Last updated – June 2011
Free economic zones (hereinafter -
Legal and organizational basis for creation, activity, and liquidation of FEZ on the territory of the Republic of Belarus is provided by the Law of the Republic of Belarus of December 7, 1998 № 213-3 "On Free Economic Zones" (hereinafter the Law № 213-3), by the Edict of the President of the Republic of Belarus No. 114 of March 20, 1996 "On Free Economic Zones on the Territory of the Republic of Belarus" (hereinafter – "Edict No. 114"), and by the Edict of the President of The Republic of Belarus of 09.06.2005 No. 262 "On Certain Matters of Operation of FEZ on the Territory of the Republic of Belarus" (hereinafter – “Edict No. 262").
Due to the entry into force of the Treaty on creation of the unified customs territory and the formation of the Customs Union dated of October 6, 2007 (hereinafter – the “Treaty”) certain measures to the unification of legislation of the member states of the Customs Code (hereinafter – the “CC”) regarding regulation of FEZ have been undertaken. In particular, on June 18, 2010 the Agreement on the issues of free (special) economic zones on the customs territory of the Customs Union and customs procedure of the free customs zone (hereinafter – the “Agreement”) was adopted. The Agreement was ratified by the Law of the President of the Republic of Belarus from 08.05.2011 № 252-З.
At the present moment regulations of national legislation, the Agreement and other legislative acts of the Customs Union function simultaneously. In this situation it appears valid to apply national legislation insofar as it does not conflict with the legislative acts of the Customs Union and in the event that it directly specified by the documents of the Customs Union. Under many questions the Agreement refer to the national legislation of a member state of the Customs Union on the territory of which FEZ is functioning (for instance, this rule is applied in regard to the questions on the procedure of creation and functioning of FEZ, the term of functioning of FEZ, the procedure of FEZ resident registration and others).
According to the Law № 213-
The Law № 213-3 defines a special legal regime as a set of legal norms establishing a special regime of taxation as well some other regulation and providing conditions for carrying out investment and entrepreneurial activity more favorable than usual.
Only legal entities of the
In his activity, resident of FEZ is guided by the Law, Regulations on FEZ, another legislation as well as by the agreement with the administration of the FEZ on the conditions of activity in the FEZ.
The resident of FEZ may also on the general basis carry out entrepreneurial and investment activity beyond the territory of the FEZ.
The decision on creation, change of borders, and prolongation of functioning term of
Today six FEZ function in the Republic of Belarus:
FEZ "Brest" was created by the Edict of the President of the Republic of Belarus No. 114 of March 20, 1996 "On Free Economic Zones on the Territory of the Republic of Belarus" for the term of 50 years
FEZ "Minsk" was created by the Edict of the President of the Republic of Belarus No. 93 of March 2, 1998 "On Creation of the Free Economic Zones "Minsk" and "Gomel-Raton" for the term of 30 years
FEZ "Gomel-Raton" was created by the Edict of the President of the Republic of Belarus No. 93 of March 2, 1998 "On creation of the free economic zones "
FEZ "Vitebsk" was created by the Edict of the President of the Republic of Belarus No. 458 of August 4, 1999 "On creation of the free economic zone "Vitebsk" for the term of 30 years
FEZ "Mogiliov" was created by the Edict of the President of the Republic of Belarus No. 66 of January 31, 2002 "On creation of the free economic zone "Mogiliov" for the term of 30 years
FEZ "Grodnoinvest" was created by the Edict of the President of the Republic of Belarus No. 208 of April 16, 2002 "On creation of the free economic zone "Grodnoinvest" for the term of 30 years.
Regulations on Free economic zones "Minsk", "Brest", "Gomel-Raton", "Vitebsk", "Grodnoinvest", "Mogiliov" are approved by the Regulation of the Council of Ministers № 657 dated of 21 May 2009.
