Handbook for investors by Paternus Terra

WWW.INVESTARBY.COM

To your attention: The information was prepared on the basis of various sources and selected as accurately as possible. This overview is intended to provide only a general outline of the subject covered. This information is not offered as legal or any other advice on any particular matter.

in v e s t m e n t c o m p a n y

Investment Company «PATERNUS TERRA»

Bureau of Economiс Research

Ltd «BKS-Pravo»

Orlovskaya str., 40a-19, Minsk, 220053, Republic of Belarus,

Pervomaiskaya str., 24/2-119a, Rokosovskogo st.,4/1 – 102 Minsk, 220088, Minsk, 220094, Republic of Belarus, Republic of Belarus,

Phone: +375 25 999 2222 +375 17 541 6726 Fax: +375 17 239 2181

Phone: + 375 29 613 0309 Fax: +375 17 335 2756

mail@investar.by www.investarby.com

info@bkslaw.by www.bkslaw.by

Phone: + 375 29 758 2400

info@ekonomika.by www.ekonomika.by

WWW.INVESTARBY.COM

Complimentary address.

Ladies and Gentlemen! Have decided to set up business in the Republic of Belarus, you will provide a decisive advantage in the international competition. Belarus has many advantages that provide favorable conditions for the work of perspective-oriented companies, engaged Head of the Company “Paternus Terra” in productive activities or services. It is considered to be one of the most attractive Andrey Zharinov areas for economic activities in the central Europe. The investment guide contains the information to set up Business in Belarus – in the country where foreign direct investment is one of the main priorities of the state policy. The investment guide contains the list of addresses of the national and regional services, promoting economic development as well as addresses of different services and organizations that will be useful at the beginning and continuation of the business activity. We will be glad to meet you personally, whether you are a businessman or a direct investor. In any region of our country you will meet officials that are committed to promote foreign investment. The Belarusian Ministry of economy has offered regulatory and administrative guidance, coordinating the work of other state agencies in this sphere and helping create a transparent and competitive legal framework for foreign companies in Belarus.

Head of the Company “Paternus Terra”

A. Zharinov

WWW.INVESTARBY.COM

Contents

1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 2 2.1 2.2 2.2.1 2.2.2 2.3 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.3.6 3 3.1 3.1.1 3.1.2 3.2 3.3 3.4 3.4.1 3.4.2 4 4.1 4.2 4.3 4.4 5

Advantages of the Republic of Belarus…………………………..................

Belarus…………………………………………………………………………………… Geographical position…………………………………………………................... Climate……………………………………………………………………................... Legal system…………………………………………………………………………….. Political stability and social harmony………………………………………….….. State budget…………………………………………………………………………….. Population……………………………………………………………………………….. International organizations………………………………………………….………. Key highlights ………………………………………………………………….………. Structure of the Belarusian economy…………………………………….……. Sector-focused structure of Gross Domestic Product…………………..……… International relations…………………………………………………………….….. Trade in goods and services………………………………………………….……… Direct investment………………………………………………………………..…….. Main sectors of Economy……………………………………………………..……… Chemical and petrochemical industry……………………………………..……… Agriculture………………………………………………………………………..……… Machinery and metal working industry………………………………..…………. Metallurgy………………………………………………………………………..………. Light industry………………………………………………………………….……….. Food industry…………………………………………………………………………... Economic Situation (Conditions)………………………………………………… International exchange of goods and services…………………………………… Free trade agreements, WTO, reduction of trade restrictions……………….. Customs system………………………………………………………………………... Legal protection of Intellectual Property……………………………………….…. Product liability requirements………………………………………………………. Regional planning and the environment………………………………………….. Planning and construction…………………………………………………………… Environment…………………………………………………………………………….. Belarus and Europe…………………………………………………………………… Trade and direct investments……………………………………………………….. Political and economic cooperation………………………………………………… Science……………………………………………………………………………………. Rail, road and air links……………………………………………………………….. Establishing companies and running a business…………………………….

11 11 12 12 13 14 14 15 16 19 19 20 21 21 22 23 23 24 25 26 26 27 27 27 28 30 32 34 34 35 37 37 37 38 39 41

WWW.INVESTARBY.COM

5.1 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.6 5.2 5.3 5.4 5.4.1 5.4.2 5.4.3 6 6.1 6.1.1 6.1.2 6.1.3 6.2 7 7.1 7.1.1 7.1.2 7.2 7.2.1 7.2.2 7.3 7.3.1 7.3.2 7.4 7.5 8 8.1 8.2 8.3 8.3.1 8.3.2

Organizational and legal structure…………………………………………………. Representative office……………………………………………………….………….. Joint-Stock Company…………………………………………………………………. Limited Liability Company (LLC)…………………………………….……………… Unitary Enterprise (UE)………………………………………………………………. Other organizational and legal structures……………….………………………. Joint Venture……………………………………………………….…………………… Accounting ………………..……………………………………….……………………. Audit………………………………………………………………………………………. Establishing a Company……………………………………………………………… Order of Establishing a Company………………………………………………….. Foundation costs….………………………………………….………………………... Registration in the Unified State Register of Legal Entities……………….….. Visa and Permits…………………………………………………………….………… Entry and Visa………………………………………………………………………….. Visa regimes…………………………………………………………………………….. Procedure of Obtaining a Visa………………………………………………………. Stay and permanent residence in Belarus……………………………………….. Acquisition of citizenship…………………………………………………………….. Real Estate……………………………………………………………………………… Search for Suitable Properties………………………………………………………. Residential and commercial real estate…………………………………………… Temporary accommodation / furnished apartments, hotels………………… Commercial Property …………………………………………………………………. Property for Rent………………………………………………………….……………. Property for Sale……………………………………………………….……………….. Residential Real Estate……………………………………………………………….. Property for rent……………………………………………………….……………….. Property for sale………………………………………………………………………... Legal aspects: construction permit………………………………………………… Legal aspects: Plot acquisition by foreign citizens and organizations……………………………………………………………………………. Labor market and law……………………………………………….………..…….. Employment and unemployment…………………………………………………... Labor Cost……………………………………………………………………………….. Labor laws……………………………………………………………………………….. Employment Agreement (contract)………………………………………………… Termination of an employment agreement, terms, protection of the employee`s rights……………………………………………………………………….

WWW.INVESTARBY.COM

41 42 43 43 44 44 47 48 49 50 50 52 52 53 53 57 58 58 59 62 62 62 63 63 63 64 65 65 66 67 68 70 70 71 72 72 74

8.3.3 8.3.4 8.3.5 8.4 8.4.1 8.4.2 8.4.3 8.4.4 8.4.5 8.5 8.6 8.6.1 8.6.2 8.6.3 8.6.4 8.7 8.7.1 9 9.1 9.1.1 9.1.2 9.1.3 9.1.4 9.1.5 9.2 9.3 9.3.1 9.3.2 9.4 9.5 9.6 10 10.1 10.1.1 10.1.2 10.1.3

Benefits for Employed Women………………………………………………………. Collective Agreement………………………………………….……………………….. Trade Unions……………………………………………………………………………. Work & Leisure…………………………………………………………………………. Working Hours………………………………………….………………………………. Overtime…………………………………………………….……………………………. Shift Work……………………………………………………………………………….. Work at night, on weekends and public holidays………………………………. Annual leave…………………………………………………………………………….. Short-time Working and Mass Dismissal……………………….………………… Social Insurance………………………………………………….…………………….. Accident Insurance………………………………………….…………………………. Disability Insurance, Pregnancy……………………………………………………. Health Insurance………………………………………………………………………. Unemployment Insurance……………………………………………………………. Staff Search……………………………………………………………………………… Private Employment Agencies……………………………………….………………. Belarusian Capital Market…………………………………………………………. Banking System………………………………………………………………………… Banking System Structure…………………………………………………………... Supervision……………………………………….……………………………………… Services…………………………………………………………………………………… Deposit Insurance……………………………………………………………………… Taxation of Savings Income………………………….………………………………. Belarusian Stock Market…………………………………….……………………….. Commercial and Real Estate Financing………………….……………………….. Financing of a Current Business…………………………………………………… Mortgages………………………………………………………………………………… Venture Capital……………………………………….………………………………… Government Support………………………………………………………………….. Inflation…………………………………………………………………………………… Taxation system in Belarus……………………………………………………….. Republican Taxes………………………………………………………………………. Personal Income Tax…………………………………………………………………... Profit Tax…………………………………………………………………………………. Tax on foreign legal entities not engaged in commercial activities in Belarus through a permanent representative office……………….…………… 10.1.4 Value Added Tax (VAT)…………………………………….………………………….. 10.1.5 Excise tax…………………………………………………………………………………

WWW.INVESTARBY.COM

74 75 75 76 76 76 77 77 78 79 79 80 81 81 82 82 82 83 83 83 84 85 85 86 86 87 88 89 91 92 93 94 95 98 98 99 100 101

10.1.6 10.1.7 10.1.8 10.1.9 10.2 10.2.1 10.2.2 10.2.3 10.2.4 10.2.5 10.2.6 10.2.7 10.2.8 10.3 10.4 10.5 10.6 11 11.1 11.1.1 11.1.2 11.1.3 11.2 11.3 11.3.1 11.3.2 11.4 11.5 11.6 11.6.1 11.6.2 12 12.1 12.2 12.3

Real Estate Tax…………………………………………………………………..…….. Land Tax…………………………………………………………………………………. Ecological Tax…………………………………………………………………………… Severance Tax…………………………………………………………………………… Charges levied in the Republic of Belarus (Republican)………………………. Charges for import of ozone-depleting substances into the territory of Belarus……………………………………………………..……………………………… Charge for transit of vehicle automobiles from foreign countries on public roads of the Republic of Belarus……………………..……………………………… Charges for issuing permits to travel on the vehicles of the Republic of Belarus on the territory of foreign countries……………….…………………….. Offshore Levy……………………………………………….……………………………. Stamp Duty……………………………………………….……………………………… Consular Fee……………………………………….……………………………………. State taxes………………………………………………….…………………………….. Patent fees……………………………………………………….……………………….. Local taxes and duties………………………………………….……………………… Tax incentives. Types of government support……………….…………………… Special Tax Regimes…………………………………………….……………………… The system of agreements to avoid double taxation………………….…………. Infrastructure………………………………………………………….……………….. Transport………………………………………………………………………………….. Road Network……………………………………………………………………………. Railways…………………………………………...……………………………………… Air Communication…………………………………………………………………….. Energy…………………………………………………………………………………….. Water supply…………………………………………………………………………….. Potable Water………………………………………………………………….…………. Waste water disposal and water pollution control………………………………. Communication………………………………………………………………………….. Postal Services…………………………………………………………………………… Healthcare………………………………………………………………………………… Medical Care……………………………………………………………………………… Health insurance………………………………………………………………………… Education and research……………………………………………………………… Pre-school education and general secondary education……………………….. Vocational training system and secondary specialized secondary education………………………………………………………………………………….. Higher Education………………………………………………………………………..

WWW.INVESTARBY.COM

102 103 104 104 105 105 105 105 106 106 106 107 107 107 108 108 110 111 111 111 111 112 113 114 115 116 116 116 117 117 118 119 120 120 121

12.4 12.5 12.6 13 13.1 13.2 13.3 13.4 13.5 13.6 14 14.1 14.2 14.3 14.4

Advanced training and retraining…………………………………………………… Research Capacity………………………………………………………………………. International Scientific Cooperation………………………………………………… Living in Belarus………………………………………………………………………. Safety and Quality of Life……………………………………………………………… Telephone, Internet and Television……………………...………………………….. Insurance………………………………………………………………………………….. Public Transport…………………………………………………………………………. Leisure activities…………………………………………………………………………. Income and Cost of Living…………………………………………………………….. Attraction of investments…………………………………………………………… Competent Authorities…………………………………………………………………. Service on Investment Promotion……………………………………………………. Tax Incentives for Foreign Investors………………………………………………… Free Economic Zones in Belarus……………………………………………………..

