office abroad or sold for rubles through the representative bank of the Republic of Belarus on OJSC "Belarusian currency-stock exchange" or off-board exchange market.
The ruble accounts, opened by the Representative Office, depending on the way of coming of monetary founds and the possibility of further use of this founds are divided into the following types:
- current (settlement) account of T-type;
- C-type account;
- supplementary (deposit) account;
- other accounts prescribed by the legislation of the Republic of Belarus.
Transactions on the current (settlement) account of T-type are carried out without any limitations in relation to the types of the transactions (including currency exchange operations connected with purchase and sale of foreign currency under the procedure established by the National Bank) and, under a general rule are carried out in the cashless form. Representative Office can use cash means from the “Т”-type account for settling with legal entities of the Republic of Belarus for the goods, work, services also for payment of current expenditures for the maintenance of Representative Office in the territory of the Republic of Belarus (including lease payments, payments for public utilities and other similar services, buying stocks of materials and capital equipment in order to maintain the current work, payment for rent of communication canals, payment for sending and delivering of goods and periodicals, payment of salaries and other rewards to the employees according to the labour and civil-law contracts, business-travel employees’ expenses, transfers of insurance contributions under the compulsory and voluntary insurance payments, payments for the medical services for the employees in the cases of accidents at work and in the cases of occupational diseases).
Foreign company regulates the activities of the Representative Office through the Head of Representative Office who must be duly appointed, accredited by the Ministry of International Affairs in the established order and who acts under the Power of Attorney issued in his favor by the foreign company.
Representative Office in order to carry out its activities is entitled to hire Belarusian and foreign citizens. The number of foreign citizens (employees of Representative Office) must correspond to the quantity specified in the Permit for opening the Representative Office.
Labor and other connected relations with foreign citizens may be regulated by the ratified and entered into force international treaties of the Republic of Belarus, constituent documents of the Representative Office, internal documents of the Representative Office and employment agreements.
Therefore the regulation of the employment relations with foreign citizens is fully at the discretion of Representative Office.
It is possible to foresee in the labour agreement (contract) with an Representative Office’s employee that the law that is enforced to act in the sphere of the relationships regulated by this contract is the law of the country of the of the employee’s location in the case if the place of signing the labour agreement (contract) is the foreign state (the country of employee’s location).
Salaries of foreign employees may be transferred abroad.
Labor relations between the Representative office and its local Belarusian staff are regulayed by the labor legislation of the Republic of Belarus.
Representative Office is entitled to enter into labour agreements for a fixed period or labour contracts with Belarusian citizens-employees of the Representative Office.
Other rules may be established in the Provision on the Representation office, in the local acts of the Representative Office and in the labour agreemrnts (contracts). The limitation for such changes is that above-mentioned rules cannot make the state of the employees worse in comparison with the state forseed in the articles of the Labour Code and Belarusan legislation on payments and fees for the social insurance, provision of pensions and assistance of employment.
Representative Office is entitled to pay salaries, premiums and other kinds of remuneration to its employees in foreign currency if it is stipulated in the Provisions on the Representative Office and (or) in the labor contracts.
For one-time work Representative Office may conclude civil-law contracts with Belarusian citizens, including contracts of work and labour.
3. Taxation
Taxation of Representative Offices is carried out in accordance with the tax legislation of the Republic of Belarus.
If the other rules are established by international compacts, than this rules are applied.
Under the Article 13 of the Tax Code of the Republic of Belarus (General Part) from 19.12.2002 with further changes and amendments, Representative Office of a foreign company is not considered to be an independent taxpayer, but it merely performs the taxation duties of the foreign company, which created the Representative Office in accordance with objects of taxation and in the amounts that fall on the activity of the Representative Office.
A foreign organization is not a tax resident of the
Taxation of Representative Office depends on whether Representative Office in the territory of the Republic of Belarus engages in business activities which are aimed at deriving income (revenue) or only performs preparatory and auxiliary functions not gaining any income as a result of them.
We would like to indicate that Representative Offices are mostly taxed as Belarusian enterprises.
In case Representative Office is not engaged in business activities on the territory of the Republic of Belarus, it pays only the duties on the staff wage fund and real estate tax, it’s rates are indicated below.
** compulsory payments on the staff wage fund
a) State social insurance fund - 34%
** real estate tax
The basic law governing the payment of this tax is the Law of the
The tax rate is 1% per year or 2% per year in relation to some objects of uncompleted construction.
Representative Offices engaged in business activities on the territory of the
** compulsory payments to the budget calculated on the basis income of the Representative Office:
In 2009 the compulsory payment to the republic found of support of the producers of agricultural goods, foodstuffs, and agrarian science is due to pay. The rate of tax is 1%.
** value-added tax (VAT)
The main legal act regulating this tax is the Law of the
The object of taxation are the overturns of realization of goods (jobs, services), proprietary rights on objects of intellectual property in the territory of the Republic of Belarus and goods imported in the customs territory of the Republic of Belarus.
The rate of the tax is 18 %, in some cases – 0 %, 0,5%, 10 %; 9,09 % or 15,25 %; 24%.
** profits tax
Basic statutory act is the Law of the
The rate of the tax is 24 %.
** excise-duty
Basic statutory act is the Law of the Republic of Belarus " On Excise Tax" from 19.12.1991 with further amendments.
The given tax is paid by Representative Offices producing excisable products or importing such products into the customs territory of the
There is a uniform list of excisable goods and a uniform rates of excise payments for import and export of such goods.
The excises are levied on spirits or spirit containing substances, tobacco, alcohol products and beer, petrol and diesel oil, machine oil for the diesel engines and/or carburetor (engineering) engines, minibuses and passenger cars, including reequipped into the lorries regardless of the working capacity of the engine, with the exception of passenger cars aimed at preventing and rehabilitation of invalids.
** land payments
The procedure of payment of this tax is regulated by the Law of the
The land payment is established for those Representative Offices which have concluded lease agreements for land plots in accordance with the Belarusian legislation.
The amount to be paid depends on the size of the land plot and its location.
We would like to draw attention to the fact that the Republic of Belarus has concluded and ratified Agreements on the Avoidance of Double Taxation with a number of countries.
Agreements on the Avoidance of Double Taxation concern only the direct taxes, such as tax on profits, tax on income and tax on the real estate.
At the present time Agreements on the Avoidance of Double Taxation are ratified by the Republic of Belarus with the following countries: Austria, Azerbaijan, Armenia, Bahrain, Bulgaria, Belgium, Hungary, Vietnam, Egypt, Israel, India, Iran, Italy, Cyprus, China, Kazakhstan, Quatar, Korea, Kuwait, Kyrgyzstan, Lebanon, Lithuania, Latvia, Macedonia, Moldova, Mongolia, Netherlands, the United Arab Emirates, Poland, Russia, Romania, Syria, Slovakia, Sultanate Oman, Tajikistan, Thailand, Turkmenistan, Turkey, Ukraine, Uzbekistan, Federal Republic of Germany, Croatia, Czech Republic, Switzerland, Sweden, Estonia, South African Republic, Yugoslavia.
Besides, similar agreements with the
It is also significant that the Representative Office is responsible for proper calculation and withholding of the income tax from the employees of Representative Office.
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