TASKS AND OBJECTIVES OF
In the
General aims of creation of
Realization of certain types of activity on the
- production, processing, stockpiling and sale of weapons, ammunition, explosives
- production, processing, stockpiling, decontamination, sale of hazardous and radioactive materials
- production, processing, stockpiling, sale of drugs, narcotic substances, psychotropic substances and their precursors
- sowing, growing, processing, stockpiling, sale of crops containing narcotic substances, psychotropic or poisonous substances
- production of spirits, excluding champagne, sparkling wines and beer
- manufacturing of tobacco products
- production of securities, banknotes and coins, stamps
- lottery activity
- preparation and broadcasting of radio and TV programs, excluding technical maintenance of radio and television
- treatment of people suffering from illnesses that constitute danger for people’s health
- treatment of animals with highly dangerous illnesses
- activity connected with job placement of residents of the
Certain types of activity may be conducted by the residents of the
As we have already stated the special legal regime is a set of legal norms establishing a special regime of taxation as well as some other regulation and providing conditions for carrying out investment and entrepreneurial activity more favorable than usual.
The appeal of a special legal regime in the
The obligatory condition of application of the special legal regime is an obtaining of certificate of goods (works, services) of domestic manufacture by the resident of
TAXATION
Current tax legislation of the
- Profit tax. Established by the Tax Code of the
The taxed profit is calculated on the basis of the sum of profit from realization of goods (works, services), other valuables (including main funds), proprietary rights and income from non-realization transactions, decreased by the sum of expenses resulting from these transactions.
The rate of tax is 24%.
Advantage:
Profit tax, on the activity under which a special legal regime is extended, is paid by the resident of
- Value-added tax. Established by the Tax Code of the
Object of taxation for this tax is turnovers on sales of goods (works, services), proprietary rights on the territory of the
The rate of the tax is 20%, in some cases – 0%
Advantage:
Turnovers on realization by residents of FEZ on the territory of the Republic of Belarus of goods of domestic manufacture that are produced by them on the territory of FEZ and are deemed to be import-substituting in accordance with the list of import-substituting goods are levied by the VAT at 10% rate. This rate is applied to the goods, shipped from January 1, 2011. This advantage is not applied to some activities, for example, to the commercial, sales and buying activity, gambling business.
- Land payments
Land payments are levied annually in the form of land tax or rent for the land plot.
The specific rate of the rent for the plot of land placed at the resident's disposal for temporary use on conditions of the lease contract is determined by the Administration of FEZ with regard to the location of the object, amount and type of investments and is regulated by the provisions of the contract on entrepreneurial activity in
The rate of the rent determined for the date of conclusion lease agreement for the term of realization of investment project by the resident of
- Real Estate tax. Established by the Tax Code of the
The objects of taxation are buildings and constructions, including non-complete constructions that are in the property or in the possession, in the economic keeping or effective management of organizations-payers.
The tax rate is 1% per year, some projects of non-completed construction that are in excess of planned rate have 2 % tax rate per year.
Advantage:
Residents of
- Compulsory payments calculated to the salary fund, deductions to the state social insurance fund – 34%.
- Excise duties. Established by the Tax Code of the
The objects of taxation are excisable goods, produced and sold by the payers, imported to the territory of the
Residents of
On the whole territory of the Republic of Belarus there are unified rates of excises for goods, produced by excise payers, as well as for goods imported by excise payers to the territory of the Republic of Belarus and (or) sold on the territory of the Republic of Belarus.
Rates of excise duties may be established as the absolute sum for the physical unit of a product (fixed (specific) rates) or as the percentage wise of the cost of the goods (ad valorem rates).
- Ecological tax. Established by the Tax Code of the
Residents of
Ecological tax is imposed on:
1. emissions of contaminants to the atmosphere
2. discharge of sewage;
3. storing, disposal of production wastes
4. import on the territory of the Republic of Belarus of goods, eliminating ozone layer, including those contained in production.