WWW.INVESTARBY.COM

121 122 122 124 124 124 125 126 126 127 129 129 130 132 139

Advantages of the Republic of Belarus 1. Attractive political and economic conditions 

Simple procedure of setting up and registration of Business



Advanced Investment Legislation

 Stable socio-political situation 2. Strategically advantageous geographic location 1. Strategically favourable geographic position 

Three major European markets of Europe, CIS countries and free market to the countries of the Customs Union



Belarus is the transport and communicative link between Russia and Europe

Optimal logistics expenses for export of goods manufactured in Europe and the CIS 2. Developed infrastructure, high standard of living 



Developed network of road, rail and air connections



Steady supply of energy, water and communication services



High-level healthcare

 Low crime rate 3. Economic opportunities are concentrated in Belarus 

Intense focus on export



Ideal location of representative offices of European and international concerns



Leading positions in the area of dairying production



Major center of commodities transit, although of own small raw material base

 Existence of Free Economic Zones in each of the six regions of the Republic. 4. Flexibility of the labor market, high productivity 

Liberal Labor Law, attractive conditions for employers



Low unemployment , high percentage of employed



Highly educated and skilled workforce

 Profitable ratio of the wages of workers to their qualification 5. Moderate taxation 

Competitive tax rates in Europe



Low payroll taxes

Exemption from income tax of individuals, who have moved to permanent residence to Belarus for 5 years, on income received outside the country 6. Efficient capital market 



wide range of banking and insurance services



Profitable interest rate conditions

 Long-term price stability 7. High level of education, development of innovation WWW.INVESTARBY.COM



Practice-oriented education

 Support and realization of innovations 8. Professional Business support 

The Foreign Investment Advisory Council and National Investment Agency



Assistance in establishing business ties and finding land



Benefits and preferences for new established manufactures.

WWW.INVESTARBY.COM

1.BELARUS

The country is situated in the middle between the Urals and the Atlantic. It is the connection link between Europe and Russia. The economic success of Belarus is directly linked with the liberal economic system, political stability and close economic cooperation with other countries. High level of education and infrastructure contribute to the competitiveness of the Belarusian economy.

1.1

Geographical position

The average area of Belarus is 207 600 sq.m. The Republic of Belarus is located in Eastern Europe. It is a land-locked country but due to its geographical position it is the main trade and transport corridor between Europe and CIS. It borders on Latvia, Lithuania on the north, and Poland on the west, Russia on the east and the Ukraine on the south. Distance between Minsk and Warsaw is 550 km, Minsk and Moscow – 700 km, Minsk and Berlin – 1.00 km, Minsk and Vienna – 1.300 km. The nature of Belarus is unique. Here you can find many rare species of plants and animals. The country has implemented major environmental projects, national parks and game reserves have been created. 93.1% of the country`s territory is occupied by a great diversity of vegetation. Forests occupy 1/3 of the green cover of the country. Belarus has around 20,800 rivers and streams which flow to the Black Sea and the Baltic Sea. The aggregate length of rivers and streams in Belarus is 91, 000 kilometers. Besides a great number of rivers, there are about 11 000 lakes in Belarus. Belarus is called «The Country of lakes». Most lakes are concentrated in the north and north-west, in so-called «Belarusian Poozerie». Almost all the lakes of Belarus were formed by the melting of the Valdai glacier (about 12 thousand years ago). In the south of the river Pripyat there is located a moorland – the famous Belarusian Polesie.

WWW.INVESTARBY.COM

In those areas of Belarus, where the unique landscapes were preserved, national parks were created. Belarusian nature is so diverse that everyone can find a place, which will perfectly reflect his state of mind. www.belarus.by

1.2 Climate The climate of Belarus is moderately continental. It is influenced by the Atlantic Ocean and characterized by rainy, cool summer, mild winter with frequent thaws, unstable weather in autumn and winter. The average temperature in January is from -4 ° C in the south-west to -8 ° C in the north-east; in July – 17-19°С. The average annual precipitation is 550-650 mm in lowlands and 650-750 mm in plains and highlands. The average duration of the vegetation period is 184-208 days. Climatic conditions of Belarus are favorable for the cultivation of basic grains, vegetables, fruit trees and shrubs in the middle part of Eastern Europe and especially for growing potatoes, flax, annual grass, fodder beet. www.pogoda.by

1.3 Legal system The Republic of Belarus is a unitary democratic social law-governed state. The Republic of Belarus exercises supreme and absolute authority over its territory and independently implements domestic and foreign policy. The National Assembly of the Republic of Belarus is the representative and legislative body. It consists of two chambers: the House of Representatives and the Council of the Republic. Under the Constitution The Parliament controls the main directions of domestic and foreign policy through the implementation of its main functions – making the laws. Under the Constitution the Council of Ministers exercises executive power in Belarus, governs the system of state and executive bodies subordinate to it. The Government consists of the Prime Minister, his deputies and ministers. It may include heads of other central government bodies. In its activity, the government is answerable to the President and accountable to the Parliament. WWW.INVESTARBY.COM

Executive authorities are divided into two groups: 1. Administrative authorities (administration): Government, ministries, committees, departments; 2. Law enforcement authorities â&#x20AC;&#x201C; law enforcement bodies, security service and tax police, etc., their feature is the use of coercive measures. The Belarusian legal system is based on the civil law system: Constitutional Court, Supreme Economic Court, Supreme Court and courts general jurisdiction: regional and district courts. Thus the system of the government bodies of the Republic of Belarus is based on the division into legislative, executive and judicial branches of government and is centralized in the unitary state. The Heads of the local executive power are appointed by the President. Generally, citizens exercise local government and self-government through local Councils of Deputies, bodies of public territorial self-government, local referenda, assemblies and other forms of direct participation in state and public affairs. Local Councils of Deputies are representative bodies of state authorities in the respective administrative territorial units. The Head of State is the President of the Republic of Belarus, the guarantor of the Constitution of the Republic of Belarus, the rights and liberties of man and citizen. The President maintains intermediation among the bodies of state administration and has the constitutional authority in all branches of government. www.president.gov.by

1.4 Political stability and social harmony For many years Belarus represents an example of political and social stability. The citizens of the country attach great importance to their independence. The country has a high level of tolerance and personal freedom. The relationships between employersâ&#x20AC;&#x2122; associations and trade unions are based on the principles of consent. Employers and employees tend to settle differences through negotiations. Due to the principles of social cohesion, the welfare of the state and its citizens is growing every year. www.president.gov.by

WWW.INVESTARBY.COM

1.5 State budget The budget process in Belarus is organized and implemented in accordance with the Constitution of the Republic of Belarus, the Law of the Republic of Belarus “On budget system of the Republic of Belarus”, other laws of the Republic of Belarus, adopted on their basis of other regulations, and decisions of the President of the Republic of Belarus. The budget system of the Republic of Belarus, being an essential part of the financial and credit system of the republic, includes stand-alone units budgets (regional, district, urban, township budget and village councils). In reviewing the state budget of Belarus is often used concept of the consolidated budget – a set budget of the Republic of Belarus or its respective administrative-territorial unit. The Ministry of Finance and local financial bodies each year consolidate budgets, respectively, of the Republic of Belarus and its administrative-territorial units. Recently, the Ministry of Finance has developed a new practice of the formation of fiscal policy, carrying out simultaneously huge methodological work in budgetary planning. The Law on “On the Budget Classification of the Republic of Belarus” was adopted in the country, which established the basis of legal regulation of relations arising in the process of drafting, approval and execution of the republican and local budget and state extrabudgetary trust funds, extra budgetary funds of budget institutions and organizations. Also in the new edition of the Law “On Budget System of the Republic of Belarus and the government extra-budgetary funds”, that laid the principles of budgetary system. Also the Law “On Budget System of the Republic of Belarus and the government extrabudgetary funds” was adopted in a new edition, which set up the principles of budgetary system. www.minfin.gov.by

1.6 Population Belarus has approximately 10 million inhabitants. Belarusians are friendly and good natured people. Patience and peacefulness of the Belarusians is mostly determined by history, clouded by countless wars. Moreover, Belarusians never started those wars. Belarus always welcomes guests and is interested in representing to them the culture and traditions of the country. Belarusians make up more than 80% of the population. Belarus has a rich and checkered history and it is inhabited not only by Belarusians but also by many other WWW.INVESTARBY.COM

nations: Russian (11,4%) have always inhabited the territory of Belarus. A large number of people of different nations moved to its territory after the World War, Polish (3.9%) have lived in the western part of the country for centuries, Ukrainians (2,4%) â&#x20AC;&#x201C; the largest influx was registered in the XVIII-XIX centuries, Jews (0.3%): The first Jews settled in Belarus in XV century. Since the beginning of 1980 due to emigration to Israel and other countries, the Jewish population of Belarus has decreased to less than 30 thousand people. Also on the territory of Belarus live Tatars, Gypsies, Lithuanians and Latvians. Its urban population constitutes more than 70% of the total. The capital and the largest city in Belarus is Minsk. There is concentrated the quarter of the total urban population in Minsk (for about 2 million of people). The average population density is 49 people per 1 km2. The countryâ&#x20AC;&#x2122;s territory is populated evenly, with the highest density in the central regions (82 people per 1 km2 in the Minsk region), and low density on the north in the Vitebsk region (10 people per km2). Belarusian and Russian are official languages of the Country. Other languages such as Polish, Ukrainian and Hebrew, are used by local communities.

1.7 International organizations The Republic of Belarus has established diplomatic relations with more than 50 countries, that allows to solve the problem of obtaining visas. The Republic of Belarus is a member of the UN Economic and Social Council (ECOSOC) since 2007. Belarus cooperates with the bodies of the UN operational activities, through which the country is provided with substantial technical assistance to promote development. There are 11 missions programs, agencies and UN organizations. Among them: United Nations Development Program (UNDP), UNESCO, the United Nations Children`s Fund, the United Nations High Commissioner for Refugees (UNCHR), the Joint United Nations Program on HIV/AIDS (UNAIDS). In addition to the United Nations, Belarus is represented in such international institutions as the World Health Organizations, the International Atomic Energy Agency, the World Customs Organizations, the International Monetary Fund, the European Bank for Reconstruction and Development and many others. Belarus is the Party to all six

WWW.INVESTARBY.COM

fundamental treaties regulating human rights and eight fundamental conventions of the International Labour Organization. Belarus is a co-founder of a large regional organization – the Commonwealth of Independent States (CIS), which unites 11 countries of the former Soviet Union. The CIS is headquartered in Minsk. In March 1994 the CIS was awarded an observer status at the UN. Participation in regional security programs, first of all, in the Collective Security Treaty Organization (CSTO), is an important component of Belarus` foreign policy.

