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10.1. Specific Incentives

Belarus provides for a number of tax incentives aimed at promoting foreign investment, especially in the areas of high tech and the development of rural regions. The following outlines the main regimes:

Foreign Investment

The Belarusian government has established a special program for attracting foreign investment that includes the following:

  • Guaranteed protection of foreign investment under the Investment Code;
  • Foreign-owned companies have the same rights as local companies, including certain tax benefits and exemptions; and
  • Profits can be repatriated without any restrictions.

In addition, Belarus has entered into bilateral agreements on the protection and promotion of investments with many countries around the world.

Free Economic Zones (FEZ)

These zones were set up to create strong private-sector enterprise and investment in Belarus. The minimum requirement to register in a free economic zone is an investment of at least EUR 1 million. The regime would be in force until 31 December 2049.

Benefits of the FEZ Include:

  • Reduced corporate tax rate;
  • Tax-free profits from export of goods and services subject to satisfaction of certain conditions;
  • 50% discount on VAT on imports for goods manufactured within a FEZ;
  • No taxes on real estate owned or leased in the FEZ for three years;
  • Exemption from payments to National Agriculture Support Fund;
  • Land plots are exempt from land tax during five years;
  • No tax on purchasing vehicles; and
  • No customs duty on raw materials and equipment imported from outside Belarus.

High Technology Park (HT Park)

Companies involved in the analysis, development, and software support of information systems are eligible to avail the benefits under the HT Park scheme. On 3 November 2014, the scope of eligible business activities for HT Park incentives, was expanded to cover micro, optical, and nano-electronics, data transmission, radio location, navigation and communications, information security, and creation of data processing centers. Companies established and operating in HT park are required to quarterly remit 1%  (reduced from 2%, effective second quarter of 2022) of their gross revenue (after deduction of specified costs such as cost of digital tokens, commissions of banks and credit institutions, taxes paid or withheld in foreign countries etc.) for the HTP’s administration activities.

Benefits of the HT Park Include:

  • Exemption from corporate tax, VAT, real estate tax;
  • Technical equipment imported by HT Park residents is exempt from customs duties and VAT;
  • Land plots situated in the HTP on which construction projects are carried out are exempt from land tax for up to 3 years;
  • Social security contribution need not be made on the portion of employees’ income exceeding the average salary in Belarus; and
  • The corporate tax rate for foreign entities without operations or permanent establishment in Belarus is reduced to 5% unless further reduced through a tax treaty for dividends, debt liabilities, royalty, and licenses.

Belarus-China "Great Stone" Industrial Park

The Belarus-China Industrial Park is a special economic zone which is being jointly developed under the framework of the China-Belarus intergovernmental cooperation, with a focus on high-tech and export-oriented production, including in the areas of electronics and telecommunications, pharmaceuticals, biotechnology, engineering, new materials, integrated logistics, e-commerce related to the storage and handling of large amounts of data, and other research and development and technological works. Companies located in the Industrial Park that are involved in specified activity types, and having a minimum investment of USD 5 million in the project are considered as residents of the Park. The minimum investment for projects involving R&D is USD 500,000. The minimum investment for other projects is also reduced to USD 500,000 if the investment amount is made within 3 years. Effective 17 September 2021, preferential conditions are introduced for companies that undertake large investments, i.e., investments of at least USD 50 million, within 5 years of concluding the relevant agreement with the Park administration.

The Industrial Park offers the following main tax incentives for companies resident in the Park:

  • Exemption from corporate tax for 10 years in respect of profits derived from the sale of goods, works, and services of the company’s own production, beginning from the date company generates a gross profit. Thereafter, income will be taxed at half the current rate;
  • Exemption from real estate/land tax for 10 years in respect of properties/land located within the Park. The real estate tax for the next 10 years is paid at half the applicable rate;
  • Exemption for 5 years from branch tax and dividend income earned by non-residents with no permanent establishment in Belarus;
  • A reduced withholding tax rate of 5% is applicable in respect of royalties paid by companies resident in the Park to non-residents (effective until 1 January 2027);
  • Exemption from VAT for goods produced in the Park for the sale and lease of real estate between residents of the Park, and services acquired from non-residents; and
  • Tax Exemption for 10 years on dividend income or equivalent income of investors that undertake large investments in the Industrial Park.

Rural and Small-Town Business Incentive

Businesses located in rural areas and small towns that conduct manufacturing or provide services in those or other rural areas or small towns are eligible for certain incentives, including:

  • 5-year corporate tax holiday in respect of self-produced products for any firm operating in a town with a population of less than 50,000; and
  • Exemption from transport duty, real estate tax on local property, customs duties, and VAT payable on most imports.

National Social and Economic Development Program

As part of the country’s National Social and Economic Development Program, the government approved the following key incentives, effective 15 December 2016:

  • 2-year corporate tax exemption beginning the first year in which profits are declared;
  • 2-year property tax exemption from the date of acquisition of taxable immovable property; and
  • VAT and customs duties exemption for SMEs on imports of technology equipment.

The above-mentioned 2-year tax exemptions are not available for companies located in Minsk and five specified regional centers, or for companies created as the result of the certain reorganization.

Innovative Development Program

As a part of the state program for innovative development, the government approved the following incentives for investment in priority development activities or sectors:

  • An exemption from import duties and VAT levied on technological equipment, components, and spare parts imported into Belarus for exclusive use in implementing a relevant project;
  • An exemption from land tax on land plots used for the construction of facilities for relevant projects; and
  • An increased investment deduction of 150% for the initial cost of fixed assets for a relevant project. The same is to be included in the costs of production and sale of goods, works, or services within three years.

The aforesaid incentives are available effective 1 January 2021 until 2025.

Incentives for Electric Vehicles

Effective 15 June 2020, the Belarusian government introduced incentives for legal entities that invest in the creation of a charging infrastructure and conditions for the development and production of electric vehicles and auto components.

For corporate income tax purposes, the following deductions are allowed on the cost of investment (i.e., cost of acquisition, reconstruction and modernization) in electric vehicles and battery charging stations (see Sec. 6.3.):

  • 100% deduction of the cost of investment in electric vehicles in the year of investment; and
  • Deduction of the cost of investment in battery charging stations, as follows:
    • 100% deduction in 2020;
    • 80% in 2021;
    • 60% in 2022;
    • 40% in 2023; and
    • 30% in 2024 and 2025.

Effective 1 January 2021, the cost of investment eligible for the deduction was amended to include restoration cost and cost of additional equipment for electric vehicles and battery charging stations.

Further, effective 1 December 2021, the following VAT exemptions are introduced (see Sec. 11.):

  • Exemption from VAT on the import of electric vehicles into Belarus, provided the vehicle is not older than 5 years;
  • Exemption from VAT on the import of components into Belarus for the manufacture of electric vehicles; and
  • Exemption from VAT on the sale of electric vehicles in Belarus.

Previously, the import of electric vehicles and battery power charges for use in Belarus was exempt effective from 15 June 2020.

The above incentives are available until 31 December 2025.

Miscellaneous

Effective 1 January 2021, a corporate tax exemption is granted with respect to the following income:

  • Profits of investment funds registered in Belarus from the implementation of their investment operations, as well as dividends received by investors from their participation in such funds, which is available until 1 January 2025;
  • Profits of entities engaged in baby food production;
  • Entities engaged in manufacturing of prosthetic and orthopedic devices (including dental prostheses), provision of rehabilitation, and disability services; and
  • Profit from the provision of the possession and use of rental housing, as well as special residential premises in administrative and public buildings of bodies and departments for emergency situations, including in the buildings of fire stations.