The rates of ecological tax are determined by the Tax Code of the
At the conclusion it is worth mentioning that a special taxation regime is not extended to all the residents of
- beyond the Republic of Belarus to the foreign legal and (or) natural persons in accordance with the concluded between them agreements of goods (works, services) of domestic manufacture produced by these residents on the territory of FEZ
- on the territory of the Republic of Belarus of goods of domestic manufacture produced by them on the territory of FEZ and are deemed to be import-substituting in accordance with the list of import-substituting goods determined by the Government of the Republic of Belarus under the approval of the President of the Republic of Belarus
- of goods (works, services) of domestic manufacture produced by them on the
At the same time the following types of activity are withdrawn from the special legal regime of
- catering, gambling, commercial, sales and buying activity operations with securities
- realization of goods (works, services), production (performance, provision) of which are carried out with the use of main resources and (or) labour of employers of residents of
- activity of banks, and non-banking credit and financial and insurance organizations.
CUSTOMS REGULATION
The
Customs procedure of FCZ is a customs procedure under which goods are distributed and used within the
The
The customs procedure of FCZ can be applied both on the
Foreign goods located under the customs procedure of FCZ keep the status of foreign goods, and goods of the Customs Union keep the status of goods of the Customs Union. Goods produced from the foreign goods located under the customs procedure of FCZ or with their use acquire the status of foreign goods. However, if the customs procedure of FCZ is ended up with the import of such goods beyond the Customs Union their status as being (not being) goods of the Customs Union is determined on the basis of criterion of sufficient processing of goods and is confirmed by the relevant report.
A declarant of goods located under the customs procedure of FCZ could be a resident of
Goods may be located under the customs procedure of FCZ within the term of functioning of the relevant FEZ excluding the cases when a person after location of goods under the indicated procedure loses the status of a resident of FEZ or the decision on cessation of application of the customs procedure of FCZ on the territory of the relevant FEZ is adopted.
CURRENCY REGULATION
The basic document regulating this type of transactions is the Regulations on Currency Transactions adopted by the Resolution of the Board of the National Bank of the Republic of Belarus No. 72 dated of April 30, 2004 (as amended) (hereinafter referred to as the “Regulations”). The Regulations are of a general character, and apply to the currency transactions of all residents of the
The main peculiarity of the settlements with involvement of the residents of
At the moment limitations on settlements with non-residents in the foreign currency until 01.03.2012 are established by the Regulation of the Council of Ministers of the Republic of Belarus and National Bank of the Republic of Belarus from 25.02.2011 No. 240/5 (hereinafter – Regulation No. 240/5). According to the Regulation No. 240/5 settlements between importer and non-resident under foreign trade agreement, providing total amount of monetary obligations of importer exceeds 50 000 Euro in equivalent and import of goods, falling within Annex to the Regulation No. 240/5, shall be made solely:
1) at the expense of receipts in foreign currency, at disposal of importer
2) at the expense of foreign currency at disposal of importer, received as:
contribution to the charter capital
foreign gracious aid
dividends and other profit from investments
interests under loan agreements, concluded with non-residents
interests for placement of foreign currency on accounts in banks
interests on obligations of banks
3) at the expense of foreign currency, received under loan agreements (credit agreements), concluded with non-residents for term exceeding 1 year
4) at the expense of foreign currency, received under credit agreements, concluded with Belarusian banks for term exceeding 1 year
5) in occasion of receipt of permission of the National Bank of the
Annex to the Regulation No. 240/5 includes different types of equipment: power equipment, compressors, stoves, refrigeratory equipment, cranes, loaders, bulldozers, tractors, cargo transport, equipment for production and treatment of agricultural products, equipment for production of paper and cardboard, equipment of clothing industry, foundry equipment, machine tools, communication equipment, PCs, medical equipment, control and measurement instrumentation, as well as number of other kinds of machines and equipment.
THE PROCEDURE OF REGISTRATION IN FEZ
All types of state registration on the
Documents for the state registration of the juridical persons and individual entrepreneurs are submitted to the administration of the
- application on registration in the capacity of resident of
- certified in the established order copies of constituent documents with the submission of original documents (for juridical persons)
- copy of the certification on state registration with the submission of original documents
- business-plan of investment project under the form approved by the administration of the respective
- document of payment proving payment of state due which constitutes 50* basic units.