1.8 Key highlights: Territory - 207, 6 sq. km Population – 9, 7 million Life expectancy – 70, 5 years Urban population – 74% Capital – Minsk (1,8 million)

Brest – 316, 4 thousand people Vitebsk – 346, 9 thousand people Gomel – 486, 3 thousand people Grodno – 332, 0 thousand people Mogilev – 371, 3 thousand people

Nationalities: Belarusians – 81.2% Russian – 11,4% Poles – 3,94% Ukrainians – 2,4% Jews – 0,3%

Public Holidays: New Year`s Holiday – January 1 Orthodox Christmas – January 7 Women`s Day – March 8 Orthodox Easter – movable Radunitsa – the first Tuesday after Orthodox Easter Labor Day – May 1 Victory Day – May 9 Independence Day – July 3 Day of October Revolution – November 7 Catholic Christmas – December 25

Official languages: Russian Belarusian National Currency Belarusian ruble. Workforce: 4, 7 million (2009). Unemployed: 40, 3 thousand (officially published

Major industries: Metallurgical engineering Machinery Metal-working Chemical and petrochemical industry Light Industry

WWW.INVESTARBY.COM

in 2009). Division of employed population by economic sectors (2009): Industry – 26, 2% Agriculture -9, 3% Construction – 9, 0% Transport and communication – 7, 6 Trade and catering, logistics and marketing, procurement – 14, 7% Other – 16, 3% Connection: Telephone: Fixed phones – about 3.7 million; mobile users – 8, 35 million Internet users – more than 3,1 million Transport: The length of railway tracks – 5511 km. including electrified – 897 km. Roads – 85,7 thousand km. including Roads paved – 74, 3 thousand km. The total length of pipelines – 2984 km., gas pipeline – 7421 km. (2008). Currency: BYR – Belarusian rouble Time zone: GMT: +02:00 Code telephone: +375

Food processing industry Total area of agricultural lands: 8944.7 thousand hectares (2008). Agriculture specializes in planting cereals, potatoes, vegetables, sugar beet, flax, meat, dairy farming. Natural resources: Wood Peat oil and natural gas Granite Dolomite Limestone Clay and sand. Key Economic Indicators: GDP (2009) – 32 569 047 euro; per capita - 3370 euro Merchandise exports (2009): Mineral Products – 37, 9% Chemical Products, Rubber – 18, 2% Machinery, equipment and vehicles – 15,7% Black, non-ferrous metals and articles thereof – 6,9% Foodstuff and agricultural raw materials – 10, 8% Other – 10, 5% Commodity imports (2009): Mineral Products – 40, 3% Chemical Products, Rubber – 12, 4% Machinery, equipment and vehicles -22, 6%

WWW.INVESTARBY.COM

Geography: Area – 207,6 thousand sq. km. Lakes: more than 11 thousand Rivers: 20,8 thousand with total length about 91 thousand sq.km. Politics: Presidential Republic

Foodstuff and agricultural raw materials – 8, 2% Other – 7, 7% Major trading partners: Russia Netherlands Germany Ukraine Poland Latvia China Great Britain Italy India.

www.belarus.by

WWW.INVESTARBY.COM

2.STRUCTURE OF THE BELARUSIAN ECONOMY

Currently, Belarusian model of social and economic development is based on active involvement of the state in management of market relations. Belarus has close economic ties with other countries. Legal security, the opportunity for long-term investment agreements, few legal constraints, proximity to research institutions – are the arguments in favor of Belarus – the country that is attractive for establishing business. Recently, the Belarusian economy has been growing steadily. Result: 

a steady increase of GDP since 1992



a significant reduction in trade deficit



improving of living standards in Belarus.

2.1 Sector-focused structure of Gross Domestic Product In 2009 Belarus` GDP totaled 32 billion euro, up 0,2% over 2008. Share in the GDP value added of industry was 25.3%, agriculture – 7,8%, construction – 10,7%, transport and connection – 8,9%, trade and catering – 10,7%. Industry that accounts for about 25.3% of GDP is highly developed in Belarus. Major industries: 

Tractors and agricultural equipment (Belarusian tractors are highly valued).



Automobile production (including dump trucks)



Motorcycle production



Electrical and household appliances manufacture



Electronics



Chemical industry



Light industry



Forestry and wood industry.

There are six free economic zones (FEZ) in Belarus. Resident companies of Free Economic Zones have following preferences: 

zero rate of export duty for the first five years of work



exemption from sales tax, road tax and property tax



the right to open bank accounts in foreign and local currencies

WWW.INVESTARBY.COM



customs preferences



full exemption from customs duty on imported raw materials

There are a highly qualified workforce in Belarus. Almost 50% of the employees and workers in Belarus have higher education. At present Belarusian industry provides about a third of the country’s GDP. www.economy.gov.by

2.2 International relations Belarus provides a multidirectional foreign policy. However, strict limitations of foreign policy resources dictate the necessity to focus on some of the most important directions. Therefore, based on the correlation of their own national interests with the assessment of the international situation and the actions of the partners, as part of multi-vector, Belarus forms and implements foreign policy priority. The major priority of foreign policy of Belarus is to maintain and improve friendly and mutually beneficial ties with its neighbors. Primarily, Russia is not only our major trading partner, but also the source of support on the international market. Belarus and Russia are strategic allies. The most important is that in building their relations on the basis of Allied, Belarus and Russia maintain their sovereignty, while remaining fullyfledged subjects of international law. The next priority in this area of foreign policy of the Republic of Belarus – CIS partners. Belarus has always been a consistent supporter of the restoration of broken links after the collapse of the USSR for the successful and stable development of our countries and peoples. However the functioning of the existing today, that is far from being perfect, mechanism of interaction between the CIS member states has some problems. This encourages Belarus to seek new ways of interaction within the CIS. Belarus attaches great importance to the development of integration structures in the post-Soviet space, primarily, the EurAsEC and the CSTO. These are the most dynamic organization with huge possibilities. Being an integral part of the European continent and the peace and progress supporter, the Republic of Belarus consistently brings into life the idea of neighborhood. The most effective trade and economic relations are developing with Germany, Poland, Lithuania, Latvia, Great Britain, Holland, Italy, France, Belgium. Such mutual objective interests as cross-border cooperation, fight against crime, a strategic transit, maintenance of regional contacts, environmental, cultural interaction serve as additional motivation for the development of constructive relations between Belarus and the European Union.

WWW.INVESTARBY.COM

2.2.1 Trade in goods and services The major foreign trade partners of the Republic – Russia, Germany, UK, USA, Poland, Ukraine, Latvia, Lithuania, Italy, Holland, France, Belgium. Europe is the most important partner of the Belarusian economy. Ten of the twelve countries that are among the main trade partners are EU members. Five leading trade partners of Belarus have long remained unchanged. On the top among them with a large margin remains Russia. It accounts about 47,2% of total trade. Following are the Netherlands – 8.2%. From $ 5.56 billion of Belarusian exports 98,5% of oil is distributed to this country. The rest $ 11.8 million make up timber, containers, hand saws and clothing. The third trade partner is the Ukraine. The fourth major partner of Belarus is Germany – 5% of the turnover of our country. From $812,4 million of Belarusian exports to this country, 27,5% fall in crude oil. In 2008 Import from Germany to Belarus increased up to 28,6%, up to $2,79 billion. The fifth major trade partner of Belarus is Poland. We are exporting goods to $ 1.8 billion (47,5% more than in 2007) into this country. 31,4% of this amount is crude oil, 15.4% petroleum products, 12.9% - liquefied gas, $ 11,7% - potash fertilizers. www.belstat.gov.by

2.2.2 Direct investments Attracting investments, including foreign ones, is the priority of the government policy. Mostly Belarus is interested in direct investments. They do not burden the national debt and let the foreign investors mobilize and realize their potential in Belarus – financial, industrial and intellectual. During January-June 2009 the Belarusian economy received $4,230 million of foreign investment, which is 27 percent more than in January-June 2008. Moreover, foreign direct investments were attracted on the amount of $2477.5 million that twice exceeded the amount of investments at the same period in the previous year. Other investments (loans, financial leasing) were received on the amount of 1,752.2 million dollars. Most of foreign investments were attracted in transport - $1,881.6 million (44 per cent of the total volume of foreign investments), industry - $1087,8 million (26 per cent) and into general commercial activities on the functioning of the market – 653.5 million (15.4 percent).

WWW.INVESTARBY.COM

The five major investing countries are: Russia (2 / 3 of the volume of foreign investments - $2864.6 million), Switzerland, Austria, Germany, Latvia. In Belarus there are about 3 thousand companies that have been established by investors from 77 countries. The most attractive sectors for foreign investors in Belarus are: machinery and metal working, light, chemical, petrochemical, wood industry, as well as trade and catering, connection, transport and health care. Belarus successfully cooperates with the most famous transnational corporations. Jointly with the German concern «MAN» were created enterprises (production of passenger and freight vehicles), with the Company «Karl Zeiss» (output of optical products) as well as with foreign companies – «Coca-Cola Beverages Belarus», «McDonalds Restaurants» (non-alcohol beverages and catering), «Unomedical» (manufacturing disposable medical products), «CHESS-Bel» (petroleum products),” Fresenius “(production of medical equipment), etc. Successfully have been implemented projects with foreign investments at JSC «Mogilevhimvolokno», CJSC “Belarusian Brewing Company «Syabar», construction of the border customs terminal «Kozlovichy – 2». The foreign investors may be attracted by extensive housing construction in Belarus (up to 4 million sq. km. per year), reconstruction of the objects of national importance – sports complexes «Raubichy» and «Stayki». Also in Belarus are implemented development programs of the most promising types of tourism (rural, ecological, hunting, transit), and 22 ourism infrastructure in historic cities with cultural heritage. To Increase the inflow of funds of private investors for implementation of such kind of projects it is necessary to simplify registration procedure and acquisition of real estate, liberalization of foreign trade, unification of customs and tariff systems of Belarus and Russia, accession of the Republic of Belarus to WTO. www.w3.economy.gov.by/ministry/economy.nsf

2.3

Main sectors of Economy

The main economic sectors of Belarus are chemical and petrochemical industry, agriculture, metal working, machinery, metallurgy, light and food industry, wooden and forestry industry. In agriculture mainly predominate cattle breeding, pig-breeding, aviculture, grain, potatoes and flax production. Economic development is aimed at increasing profitability, reducing debt, increasing the solvency and liquidity. Exports: trucks, tractors, televisions, refrigerators, chemical fiber, potassium fertilizers, textile WWW.INVESTARBY.COM

and light industry. Imports: petroleum, natural gas, coal, machinery and equipment, ferrous and nonferrous metals, chemical products.

2.3.1 Chemical and petrochemical industry Chemical and petrochemical industry is one of the main sectors of industry in Belarusian. There are 75 enterprises in Belarus, that are characterized by high lecel of profitability. Most of them are part of «Belneftekhim». Concern exports about 70% of own production into the foreign market. The largest enterprises of this sector are: RUE «Belaruskali», Inc.”GrodnoAzot», OAO «Gomel Chemical Plant». Belarus is one of the world’s largest producers and exporters of potash. The RUE «Belaruskaly» accounts for over 14% of global production capacity and about 16% of world exports of potassium fertilizers. The products sales are implemented in 54 countries, including Asia, Latin America, North America and Africa. Systems of Quality management in line with international standards ISO 9000 were implanted in 19 companies of «Belneftekhim». The country produces all the main types of chemical fiber and yarn: polyamide (JSC «Grodno Khimvolokno»), polyester (JSC «Mogilevkhimvolokno» and RUE «Khimvolokno»), polyacrylic (JSC «Polymir»), viscose industrial and textile (RUE «Khimvolokno» and «Mogilev ZIV»). Available capacities of production volumes to 300 thousand tons per year. «Belshina» is one of the largest companies in Europe, currently producing 192 standard sizes and exporting more than 160 types of tires for cars, trucks and heavy trucks, buses, trolleys, materials handling and road construction machinery, tractors and agricultural machinery. Product range that is produced at the enterprise is constantly updated according to the market requirements.

