Main legislative provision on foreign investments
Section 5 ol the Law on Property in the Republic of Belarus is devoted to the property ol other states, foreign natural persons, legal entities and joint ventures. The Law declares the right ot foreign investors to the property needed for their activities.
In compliance with Article 27 of the Law «On Foreign Investment in the Republic of Belarus’, foreign investors have the right to buy land in the order and on the conditions determined by other laws of the Republic of Belarus. The procedure of purchase of land is established by the Law of the Republic of Belarus «On Property on Land’ dated June 16,1993, however, this Law allows foreign investors to only lease land for a period of up to 99 years. Belarusian legislation on foreign investments provides for different forms of investments, namely:
-share in the enterprises created jointly with Belarusian legal entities and natural persons;
-creation of 100% foreign enterprises;
-purchase of enterprises, buildings, facilities, shares and other property rights.
This list is not complete and investment may take any forms which do not contradict the law.
The most common form of investment in the Republic of Belarus is creation of joint ventures with Belarusian legal or natural partners, or setting up 100% foreign enterprises. The enterprises with foreign stake are created in compliance with the Law on Foreign Investment in the Republic of Belarus: the minimum foreign investment requirement amounts to $20,000. which can be made both in the monetary form and in kind.
In compliance with the legislation regulating denationalization and privatization, foreign investors enjoy equal rights with Belarusian residents.
Analysis of the tax legislation in force is important in taking a decision on foreign investment, especially in terms of tax benefits for the foreign investors. According to Article 30 of the Law on Foreign Investment, the enterprises with foreign stake and foreign investors pay taxes in compliance with the legislation of the Republic of Belarus and enjoy tax benefits if envisaged. For example, the enterprises having more than 30% foreign share in the authorized capital, whose proceeds fully come from sale of own products and services are profit-tax exempt for three years, including the first profit year. In the event the enterprise with a foreign share produces products or services of special importance to the country, the Cabinet of Ministers of the Republic of Belarus can lower the profit-tax rate for such enterprise by up to 50% for another three years.
The foreign property and materials imported for investment into equity are exempt from the import customs duty, as well as the personal property imported by the non-residents who work at the enterprises with a foreign share.
The Law on Foreign Investment of the Republic of Belarus sets for the foreign investment legal regime; according to Article 34, the legal regime for foreign investment may not be less favorable than the property, property rights and investment regime available for the Belarusian legal entities and natural persons, except for the cases provided for by the legislation of the Republic of Belarus Thus, treatment of foreign investments is equal to that of national investments, and in a number of instances preferential, e.g. taxation.
Foreign investors are guaranteed against confiscation of their property in the Republic of Belarus. These guarantees are provided in Article 35 ol the Law on Foreign Investment. Besides. Belarus signed a number ol bilateral international agreements on promotion and mutual protection of investment. The stability of investment environment is guaranteed by the 5-year period when the foreign investor is allowed to ignore the new legislation which may aggravate the conditions versus the time of investment. Another guarantee for foreign investors is provided by part 2 of Article 34 ol the law. which provides a 5-year protection against possible new legislation, worsening conditions for foreign investors in comparison with the initial ones The Law guarantees foreign investors the transfer to the overseas of the due amounts in foreign currency.
In the event of liquidation, the foreign investor has the right to take back his share either in cash or in kind.
The foreign investor can insure property and risks of his enterprise with any licensed insurance company. Disputes between foreign investors and other legal and natural persons shall be either brought before the state courts of the Republic of Belarus, or, by agreement of the parties.-to any independent court of arbitration.
Prosprcts and problems of business in Belarus
The developments over the last ten years highlighted a radical change of the people of the Central and Eastern Europe for independence, free market economy and a better life. Any fundamental breakup in the economic and political system always entails instability, slump and difficulties. By virtue of objective and subjective causes, the rate of reforms in different countries may be different, however, strategic direction of changes in the economy of all the countries of the region is identical, and return to the old system is already infeasible And that means that the region will play a significant role in the future European economy.
Belarus is situated in the center of the new part of Europe, where radical political and economic changes are offering intrigue business possibilities. Commodities from Minsk to Vilnius may be delivered within 3 hours time, to Warsaw, Kiev, and Riga — in 7 hours, to Moscow — in 8 hours, to St.Petersburg — in 12 hours, to Berlin — in 20 hours. At the same time, reforms in Belarus are being effected slower than those in Poland, the Baltic countries or Russia, and business in changing economies of postcommu-nist countries differs from that of stable countries of the West.
Belarus has always been one of the most developed republics of the former USSR, distinctive features of which were a high educational and cultural level of the population, people’s diligence, stability, well-developed infrastructure. The weak side ol many Belarusian enterprises is lack of necessary experience of work in free market environment. Many directors ol enterprises, especially of elder generation, were formed in times ol administratively-regulated economy and absence of competition. At the same time, there have appeared more young, well-educated, smart, and vigorous directors in the state sector, as well as in the private one. They need Western experience of conducting business and management.
Belarus offers investors qualified and cheap labour force. Many enterprises are having unoccupied capacities and looking lor experienced foreign business partners. Belarus has good and close relations with Russia and other CIS; Belarusians know perfectly well the mentality and realities of these countries, and there is no language barrier. Belarusian commodities have always been ones of the most high-grade in the former USSR, and the trade mark «Made in Belarus’ has traditionally had high reputation in the newly independent states. Belarus, Russia and Kazakhstan founded a vast common economic and customs space, inside of which commodities and raw materials are transferred easily without any duties and customs formalities. The prices for many raw materials are lower than for those in the West. Geographically. Belarus is the closest country of the CIS to the Western Europe. Legislation is gradually becoming more attractive for the foreign investors. Well-developed science and high qualification of engineers provide for local support of any projects, including those relating to high technology domain.
This is an invitation. Make your business in Belarus!