In general the realization of an investment project on the territory of FEZ, including foundation and registration of a juridical person in the capacity of a business entity on the territory of FEZ as well as registration of a juridical person in the capacity of a resident of FEZ presupposes the sequence of the actions of an investor which may be conditionally divided into several stages:
1. Working up of the investment project. The investment project should meet the following requirements:
- the investment amount should be not less than one million Euro
- the investment project should foresee foundation and (or) development of production oriented to export and (or) import substitution
2. Search on the
3. Preparation of the package of the documents for the presentation to the administration of
4. Examination of the documents by the Administration of FEZ.
5. State registration of a juridical person in the capacity of a business entity on the
6. Signing of the agreement on the conditions of activity of
The official legal document that confirms registration of a business entity in the status of a resident of
Every month (not later than the 10th day of the month following the reporting one) the Republic of Belarus as a member-state of the Customs Union forwards to the Commission of the Customs Union (constantly acting body of the Customs Union) information on registered residents of FEZ for the reporting period (on persons deprived of the resident of FEZ status for the reporting period).
DISCONTINUATION OF ACTIVITY OF THE RESIDENTS OF
Discontinuation of activity of an entity in the capacity of a resident of
At the same time business entities cease their activity in the capacity of a resident, but may continue it on the common grounds without additional state re-registration as a juridical person or an individual entrepreneur.
Administration of FEZ is entitled to deprive a business entity of the status of the resident of FEZ in accordance with an application of the resident of this FEZ or in case of violation of the current legislation of the Republic of Belarus by the resident of the FEZ, including the breach of agreement on conditions of activity in the FEZ or missing the terms for forming the founding capital. This decision can be appealed against in the economic court within a month from the date of decision.
The Law № 213-3 establishes the following cases of the loss of status of the resident of
- liquidation of the
- expulsion from the borders of
- liquidation (discontinuance of activity) of a juridical person or an individual entrepreneur
- change of the whereabouts of a juridical person or an individual entrepreneur if the new whereabouts are situated beyond the territory of the
- cessation of the agreement on the conditions of activity of
Loss of status as well as its deprivation results at termination of obligations under the agreement on the conditions of activity of FEZ and other agreements, the conclusion of which is conditioned by the presence at a juridical person, an individual entrepreneur of the status of the resident of FEZ.
According to the Law № 213-
Being the body conducting the state registration, Administration of FEZ in case of non-fulfillment of entrepreneurial activity provided by the constituent documents within 12 months in a row and non-forwarding by the commercial organization to the tax body of information on the reasons of non-fulfillment of such activity in entitled to, on proposal of the bodies of the Committee on State Control, Prosecutor’s Office, Ministry on Taxes and Duties, and other authorized governmental agencies, make a decision on liquidation of a commercial organization.
Administration of
Liquidation of commercial organizations with foreign investments in case of violation of the current legislation is permitted only in the court order.
The Law № 213-3 provides keeping status of a resident of
In case of reorganization of
In case of reorganization in the form transformation the status of resident is passed to a newly appeared entity from the moment of state registration of the last.
STATE GUARANTEES TO REZIDENTS OF
The State guarantees to residents of
- property right and other property interests as well proprietary rights acquired in a legal way, and protects these rights
- equality of rights presented to the residents of
Forced nationalization, requisition or analogical by their effect measures are not admitted in regard to the residents of
The system of state guarantees of the protection of the investments covers foreign investors in
The State guarantees to the foreign investors the right to get back their share in the property of the enterprise at its remainder value, as well as the transfer of their due sums of the incomes, including the ones in foreign currency, received from investments in the zone, beyond the boundaries of the FEZ and the Republic of Belarus.
According to Article 11 of the Investments Code investments can not be nationalized without compensation, requisitioned, or other measures equal to the indicated consequences can not be applied either.
Nationalization or requisition are possible only with the full and on-time compensation of the cost of nationalized or requisitioned investment property and other damages caused by nationalization or requisition. Compensation of the cost of nationalized or requisitioned investment property should be equal to market cost of this property defined in the order established by the President of the
According to Article 12 of the Investments Code of the
* Starting from February 1, 2007 one basic units is 35 000 BYR (as of June, 2011 it is equal approximately to 7 $ or 5 € at exchange rate of the National Bank of the Republic of Belarus).
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