2.3.2 Agriculture The main component sector of agribusiness is agriculture. It employs 458 thousand people (10,6% of total employment in the economy). Although the gross domestic product share of agriculture is less than 8%, it is of great significance, taking into account its social role. The country’s food security is fully guaranteed. Mainly only critical products are imported, that due to natural and climatic conditions in the country are not produced. Belarus is a leader on the post-Soviet space on food production per capita, while the grain production of more than 700 kg per inhabitant of the country –

WWW.INVESTARBY.COM

higher than many developed countries, increase the productivity of livestock and poultry. www.mshp.minsk.by

2.3.3 Machinery and metal working industry Machinery and metal working is one of the most leading sector of industry in Belarus. Machinery and metal working used to be the sector that provided the development of the technical progress training of highly qualified personnel workers, technical workers, as well as development of scientific institutions, technical educational institutions. This sector became the basis of the industrial development of the Republic of Belarus. Sectoral structure of the actual engineering of Belarus includes: Energetic, mining engineering, electrical engineering, chemical and petrochemical engineering, machine tool and tool industry, cross-sectoral industry production, instrumentation (Including specialized factories of aviation, defense, shipbuilding and radio industry), automotive and bearing industry, tractor and agricultural machinery, road construction and utilities, machinery for light industry and food industry, as well as household appliances. Machine-tool is presented by a number of companies and organizations, including the machine-tool, tool plants and factories for the production of universal tooling, factories forging and casting equipment. Nomenclature of domestic production of machine tools cover all the 9 groups adopted in machine classification. Besides technical production, machine-tool plants also produce consumer goods: universal kitchen machines, home woodworking machines, baby carriages, locks with high secrecy, cutting tools, kitchen sets and plastic products. The main representatives of this sector are: Gomel «Gidroavtomatica», Gomel Machine Tool Plant them. Kirov, Minsk IO on automatic lines production, Pinsk Enterprise «Kuzlitmash», “Vitebsk Machine Tool Plant” VISTAN. Automobile production. This sector includes 30 companies and organizations, that produce automobiles, trains for international traffic, trucks and timber trucks, SUVs offroad, super heavy dump trucks and dump trailers, loaders, self-propelled scrapers, cargo trailers, trailers for cars, bicycles, motorbikes, accessories and spare parts for automotive applications. The main representatives of this sector: Minsk Automobile Plant, Minsk Wheel Tractor Plant, Belarusian Automobile Plant (Zhodino), Mogilev Automobile Plant, Minsk Motor Plant. Agricultural machinery. This sector includes 30 companies and organizations that are oriented on production of agricultural equipment, spare parts and parts to agricultural WWW.INVESTARBY.COM

machines, equipment for processing industries and trade, road, land reclamation and construction equipment, machinery and equipment for heating and security climate, technological equipment and tools; general purpose projects. The main representatives of this sector: «Minsk Tractor Plant» . Belarusian «Belorustorgmash» (Baranovichi), «Bobruiskagromash», Gomselmash» The electronics industry of Belarus includes one concern – GNPK Planar, three associations – “Integral”, PO “Monolith,” ON “Coral” – and Pruzhanskij factory radio parts. The Concern and association consists of 16 enterprises and 8 engineering offices. The electronics industry of Belarus includes one concern – «Planar», three associations – “Integral”, “Monolith,” “Coral” – and Pruzhanskij factory radio parts. The Concern and association consists of 16 enterprises and 8 engineering offices. At the industry’s enterprises are developed and mastered the production of equipment and devices for monitoring rational use of fuel, energy, and does not make up natural resources. The Companies now produce goods for cultural and household purposes, previously imported from outside Belarus: vacuum cleaners, washing machines, small refrigerators and other. Production of household fixtures, clocks, furniture accessories, medical equipment is expanded.

2.3.4. Metallurgy Metallurgical enterprises produce metalware of a high degree of availability and quality, that promote a phased renovation and modernization of the production. Metallurgical complex includes 8 companies. Their products are certified in many countries and are produced according to international standards. Sub-sector enterprises produce steel electric round and shaped tubes, steel cast billets, bars, different kinds of wires, metal bolts, screws, nuts, nails, molding materials, heating equipment. Output of this production is mainly concentrated at the Belarusian Steel Works (RUE “BMZ”). Here is concentrated about 80% of the total industry output. Annual sales exceed $ 1 billion.

WWW.INVESTARBY.COM

2.3.5. Light industry Light industry includes more than 10 major industries and dozens of productions and over 400 companies. The largest economic entities are part of the Belarusian State Light Industry Concern «BELLEGPROM». As part of the light industry of Belarus, the largest volume of products makes up the textile industry, combining the production of all types of fabrics, knitted, felted and other products based on fibrous materials. The second most important sub-sector in this area is the clothing industry (more than 250 enterprises and industries). In the Country there were created favourable conditions for the development of linen industry. Wool, silk, knitwear, footwear industries are successfully developing. .

2.3.6. Food industry Food industry includes the production of food products, soap and detergents, tobacco, perfume and cosmetics products. Food industry of Belarus is very diverse and includes: oil and fat, confectionery, canned goods, starch and syrup, pasta, cheese, milk, flour and cereals, meat, fish, fruits, bakery, sugar, alcohol, alcoholic beverage, wine, brewing, tobacco. Food industry of Belarus is the oldest one. The largest branch of the food industry – meat and milk (over 40% of the total food industry) – represented by 21 Meat Processing Plant (Minsk, Orsha, Vitebsk, Baranovichi, Gomel, Grodno, Mogilev, Bobruisk, etc.), dairy (Minsk, Vitebsk, etc.), milktin (Rogachev, Lepel, Lida) and butter-making factory (about 100), located throughout the territory of Belarus. One of the oldest milling industries in Belarus is being developed (Minsk, Gomel, Mogilev, Vitebsk, etc.). Confectionery has grown up into a large industry (Minsk, Gomel). In the postwar years, sugar industry was established (Gorodeya, Skidel Slutsk Zhabinka). As well as alcohol and vodka, starch and syrup, tobacco, wine, canning, brewing and other industries are developed.

WWW.INVESTARBY.COM

3.ECONOMIC SITUATION (Conditions)

Belarus is a country with an open economy. More than a half of the output of Belarus is exported. Country export quotas is about 69%, whereas in some EU countries such as Germany – 38%, France – 26, Poland – 39, Lithuania – 53%. In this aspect, the foreign activity and its further liberalization is one of the key factors for successful socio-economic development. In Belarus there are no restrictions or discriminatory measures in relation to national and foreign business entities to carry out foreign trade activities. There are 6 Free Economic Zones in the Republic with a liberal business environment. FEZ offer their resident companies tax preferences, fewer taxes and tax reductions. They are created by the Decrees of the President of the Republic of Belarus on the term of 30 – 50 years in order to increase the inflow of foreign investments, introduction of new technologies, export development and creating new jobs. A stable political situation and absence of ethnic or religious conflicts make the country more attractive for the investors. 3.1 International exchange of goods and services The economy of Belarus is closely links with the economies of other countries. It is possible only in a well-functioning system of international cargo and passenger traffic.

3.1.1 Free trade agreements, WTO reduction of trade restrictions Belarus is a candidate for accession to the WTO. The country is working hard to match the requirements of the organization. Progress on this issue has achieved positive feedback. Economic indicators show the Belarus country’s attractiveness for international trade. Among the additional advantages: 

Geographical location



Favorable investment climate



Highly-educated labor force



Industrialized economy



Well-developed transport and communication infrastructure WWW.INVESTARBY.COM

3.1.2 Customs system All entering and exiting the country must fill out the customs and the cargo Declaration. Baggage transportation rules: Travelers are allowed to carry up to 50 kg of personal baggage cost up to 1500 Euro. Baggage that exceeds these parameters, is taxed at a rate of 30% but not less than 2 euro for every extra kilogram. Import the following goods is limited: 

alcohol (including beer, that contains 7% of alcohol or more) 2 liters.



200 pieces of cigarettes or 200 grams of tobacco



Jewelry 5 items



Used tires 4



Food:



From CIS – 30 kilos in June-October, 5 kilos the rest months



From other countries 5 kilos per person

Import of foreign currency in Belarus is not limited. The sums over 10,000 dollars in the equivalent for import to Belarus must be declared. To be imported into Belarus is prohibited: 

Firearms



Military Equipment



Drugs



Poisons



Radioactive and explosive substances

Import of animals and plants in Belarus is permitted only at presence of the veterinary and medical certificates. Used items and things acquired for personal use are exempted from customs duties for citizens who reside on a permanent residence. This rule also applies to personal items of individuals residing into the country for sightseeing, visits, training, etc. But in this case one must take into account the total weight, that must not exceed a certain rate, valid on the date of entry.

WWW.INVESTARBY.COM

The economy of Belarus is closely linked with the CIS (former USSR countries), European countries, countries-members of WTO, as well as with other countries not included into the Customs agreement. Due to its location in the centre of Europe, a huge amount of goods is transported through Belarus, that requires a uniform Customs system. The country has started to operate electronic declaration for export goods, as well as electronic statistical declaration that greatly simplifies the procedure for export. Electronic declaration for imported goods is being worked out. The Republic has concluded several agreements on customs system, that basically valid between the CIS countries. In 2010 came into force a Code â&#x20AC;&#x153;on the Customs Unionâ&#x20AC;?, which includes: Belarus, Kazakhstan and Russia. From the date of its issuance, all goods and people can move freely within the territory of the Union without borders, customs checkpoints, having to go through the various customs procedures. For the CIS a number of customs for import relief measures in the Customs Union is provided. Foreign companies engaged in trade with the countries of the Customs Union, carrying out a customs clearing of goods in one of the member countries of the alliance have an access to commodity markets in all three countries. The most important document while importing goods is the customs declaration. The customs declaration must be applied: the agreement, CMR, invoice and other documents for clearance of imported goods. The country has as a weighting system for determining fees and the system, which provides a certain percentage of the imported goods, as well as a mixed system. To import goods on the territory of Belarus, VAT, customs duties and fees will be charged for customs clearance. Goods temporarily imported into Belarus can be placed in customs warehouses, and are exempt from customs duties and taxes. Due to increasing number of freight across the country, more customs terminals started to function, where the capacity reaches 4 thousand vehicles per day. Customs authorities of the Republic may have a consultation in order of import goods, VAT, duties and procedure of filling all the necessary documents. Also you may have all the necessary information on the official web-page of the State Customs Committee: www.gtk.gov.by

WWW.INVESTARBY.COM

3.2 Legal protection of Intellectual Property Currently regulation of intellectual property rights in Belarus is predominantly governed by the Civil Code, the Law on Copyright and Related Rights and the Law on Industrial Patents, Utility, Models and Patterns. Belarusian Copyright legislation includes international treaties, special laws, as well as subordinate regulations. The Republic of Belarus is a member of 17 multilateral international treaties, functioning under the auspices of the World Intellectual Property Organization, as well as in number of multilateral international treaties concluded within the CIS, in the field of protection of industrial property, copyright and related rights. In accordance with the law of the Republic of Belarus, the objects of industrial property, as well as copyright and related rights are under the protection. Industrial property rights refer to the legal relations, arising in connection with the creation and use of inventions, useful models, industrial standards and selection achievements, with the protection of undisclosed information (know-how), and with the means of individualization of business participants, goods, works and services (firms` names and trademarks). Also Belarusian copyright legislation provides legal protection for authorship rights and an author`s pecuniary rights with respect to scientific, literary and artistic works (copyright subject matters) as well as legal protection for the rights of performers, record producers and broadcasting/cable providers with respect to performances, recordings and transmissions (related rights subject matters). National legislation of the Republic of Belarus in the field of intellectual property meets international standards and provides the required standard of regulation for the establishment, protection of intellectual property, as well as protects it from illegal use. Issues of customs control of goods containing objects of intellectual property governed by the Customs Code of the Republic of Belarus. In addition, the necessary secondary regulations governing various matters relating with the protection of industrial property, copyright and related rights are adopted. State Committee on Science and Technology of the Republic of Belarus is the central governmental authority of the Republic of Belarus, ensuring the implementation of state policies to protect the rights of intellectual property. Insurance of the protection of intellectual property and implementation of the functions of the patent authority vested on the National Center of Intellectual Property under the jurisdiction of the State Committee on Science and Technology of the Republic of Belarus. WWW.INVESTARBY.COM

National Center of Intellectual Property: 

accepts applications for the issuance of protective documents (patents, certificates) for inventions, utility models, industrial designs, trademarks, service marks, topographies of integrated circuits, plant varieties, examines these applications, carries out state registration of industrial property rights, issues protective documents ;



register license contracts, contracts of assignment, pledge agreements on the rights of intellectual property and other agreements that must be registered at the Centre in accordance with the law, maintains the state register of such agreements;



in accordance with the Law provides functioning of collective management of authors’ property rights and other holders of copyright and related rights.

Boards of Appeal of the Patent Office is a specialized department of the National Intellectual Property. It conducts pre-trial (administrative) adjustment of disputes concerning patentability of industrial property in the Republic of Belarus. The Republican Unitary Enterprise “Belarusian Authors’ Society” is the organization that is authorized to exercise and protect, on the collectively basis, the rights of authors and other holders of copyright and related rights on products and objects of related rights. The main activities of the Belarusian Authors` society in the collective management of authors ‘property rights are: contract assignments with authors and foreign organizations for collective management of rights, levying and payment of royalties, protection of authors’ rights in the court. Adjudication of disputes, arising from the application of legislation governing the economic and moral relations, arising in connection with creation, legal protection and use of intellectual property, carries out the panel of judges on the patent of the Supreme Court of the Republic of Belarus. Criminal, civil and administrative liability is provided for violation of legislation on intellectual property.

WWW.INVESTARBY.COM

3.3 Product liability requirements Standardization and certification guarantee high quality products. In accordance with the Article 1.of the Law of the Republic of Belarus of January 5, 2004 «On Technical Regulation and Standardization»: it is an activity to establish technical requirements, aimed at achieving the optimum degree of ordering in the development, production, operation (use), storage, transportation, sale and disposal of products or services. The aim of the technical regulation and standardization is to provide: 1. Life, health, human heredity, property and environment protection. 2. Improvement of the competitiveness of goods (services). 3. Technical and information compatibility and interchangeability of products; 4. Unity of purpose; 5. National security; 6. Elimination of technical barriers to trade; 7. Rational use of resources. In accordance with the laws of the Republic of Belarus, State regulation and control in this field is carried out by the President of the Republic of Belarus, Council of Ministers, the Committee on Standardization, Metrology and Certification under the Council of Ministers and other state . Technical standardization committees can be created for the development the State Standards in accordance with the Article 11. The structure of these committees are formed on the principles of representation and the voluntary participation of stakeholders of technical standardization among them can be the authorities of the Republic Belarus, economic entities of the Republic of Belarus, foreign legal individuals, foreign citizens, individuals without citizenship. In this case, technical regulation and standardization is based on the principles: 

mandatory application of technical regulations;



Availability of technical regulations, technical codes and state standards, information on the methods of their development, adoption and publication for the users and other engaged individuals;



Priority use of international and interstate (regional) standards;



The use of modern science and technology;



Voluntary application of the State standards.

In the field of technical regulation and standardization, certification plays significant role. It is a form of conformity (form of conformity assessment, the result of which is documented certification of compliance with the object of conformity assessment WWW.INVESTARBY.COM

requirements of technical regulations in the field of technical standardization), is carried out by an accredited certification body or an accredited testing laboratory (center), who have been granted the right to perform work on conformity and testing of products. Relations concerned with the assessment of the requirements of technical regulations in this field are regulated by the Law of the Republic of Belarus date from January, 5 2004, №269-3 «On assessment of the requirements of technical regulations in the field of technical regulation and standardization». The Objects of conformity assessments are: 

Production;



Design, production, operation (use), storage, transportation, sale and disposal of products;



Services;



Quality management system;



Competence of a legal entity in working on conformity and (or) products testing;



Professional competence of the employees in exercising of certain works and services:



Other objects, for which, in accordance with the laws of the Republic of Belarus was adopted a decision on conformity assessment.

Certification – it is a system of measures and activities, aimed at confirmation of the compliance characteristics of the product to the international standards, technical regulations and other statutory instruments valid in the world market or in some countries – importers of products. Certification is carried out in accordance with the general requirements for the procedure and rules of certification, approved by the Law of the Republic of Belarus, date from November, 9, 1999 №298-3 «On ratification of the Protocol on common application of technical, medical, pharmaceutical, sanitary, veterinary, phytosanitary and environmental standards, rules, regulations and requirements regarding goods imported into the States». The products must meet certain requirements to be certificated. Belarusian law provides several types of liability of the manufacturer for the quality of the produced goods. From the standpoint of liability, the manufacturer of the goods shall be liable for the quality of the goods within expiration date of goods. If it is not defined – within 10 years term. The amount of liability is usually set in the amount of harm caused. Another

WWW.INVESTARBY.COM

amount of liability regarding the received Complaints may be provided by foreign-trade agreements concluded with the Belarusian economic entities. In accordance with the Code of the Republic of Belarus «On administrative offences», a legal entity admitted to be guilty in committing an administrative violation on the territory of Belarus is subjected to administrative liability. In this case, equally both the legal entities resident in the Republic of Belarus and foreign legal entity, comes in case of staying of these people in the Republic of Belarus. The Code of the Republic of Belarus «On Administrative offences» provides the procedure of solving diplomatically the subject of prosecution of foreign citizens. However, this regulation does not contain regulations concerning the procedure of administrative prosecution of foreign legal persons who are not on the territory of Belarus.

3.4 Regional planning and the environment 3.4.1 Planning & Construction Advanced Environmental Landuse Planning Law guarantees conflict-free coexistence of densely populated economic zones and agricultural lands. Buildings for industrial and commercial use can be built in certain construction zones. Before the construction it is necessary to obtain a permit. The duration and scope of this procedure depends on the specific investment project. License for construction in the Republic of Belarus is issued to the following works and services: 4. Development of the project documentation; 5. Technical supervision of construction; 6. Detailed examination of the technical condition of construction of buildings and structures; 7. Geological engineering survey; 8. Construction and other special construction works. To obtain the license for the construction it is necessary: 1. Managers, specialists and workers should work at the main work place. Moreover, managers and specialists must have a university specialty degree relevant to job requirements and work experience of at least three years or special vocational education, relevant to the job requirements and work experience not less than five

WWW.INVESTARBY.COM

years. In the work staff must be not less than 3 workers with a special degree and qualification . 2. OSH management system must be provided: 3. Availability in the property (economic management, operational management) or on lease terms of basic production funds necessary to carry out works and services.

3.4.2 Environment The basis of the state regulation of natural resources is environmental legislation, that provides legal protection of the environment. Legal regulation of the environmental protection and rational use of natural resources in our state is carried out on the basis of population regulations, which include the laws of the Republic of Belarus, ordinances and decrees of the President, regulations and orders of the Government, normative acts of ministries and departments, as well as international legal acts regulating the domestic environmental relations on the basis of the primacy of the international law. Belarusian environmental legislation is one of the oldest in the world. A very important step in ensuring the legal protection of nature in the country was the Law «on Environmental Protection in Belarus» (1992). This law is intended to provide legal basis for environmental management, protection of human rights for favorable habitat for their life and health, to determine the ecological foundations of environmental protection for present and future generations. The law defines the role of the supreme legislative authority of the State Government and local councils in the formulation and implementation of environmental policy, are established the legal basis for the process of environmental impact assessment, environmental monitoring, allocation of natural protected areas and zones of ecological disaster; are provided establishment of trust funds to finance environmental protection, allocation of natural protected areas and zones of ecological disaster; compensation for damage caused to citizens as a result of environmental pollution, which entitles the courts to consider claims of individuals or legal entities in connection with the damage of this kind. But since the adoption of this law many of its regulations were outdated, so in July 17, 2002, was adopted the Law of the Republic of Belarus “On Amendments and Additions to the Law of the Republic of Belarus” On Environmental Protection “. It reflected the changes in socio-economic development of the state that had occurred over the past ten years. New, “market” law that created the legal preconditions for the development of all forms of ownership and management on the land, rational use and protection, was the law «On land ownership “(1993). The Law «On Amendments and Additions to the Law of the Republic of Belarus «On land ownership» (1997).

WWW.INVESTARBY.COM

Now the land in Belarus can be in private ownership, not only for citizens of the republic but also in the ownership of legal persons, including foreign ones, if on this land are located manufacturing facilities or facilities to provide services, privatized by these persons. Violation of the environmental laws by business entities or individuals shall entail administrative, disciplinary, financial and even criminal liability with the mandatory compensation of the damage to the environment.

WWW.INVESTARBY.COM

4.BELARUS AND EUROPE

Belarus is located in the centre of Europe both from geographical and cultural point of view. Although Belarus is not the member of EU, it has close political and economic ties with its European neighbors.

4.1 Trade and direct investments Belarus and Europe has close economic ties. The EU is the leader in the partnership among the trade partners of Belarus. The ten major trade partners of Belarus among EU countries are: Netherlands, Germany, Poland, Great Britain, Latvia, Italy, Lithuania, France, Belgium and the Czech Republic. The structure of imports from EU countries dominate the supply of equipment and mechanical devices, means of land transport, electrical machinery and equipment, plastics, other chemical products, optical instruments and devices, pharmaceuticals. Belarus’ main exports to the EU are mineral fuel and oil products textiles and garments, wood and wood products, ferrous metals and their products, tools, and Optical, furniture.

4.2 Political and economic cooperation For many Belarusian Companies, including branches of foreign companies, European market is more important than domestic market. Since 2000 the export of goods from Belarus to the EU countries has increased up to twenty times. The European Union accounted for 44% of Belarus` total export. In this area the European countries are persistently ahead of the Russian Federation which accounted for 32% of the Belarusian aggregate export. Started negotiations about the development of power engeneering, transport, environment, customs, agriculture, economics and finance, standardization and certification. Opportunities for further rapprochement also gives the EU initiative of the «Eastern Partnership», a full-fledged member of which is the Republic of Belarus. WWW.INVESTARBY.COM

This initiative provides strong cooperation between the EU and six former Soviet republics (Belarus, Ukraine, Moldova, Georgia, Armenia and Azerbaijan). The Republic of Belarus seeks to promote direct interaction with the European Union in the areas of mutual interest: power engineering, development of trans-European transport corridors and customs facilities, macroeconomic cooperation, transit, agriculture, standardization, environmental protection, etc. The European Union is a major donor of technical aid provided to the Republic of Belarus via the Technical Assistance for the Commonwealth of Independent States (TACIS program). Since TACIS was launched, 320 projects worth around Euro 204 million have been implemented in Belarus. The EU has reformed its technical aid system to replace TACIS program with the European Neighborhood and Partnership Instrument (ENPI), which applies to Belarus as well. Belarus and EU are now working closely to indentify the ENPI cooperation areas. In particular, the parties put together an ENPI-sponsored program of action for Belarus for 2007. Power engineering was named the priority area of the program. Belarus is qualified to participate in three of the current EU Cross-Border Cooperation Programs, namely Baltic Sea Program, Latvia-Lithuania-Belarus, Poland-UkraineBelarus. Belarus is entitleв to around Euro 250 million worth of international technical aid under these programs. On December 18, 2008, the Government of the Republic of Belarus and the Commission of the European Communities signed a framework agreement and protocol on interpretation of the terms and definitions used in this agreement. The agreement is aimed at creating a legal framework to cooperation between Belarus and the European Union within the framework of the European Neighborhood and Partnership Instrument. www.mfa.gov.by

4.3

Science

Belarusian research institutes, universities, enterprises and individuals have the right to participate in all EU programs. Due to the equal participation of Swiss science research in the EU programs, Belarus receives additional benefits in the areas of science, technology and economy. Within the EU Seventh Framework Program focuses on information and communication technologies, health, energy, nano-and environmental technologies. Support at the

WWW.INVESTARBY.COM

European level is provided to fundamental and science disciplines. Participation in the programs is of a great interest for private companies. Belarusian researchers have opportunity to realize and control their own projects. Small and middle-sized enterprises of the Republic of Belarus, that are experienced in international cooperation, receive, thus, access to scientific discoveries, that they can practically use.

4.4 Rail, road and air links The Republic of Belarus is a transit country between East anв West. The country is crossed by the small railways and highways, that link western European countries with the CIS, South and Central Europe from the north-western regions of Russia, Scandinavia, central Russia from Kaliningrad, the Baltic Sea ports with the ports of the Black Sea. The length of The Belarusian Railway is more than 5,5 thousand km. Minsk railway station is the biggest in Europe. It works round the clock and offers a wide range of services: 

Restaurants



Bars



Stores



Pharmacy



Luggage room



Playroom

Belarusian Railway actively cooperates with International transport organizations, such as Railway Transport Council of CIS and Baltic States, the Organization of Railways Cooperation, International Union of Railways, Forum Train Europe. Belarus has established an extensive network of roads, which allows year-round communication with all populated areas. The length of the network of common use is 81 thousand square kilometers. Highway M1/E30 Brest-Minsk-Russian border (592 km) is the continuation of the European main Cork – London – Berlin – Warsaw. Roads Kaliningrad – Kaunas – Vilnius – Minsk – Gomel crosses Belarus from northwest to southeast and provides transportation of goods to the largest seaports. The largest highway, stretching from St. Petersburg to Odessa through Vitebsk, Orsha, Mogilev and Gomel, connects the north-western region of Russia, and through it, and the Scandinavian countries with Ukraine and Black Sea ports. Important route Minsk – Grodno – Gdansk is the shortest connection of the northern part of Western Europe through the seaport of Gdansk in Poland with Belarus, Russia and Ukraine.

WWW.INVESTARBY.COM

To drive a car in Belarus, you will need an international driving license. On the territory of Belarus there are a Right-hand traffic. Speed limit on highways is 120 km / h (75 miles per hour). In Belarus, there are valid only some kinds of foreign travel insurance policy. Insurance can be purchased at the boundary for 15 days. The cost of the insurance is 5 Euro. Tax payment of 20 to 155 U.S. dollars is paid for the entrance into Belarus by car. For highway traffic M1/E30 fee of $ 1 per passenger vehicle is paid. Inscriptions on the road signs are written in the Cyrillic alphabet. Latin alphabet is used on the signs at major road junctions. The major Airport of the Republic is «Minsk National Airport». It is a modern Airport with a developed infrastructure (banks, restaurants, stores). «Belavia» is the national airline of Belarus. It offers flights to the major European cities, including: 

Frankfurt



Vienna



Kiev



London



Moscow



Paris



Riga



Warsaw

There are also Airports in other cities: Gomel, Brest, Grodno, Vitebsk, Mogilev and «Minsk-1 Airport» in Minsk. Almost 90% of all passenger Air traffic is carried out by Belarusian National Airline «Belavia». Among the major airlines offering flights to Minsk are: 

«Lufthansa (Germany)



«Austrian Airlines



«Lot (Poland)



«El Al (Israel)



«Etihad Airways (United Arab Emirates)

WWW.INVESTARBY.COM

5.ESTABLISHING BUSINESS

COMPANIES

AND

RUNNING

Belarusian Government supports foreign companies wishing to establish a business in Belarus. To establish a company in the Republic of Belarus for foreign investors is becoming easier and more evaluable from year to year. Not long ago, in order to set up a Company, it was necessary to have a great amount of documents, to pass a large number of instances and the time to pass a registration could drag on for six month. But all this left in the past. Nowadays to establish a company it is necessary to prepare a package of constituent documents, to pay tax duties to the Government, contact the relevant authority and to register the company. Official and private counseling services will assist in getting all the necessary information. The process of establishing a company takes not more than 7-10 days.

5.1 Organizational and legal structure Belarusian government guarantees equal opportunities of free utilization of abilities and assets for entrepreneurs and other economic activity, not prohibited by the law, that is enshrined in the Constitution of the Republic of Belarus. Therefore, all, including foreigners, have the right to engage in entrepreneurial activities in the country, start businesses and benefit from it income. In Belarus, a company (legal entity) may be created in the form of partnerships (limited partnership or full) and companies (with limited or additional liability, closed or open joint stock companies), the production cooperative, the unitary enterprises and farm enterprises. It is also allowed the creation of commercial associations and (or) non-profit organizations in the form of associations and unions. In accordance with the legislative acts of the Republic of Belarus, legal entities may establish associations, including those involving foreign entities in the form of financial and industrial and other economic groups. The choice of the legal form mostly depends on the number of members, authorized capital, the share of liability to creditors, the way of the management of the company, tax incentives and etc. To set up a company, legal entities or individuals may do it independently or to buy a stake in the company already operating.

WWW.INVESTARBY.COM

It is important to make an analysis, therefore at an early stage it is worth applying to the investment and legal advisors. Establishment of a representative office or a branch on the territory of Belarus is considered to be attractive for the implementation of investment projects.

5.1.1 Representative office .A foreign organization`s representative office is a separate structural unit located in the Republic of Belarus, which protects and represents the interests of a foreign organization and performs other functions in compliance with the legislation of the Republic of Belarus. Representative office of an organization is not a legal entity, therefore all the income receives the Company that is being represented. In order to establish a representative office a foreign company must obtain a special permit from the Ministry of Foreign Affairs of the Republic of Belarus. The application package for such a permit includes the following documents: 

copy of the foundation documents of the foreign company (they must be legalized (apostilled));



copy of the document confirming state registration of the organization with the authorized body of the applicant`s country (extract from the trade register, registration certificate, etc.) legalized as required by the applicable law;



power of attorney issued to the head of the representative office legalized as required by the applicable law ;



Properly legalized power of attorney issued to the person authorized to perform actions related to the establishment of the representative office;



letter of guarantee for placement of registered office in Belarus;



copy of the passport of the person authorized to do business in Belarus;



application

All the documents are submitted to the Ministry of Foreign Affairs of the Republic of Belarus. After examining documents, the Ministry of Foreign Affairs gives permission to open a representative office. The organization that established a representative office shall register with tax and other authorities of the Republic of Belarus within the term and according to the procedures established by the laws of the Republic of Belarus. It shall also open accounts in the banks of the Republic of Belarus.

WWW.INVESTARBY.COM

5.1.2 Joint-Stock Company A join-stock company is a company with a charter capital divided into a certain number of shares. There are two forms of JSC: - Open joint-stock company (abbreviation in Russian «OAO») - Its stockholders may sell their shares to an unlimited range of buyers without permission (consent) of other stockholders. -

Closed joint-stock company (abbreviation in Russian «ZAO»). The most common type of joint stock companies in Belarus. The stockholders are the founders or certain groups. A CJSC is not allowed to offer its stock for public subscription or otherwise offer its sock to an unlimited range of buyers. Disclosure of accounts is optional.

OJSC and CJSC are the most complex legal forms and today are hardly used because of the necessity of carrying out of additional procedures relating to registration of the securities. But in Belarus this legal form exists. Mostly, state-owned enterprises, and large enterprises of private ownership use this form of ownership. According to the Decree №1 of the President of the Republic of Belarus of 16 January 2009 on State Registration and liquidation of Business Entities, the minimal amount of authorized capital and number of shareholders in OJSC is 3500 Euro, in CJSC is 875 Euro.

5.1.3 Limited Liability Company (LLC) Limited liability company is the most important and popular organizational-legal form in Belarus (LLC). Limited liability company is defined as a commercial company founded by two or more individuals or legal entities. Authorized capital of the LLC is divided into shares. Shares in a LLC are not subject to issue and registration. The amount of each share is determined by the constituent documents of the LLC and is usually equivalent to the amount of shareholder`s contributions to the authorized capital of the LLC. Generally, participants in LLC are not liable for the company`s debts; their liability is limited by the value of their contributions to the charter capital. LLC may have two-tier or three-tier governance structures: General meeting of shareholders; Board of directors (supervisory board); Collective management board. The creation of the board of directors (supervisory board) is optional and in most cases LLC has a two-tier governance structure comprised of the general meeting and collective management board.

WWW.INVESTARBY.COM

5.1.4 Unitary Enterprise (UE) Foreign companies working on the Belarusian market prefer to create Unitary enterprises. Unitary enterprise is a commercial company established by a single founder only. All assets of a UE are considered to be a property of its founder. This legal form, mostly, is used by small enterprises. The managing body is the director. Director`s functions may carry out either founder himself or a hired person. Disadvantage of the unitary enterprise is a complicated way of exit of the founder from the business. In the case of such a decision, the founder can only sell it as a property complex, or convert it into a business partnership, which will also require time and money. According to the Decree â&#x201E;&#x2013;1 of the President of the Republic of Belarus of 16 January 2009 on State Registration and liquidation of Business Entities, the minimal amount of authorized capital and number of shareholders in LLC is not determined .

5.1.5 Other organizational and legal structures In Belarus these forms of business organization are not widely used because of the specificity of their creation and activity. It is easier to find a partner who is ready to invest into the development of the common business and to risk only within the deposit amount, than to find a partner who is ready to take personal labor participation in the activities of the company and to be liable for the debts of the company by all its assets. General and limited partnerships - founders of general partnerships and general partners in limited partnerships can only be individual entrepreneurs (individual person that is engaged in business without a possibility of hiring labor) and/or commercial organizations, they are jointly and severally with each other bear subsidiary liability for obligations of the partnership with all their assets. Also there are some nuances while withdrawing from the partnership. Production Cooperatives - involve not only cash and / or property contributions of founders to establish a business, but also personal labor participation in their activities, distribution of profits also depends on the labor participation of the members in cooperative activities; Farm Cooperatives - involve agricultural production, its processing, storage, transportation and sale, as well as the personal labor participation and can be created by one founder or by members of one family. WWW.INVESTARBY.COM

Name

Authorized Capital

Members

Constituent Documents

Comparative table of the most popular legal forms Limited Additional Closed Open Unitary Liability Liability JointJointenterprise Company Company Stock Stock ( LLC) (ALC) Company Company (CJSC) (OJSC) Name should start with the organizational form of society, but also include words, or a combination of words that differ from other companies. Minimum and maximum Minimum Minimum amount of authorized amount of amount of capital is not determined authorized authorized capital is capital is 100 400 minimum minimum wage wage amount amount (about 875 (about Euro). 3500 Euro). Legal and Legal and Legal and Legal and individual individual individual individual entities entities entities entities Minimum Minimum Minimum Minimum amount of amount of amount of amount of members members – 2, members – members – – 2, maximum – not 2, 2, maximum limited maximum maximum – – 50. – 50. not limited Charter

Object of the Profit activity Legal status Management Board

Minimum and maximum amount of authorized capital is not determine d Legal and individual entities Minimum and maximum amount of members – 1.

Charter

The founding treaty Charter concluded between the founders, Charter

Profit

Supervisory board – General meeting of shareholders. Executive body - director (Managing director, (Board of Councils). On the

Profit

Supervisory board General meeting of shareholders. Executive body director

Profit

Supervisor managing body- the owner, executive

WWW.INVESTARBY.COM

decision of the Board of Councils the power may be transferred by contract to another commercial organization to an individual entrepreneur.

Liability

Participan ts are not liable for the obligation s of LLC and bear the risk of loss in the extent of the value of their deposits.

are jointly and severally with each other bear subsidiary liability for obligations of the partnership with all their assets, but not less than 440 Euro)

(Managing director (Board of Councils). On the decision of the Board of Councils the power may be transferred by contract to another commercial organization to an individual entrepreneur. Shareholders are not liable for obligations of the joint stock company and bear the risk of losses within the value of their shares

bodyDirector.

Unitary Enterprise is responsibl e for its obligations to all its property. The owner is not liable for the debts of the enterprise, except bankruptc y of the company Đ° caused by the company`s founder or director.

WWW.INVESTARBY.COM

5.1.6 Joint Venture Joint venture is a legal entity of he Republic of Belarus, its authorized capital consists of shares of a foreign participant (share of foreign participants) and the share of domestic participant (share of domestic participants). Participants can be individual entity as well as legal entity. Joint venture is the most intensively developed form of international economic cooperation. Joint ventures are normally formed both inside one's own country and between firms belonging to different countries. With joint production arises the need for joint investment, revenue sharing, sharing management responsibilities, as both sides take their part of the economic risk. Thus, joint venture represents a more profound and complex connections between the partners. In co-operation through joint ventures, as a rule, there are established treaty, stable, close and mutually beneficial relations between the parties. In the economic aspect, the joint venture serves as a kind of foreign capital use. This ensures the subordination of the foreign investor control and the legal regime of the state of the recipient. Joint ventures can be created "per one transaction", for an indefinite or fixed period of time in advance and merge two or more partners or even an entire industry. Establishment of joint ventures can be made in various spheres of activity (production, trade and procurement, finance, etc.) Foreign businessmen, creating joint ventures on the territory of Belarus have the following goals: reductions in expenses and risks while creating new capacities, acquisition of production facilities or sources of raw materials, acquisition of new capital sale of goods or services, improving the efficiency of existing marketing, to get the opportunity to avoid the cyclical or seasonal volatility (production decline), to enter the new markets. Creation of a Joint Venture represents an opportunity to foreign entrepreneurs easier enter the local market, to establish contacts with local authorities, suppliers and learn more about the labor market, to acquire management experience and experience in handling personnel policies. The main legal acts regulating the issues of opening and operation of joint ventures and foreign enterprises are the Investment Code of the Republic of Belarus and the Regulation on state registration of business entities approved by Decree of the President of the Republic of Belarus â&#x201E;&#x2013; 1, 16.01.2009. Foreign investors have the right to create legal entities with any volume of foreign investment and any organizational and legal forms, as well as branches and representative offices of the main companies registered in other countries. A distinctive feature of the joint venture (the company with foreign investment) from a simple company is the size of the share of foreign founder. Its amount can`t be less than WWW.INVESTARBY.COM

$20 000. A foreign investor can create an ordinary resident company with a smaller share capital, but once the company declares itself as a joint venture company, it gets a lot of benefits, as Belarus welcomes activities of such companies. And if the founders of the company are foreigners only, then this company is considered to be a foreign company.

5.2 Accounting In accordance with the Belarusian legislation, it is required to maintain financial accountings in proper way, which, depending on the type and size of business, is necessary to determine the actual property companies and property claims and liabilities related with commercial activities. Also it is necessary to maintain financial accountings, to find out the financial results for each fiscal year. Organizations are obliged to provide accounting records for the month, quarter and year with the cumulative total since the beginning of the year, unless otherwise stipulated by the legislation of the Republic of Belarus. Herewith, monthly and quarterly financial accountings are intermediate. While preparing financial accountings there must be provided: 

Transparent report of all business operations and results of inventory of assets and liabilities for the accounting period.



identity data of analytical accounting to data of synthetic accounting for the reporting period, as well as indicators of accounting data of synthetic and analytical accounting.

Violation of the terms is regarded as improper preparation of financial accounting records. Accounting records (except organizations, financed from the budget, as well as nonprofit organizations not involved in entrepreneurial activity and with the exception of the retired assets, turnover from the sale goods, works and services) consist of: 

Balance sheet;



Profit and loss statement;



Statement of retained earnings;



Statement of cash flows;



Appendixes, stipulated by legal acts;



Explanatory note.

Structure of the intermediate and the consolidated financial Statements is determined by the Ministry of Finance of the Republic of Belarus, Republican bodies of Public WWW.INVESTARBY.COM

Administration that carry out methodological guidance on accounting and reporting for organizations in appropriate economic sections.

5.3 Audit Audit - an independent expertise of financial statements based on verification of compliance with accounting procedures, compliance of economic and financial transactions with the legislation of Belarus, Transparency of all business operations and results of inventory of assets and liabilities of the company. The expertise is finished by the audit report. Auditor - is a qualified specialist, certified for the right to audit activities in accordance with legislation. The purpose of the audit â&#x20AC;&#x201C; is to solve a particular problem, which is determined by the law of regulatory auditing, contractual obligations between the auditor and the client. The audit finds out the correctness of the balance sheet, profit and loss account, the correctness of the explanatory note. Auditor`s ability is to solve the following objectives: - whether all the assets and liabilities are reflected in the report; - whether all the documents are used in the report; - how the actual method of valuation of the property complies with the definition adopted by the accounting policy; Auditor checks profit and loss statement in order to establish the correctness of the calculation of balance sheet profit and taxable profit.

Auditor should verify: compliance of the authorized capital with the founding documents and the decision of the owners of the company to change the amount of share capital; compliance of the data of synthetic and analytical accounting with the accounts asset and liability balance; correctness and completeness of reportable accounts payable and receivable; compliance with accounting policies adopted at the enterprise; correct classification of revenues and expenses for reporting periods; differentiation of current costs and capital investments in the accounting.

Auditors (audit firms) also solve other objectives related to the provision of audit services: - verification of accounting and reporting; - assisting in the organization of accounting; - assisting in restoring and maintaining of accounting records; - assisting in tax planning and tax calculation; - analysis of the results of economic activity; WWW.INVESTARBY.COM

drafting of the founding documents; information support; other services.

Audit authorities carry out an annual audit validation of the annual accounts. Auditing can be both voluntary and mandatory. Audits are mandatory for the following types of commercial company: 

Open joint-stock companies;



Banks and other financial institutions:



Commodity and stock exchanges;



Commercial companies with foreign investments;



Insurance companies ;



Companies resident at High Technology Park;



Companies which provide the guaranteeв refund of the money deposited by individuals on the bank saving accounts;



Companies with an annual turnover for the proceeding reporting year exceeding EUR 600,000.

If a company does not fall into the list of mandatory audit, it can independently use the auditing services with the involvement of auditor firms. In addition, for internal control, companies appoint an auditor (or the Commission), whose duties also include annual monitoring of economic activities. Inspector or commission may be appointed from the staff of the company (except managers).

5.4 Establishing a Company 5.4.1 Order of Establishing a Company In accordance with the Belarusian legislation, enterprises can be established by both legal and individual entities. Foreigners have the right to establish a company on the territory of the Republic of Belarus if the follow relevant legal requirements. As the first step to establish business, individual entities and representatives of international companies in Belarus must provide a notarized copy of their passport. In some instances, may also need a certified translation into Russian. Generally, incorporation of a commercial legal entity includes the following steps: 

State registration (including registration in tax authorities, registration in the State Department of Social Welfare and the State Statistical Office);

WWW.INVESTARBY.COM



make a stamp of the company;

 open a bank account. The minimum authorized capital for legal entities with foreign investments –20 000 of EURO. To register a legal entity in Belarus is necessary to: 

acquire a certificate in the executive committee that is chosen to carry out activities in the region;



to open a temporary account in the bank and to create authorized capital (fund) the future of the company in accordance with legislative requirements for the chosen legal form);



apply to the registration authorities with a statement of registration and application document package in accordance with legislative requirements for the chosen legal form, to obtain a certificate of registration



exercise notification procedure of registration of authorized state bodies;



to make a stamp of the company;

filing for registration of the Entity in the State Register of Legal entities and Individual Entrepreneurs. This list contains the minimum set of procedures is incomplete. In accordance with the legislative requirements for the chosen legal form, activity additional requirements for the content of documents necessary for the establishment of the company may be envisaged. 

Tax duties depend on: 

Legal structure of the company



Size of the company



Location of the company

Tax benefits are provided to the companies, located in Free Economic Zones, Park of High Technologies as well as in countryside. The principles of free trade and business activities allow everyone, including foreigners, to carry out business activities in Belarus and establish a business. Usually it does not require a permit or membership in Chamber of Commerce or professional associations or annual reporting on the business. At the same time, foreigners must have a work permit and residence for running business over the long term. Process of the state registration takes one day. The next day foreigners receive a certificate of state registration of legal entities.

WWW.INVESTARBY.COM

This system operates throughout the Republic, regardless of the administrativeterritorial division.

5.4.2 Foundation Costs Mostly, foundation costs will depend on the form of the company: whether it is simple company or a company with foreign investments. For all, without exception, companies the State business registration fee is Br175 000 (about 45 EURO). The cost of services of law firms, depending on the availability of foreign investment, is changing. This is due to the fact that if a firm is registered as a company with foreign investment - preparation of the necessary documents will take more time. Consultation on the order of running a business, and the work on establishing a company can cost in average 500 Euro. It is also necessary to put into charges expenses relating with notarization of some documents and (or) translation of documents (about 100 Euro), legalization of documents (100-200 Euro). It is also necessary to form a statutory fund through cash or other assets of the company founders. If the company is registered as a company with foreign investments, the statutory fund can be made as follows: at a rate of 50% - before the state registration, the remaining 50% - within 2 (two) years from the date of the registration.

5.4.3 Registration in the Unified State Register of Legal Entities The Unified State Register is a national system of accounting and identification of legal entities and individual entrepreneurs, that provides complete and accurate information on legal entities and individual entrepreneurs registered in the Republic of Belarus, for the conduct of other public registers (records) that contain information on legal entities and individual entrepreneurs. The data of the state registration, including commercial organizations brand name, in accordance with the law are included into the Unified Stated Register of legal entities and individual entrepreneurs. It is opened to the publicity. Legal entity is considered to be established from the moment of its registration, unless otherwise determined by the President of the Republic of Belarus.

WWW.INVESTARBY.COM

6.VISA & PERMITS Mostly, Belarus is obliged to foreign specialists to be a well-being country. They enrich the country not only economically, but also from a cultural point of view. For citizens wishing to live and work in Belarus, there are certain rules.

6.1 Entry and Visa Most foreign visitors need to get a visa to enter Belarus (Transit, short / long-term, single / multiple). Visa-free regime is provided to the following countries: 

CIS countries (except Turkmenistan)



Cuba (for a stay lasting no longer than 30 days)



Mongolia

The exception also make holders of diplomatic passports from: • Argentina • Brazil • Republic of China • Hungary • India • Iran • Macedonia • Romania • Slovakia • Turkmenistan • Turkey • Vietnam All the rest foreigners have to get visa to enter the country. Short-term visas is the most common-used type of visa. They are issued for up to 90 days and are suitable for: 

Businessmen



Students



Entry of private business

Short-term visas can be single, double or multiple entries depending on the necessity. WWW.INVESTARBY.COM

Tourists usually get a group short-term visa through a travel agency. Long-term visas are usually valid for one year and provide multiple entries to Belarus. They are suitable for: frequently visiting businessmen and tourists wishing to stay longer. Transit visa is issued for up to one year and provides for two days to pass through Belarus. Types and Validity of Visas Term Term of of staying* validity В 1 year 2 days (transit) from the date of entrance. С No The term longer of than 90 staying days is is specified in the visa but not longer than 90 days.

Visa support for visa

It is necessary to show the visa of the destination country, as well as tickets and other documents confirming the right to transit. Business trip, participation in sport/cultural events – original application from the host hat contains all the necessary details. Education – original invitation to studying from an organization which is authorized to issue such an invitation, coordinated with the Department of Citizenship and Migration Department of the Interior. On arrival in Belarus is issued a temporary residence permit and, if it is necessary – a multiple exit-entry visa. Maintenance of religious ties – application of a religious association, drawn up in accordance with established procedure. Tourism – application of the Belarusian subjects of tourism, resorts and recreational organizations, and other organizations. Private business — original invitation issued by the Department of Citizenship and Migration Department of the Interior of the Republic of Belarus; the documents confirming the existence of an apartment in Belarus. Visiting burial places – original certificates of the Belarusian Red Cross or the documents proving the fact of a burial in the territory of the WWW.INVESTARBY.COM

1 year

Republic of Belarus and the preservation of the graves of close relatives or a spouse (wife) of an alien. Journalism activity – Mass media representatives of foreign states on the written instructions of CCU MFA in connection with their temporary accreditation by the Ministry of Foreign Affairs of the Republic of Belarus; Work (with the right of employment) - a notarized copy of the Republic of Belarus, a special permit for employment of migrant workers employed in the Republic of Belarus issued by the department of Citizenship and Migration Department of the Interior chief of the Minsk City Executive Committee, Department of the Interior Regional Executive Committee; original application of a commercial organization with foreign investments registered in the prescribed manner. Up to 90 Provided a list of documents that for the visas of days type C, as well: the original statement of the Belarusian legal entity from the Unified State Register of legal entities and individual entrepreneurs of the Republic of Belarus, a copy of the agreement (contract, cooperative agreements) between the Belarusian legal person and a foreigner or foreign organization in which he works, confirming the existence of stable business relationships parties, confirmation that the person is a founder of the firm in Belarus, Director.

* A consular officer may reduce the multiplicity and the validity of the visa.

Visa is issued by: 

Consular offices in Belarus



Diplomatic representatives in Belarus

WWW.INVESTARBY.COM



Consular Centre of the Ministry of Foreign Affairs in Minsk airport (for citizens from the countries where is no representative offices of Belarus)

Usually obtain a visa on arrival is not possible, and most airlines do not allow you to fly without a valid visa. However, foreigners arriving into Belarus from a country where is no an Embassy of Belarus, may obtain visas on arrival at Minsk airport. The inviting person or organization must submit the original invitation to the Department of Citizenship and Migration before your arrival. The term of the issuance a visa: In the case of a positive decision, the issuance of a visa will take 5 working days from receipt of the application. The cost of visas varies, depending on: • applicant's citizenship • age of the applicant • the type of visa In general, the rate of visa issuance fees is the following: 

Transit visa (type B): Single - 20 euro, group (per person) - 10 euro, multiple - 40 euro.



Short-term visa (type C): Single - 60 euro, group (per person) - 10 euro, multiple 120 euro.



Long-term multiple-entry visa (Type D) - 150 euro.

For the citizens of Great Britain: 

Transit visa - $ 78



Short-term visa - $114



Long-term visa - $366

For the citizens of the USA: 

Transit visa - $ 100



Short-term visa - $131



Long-term visa - $350

For the citizens of Latvia, Lithuania, Poland and Estonia:

WWW.INVESTARBY.COM



Single short-term visa – 25 euro



Multiple short-term visas - 60 euro.

Issuance of visas to the citizens of Serbia (for a period exceeding 30 days), and Japan is free of charge. Visas that are issued at Minsk airport cost about twice as expensive as regular rate. The Ministry of Foreign Affairs of the Republic of Belarus provides a regularly updated list of consular fees.

6.1.1 Visa regimes To Enter and exit from the Republic of Belarus, aliens must have valid passports or equivalent documents and a valid visa. It is possible to enter the Republic while having a guest, tourist or business visa. For issuing visas to enter the Republic of Belarus, it is charged a visa fee. The easiest way to get a visa is to contact a tour agency. But there exist other ways to get a visa. For issuing a visa, foreign citizens should provide a filled application form, valid passport, 2 photos, size 35x45 mm and other documents necessary for obtaining a particular type of visa into diplomatic representative or consular office of the Republic abroad. Ordinary visa is issued during 14 days, express visa - 48 hours, and it costs twice as expensive as the initial cost. List of the countries with visa-free regime: • • • •

almost all CIS countries China Cuba Egypt.

Since 2003, there was simplified a procedure for issuing business and guest visas to the citizens of Argentina, Brazil, Bulgaria, Great Britain, Hungary, Canada, Slovakia, Uruguay, Switzerland, South Korea, South Africa, Japan. However, these visas are valid for up to 30 days. If the program of business or private visit includes visits to several countries at the same time, members of the Customs Union of the Russian Federation, Belarus and Kazakhstan, it is necessary to obtain visas of all the visited countries.

WWW.INVESTARBY.COM

6.1.2 Procedure of Obtaining a Visa To obtain a visa it is necessary to provide the following documents into consular or representative office: 

Filled application form to obtain a visa



1 photo passport



supporting documents (original letter of invitation signed and stamped by the inviting party, if a company invites)



other documents, that are required by consular department (depending on the purpose of the visit and the type of visa required).

Aliens, arrived in Belarus from a country where is no an Embassy of Belarus, may obtain a visa on arrival at Minsk National Airport. The inviting person or organization must submit the original invitation to the Department of Citizenship and Migration before your arrival. Visa application form: www.mfa.gov.by/ru/consular/visa-applications/

6.1.3 Stay and permanent residence in Belarus Foreigners arriving in the Republic of Belarus shall, within three days from the date of entry, except on weekends, public holidays and public holidays declared to be days off by the President of the Republic of Belarus, (the citizens of the Russian Federation, Latvia and Lithuania - in 30 days), register at the place of actual residence. Foreigners are required to register on arrival ("initial registration") and also if they change the place of residence during their stay in the Republic of Belarus (the "subsequent registration"). Foreigners obtain a temporary residence permit in the Republic of Belarus after the entry into the Republic. Thus, the foreigner arriving in the Republic of Belarus with a view of temporary residence, as an alien, initially enters as temporarily staying and issue registration. After entry into the Republic of Belarus the foreigner receives a temporary residence permit in the Republic of Belarus, which is issued by the organs of internal affairs. This permit makes the alien as a temporary resident in the Republic of Belarus. These aliens are to register if they change the place of residence during the period of staying in Belarus. To obtain a permanent resident status in the Republic of Belarus, a foreigner must obtain a permit for permanent residence in the Republic of Belarus, which is issued by the organs of internal affairs. Foreigners who have obtained a permit for permanent residence in the Republic of Belarus, a residence permit, which is the identity document WWW.INVESTARBY.COM

of an alien in the Republic of Belarus. Residence permit is issued to foreigners who have attained the age of sixteen - a mandatory basis; foreigners who have not reached that age, residence permit is issued upon written request of their legal representatives (Decree of the President of the Republic of Belarus of June 3, 2008 â&#x201E;&#x2013; 294 "On documenting of the population of the Republic of Belarus").

6.2 Acquisition of citizenship Belarusian citizenship is acquired: - By birth; - As a result of admission to citizenship of the Republic of Belarus; - In order of registration. The acquisition of citizenship of the Republic of Belarus by birth: Child acquires the citizenship of the Republic of Belarus by birth, if : - At least one of the parents is a citizen of the Republic of Belarus, regardless of place of birth of the child; - parents or a parent of the child permanently residing in the territory of the Republic of Belarus, are persons without citizenship, but their child is born on the territory of the Republic of Belarus; - parents or a single parent of the child permanently residing on the territory of the Republic of Belarus are foreign citizens, provided that their child is born on the territory of the Republic of Belarus, and the state of the parents` citizenship does not give to their child a citizenship of their State. A child, living on the territory of Belarus, whose parents are unknown, becomes a citizen of the Republic of Belarus. Any person, achieved the age of 18 may apply for admission to citizenship of the Republic of Belarus if: -

a person undertakes to respect the Constitution of the Republic of Belarus and other legislative acts of the Republic of Belarus; Knows one of the official languages of the Republic of Belarus to the extent necessary for communication resides on the territory of the Republic of Belarus, after obtaining a permit for permanent residence in the Republic of Belarus for seven years permanently. The period of residence in the Republic of Belarus is considered to be permanent if the person leaves the Republic of Belarus not more than for three months during each year; has a legitimate source of livelihood; WWW.INVESTARBY.COM

doesnâ&#x20AC;&#x2122;t have a citizenship, or looses the citizenship of the foreign state, in case of acquiring the citizenship of the Republic of Belarus; or addressed to authority of the foreign state with an application of ceasing of his existing foreign citizenship, except cases when termination of foreign citizenship is impossible for reasons beyond the person.

The term of seven years of residence may be reduced for: -

Belarusians, and those identifying themselves as Belarusians, and their descendants (relatives in a straight line: children, grandchildren, great grandchildren) who were born outside the present territory of the Republic of Belarus persons who have rendered outstanding merits to the Republic of Belarus, the great achievements in science, technology, culture and sports, or have a profession or expertise from the public interest for the Republic of Belarus; persons who are foreign citizens or persons without citizenship, who used to be the citizens of the Republic of Belarus before.

Any person who achieved the age of 18, permanently residing on the territory of the Republic of Belarus who used to be a citizen of the former Soviet Union and is not a citizen of the Republic of Belarus have the right to apply for acquiring a citizenship of the Republic of Belarus in order of registration, if this person: -

was born or used to live permanently on the territory of the Republic of Belarus up to November, 12, 1991; is a spouse (wife) of a person who acquires the citizenship of the Republic of Belarus in order of registration; is a descendant of a person who acquires, acquired or may acquire the citizenship of the Republic of Belarus in order of registration.

Citizenship of the Republic of Belarus without complying of the conditions mentioned above can be acquired in order of registration: -

children that live permanently on the territory of Belarus, - the joint application of the parents, one of whom is a citizen of the Republic of Belarus, or at the request of one of the parents who is a citizen of the Republic of Belarus, if the location of the other parent is unknown, or at the request of the sole parent who is a citizen of the Republic of Belarus; children that live on the territory of Belarus, whose parent or parents are dead, deprived of parental rights, refused the child`s upbringing, the court found him to be incompetent, missing or dead and incapacitated persons over which was established custody or guardianship. WWW.INVESTARBY.COM

at the request of the trustee, agreed with the authority of guardianship.

Source: The Law of the Republic of Belarus, August 1, 2002 N 136-3, "On Citizenship of the Republic of Belarus"

WWW.INVESTARBY.COM

7.REAL ESTATE The choice of commercial and residential real estate is broad and diverse. Great assistance in finding a suitable property for lease or purchase can provide Internet and newspapers. Foreign individuals or companies can purchase commercial real estate in the Republic of Belarus without limitation. Foreigners and persons without a citizenship permanently residing in Belarus and engaged in legal employment, business or other activity, have the right to purchase flats (houses) under contracts of sale in any localities of the Republic of Belarus.

7.1 Search for Suitable Properties 7.1.1 Residential and commercial real estate Newspapers and internet is the main source of information in searching for a real estate. The choice of real estate is broad - apartments, single-and multyapartment buildings, offices, commercial property, parking lots and garages. All this is offered for sale or for rent. All the information about purchasing and renting residential property can be found at www.realt.by. Regarding the choice of a hotel, everything depends on which city you are going to stay in Belarus. 

Five-star hotels you can find only in the capital oа Belarus, in Minsk. The average cost of a single room is about: 200 euro per day for a standard room 266 euro per day for a «lux» room;



Four-star hotels can be found not only in Minsk, but also in Vitebsk. The cost of a single room is about: 40-116 euro per day for a standard room 190 euro per day for a «lux» room;



Three-star hotels can be found in each regional city of Belarus. The average cost of a single room: 40 euro per day for a standard room The average cost of a double room: 90 euro per day for a «lux» room.

WWW.INVESTARBY.COM

All the information on accommodation, reservations, and the cost in any of the hotels in Belarus, regardless of its location and form of ownership you can get at the web sites: www.belhotel.by www.hotels-belarus.com

7.1.2 Temporary accommodation / furnished apartments, hotels The starting point in search for a suitable housing is also an Internet. There is a wide choice of furnished apartments and serviced apartments. Some real estate agencies and firms specializing in servicing foreign experts may assist in searching. Fairly complete survey with information on all real estate agencies Belarus is available at www.realt.by

7.2 Commercial Properties 7.2.1 Property for Rent The choice of commercial real estate for lease is wide - from offices, shops, a variety of commercial premises in specialized centers, warehouses and production facilities, etc. All this is offered for sale or for lease. Cost varies depending on whether the property is in Minsk, in a regional center in Belarus or outside the city. Market prices for office space, IV quarter 2010: The average rent without utilities for square meter: • in Minsk from 13 to 20 euro per sq. m., depending on the distance from the city center; • in regional centers - from 7 to 12 euro per sq. m.; Market prices for commercial space, IV quarter 2010: The average rent without utilities for the sq. m.: • in Minsk from 25 to 40 euro per sq. m., depending on the distance from the city center; • in regional centers - from 15 to 20 euro per sq. m; Market prices for storage space, IV quarter 2010: average rent without utilities for sq. m.: • in Minsk from 4 to 6 euro per sq. m., depending on the distance from the city center; • in regional centers - from 2 to 4 euro per sq.m.;

WWW.INVESTARBY.COM

7.2.2 Property for Sale Foreign individuals or companies can purchase commercial real estate in the Republic of Belarus without limitation. Steps in a purchase transaction. After selecting a property and making a final decision on purchasing it, of course, the best is to contact the experts - real estate agency. They will assist to clarify all details of the transaction, hold final negotiations with the owner of the property, check out all the necessary information about the seller to prepare all necessary documents for registration of the sale, to organize notarization of the transaction at the location of the object, to control the payments for the acquired property. All necessary information about real estate agencies can be found on the website of the Ministry of Justice of the Republic of Belarus: www.minjust.by . The cost of real estate services is approved by the Council of Ministers of the Republic of Belarus of March 14, 2008 № 386 "On some measures for the implementation of the Presidential Decree of February 28, 2008 № 140" (as amended by the Council of Ministers of the Republic of Belarus 20.07.2009 № 957). To make a transaction of purchasing the selected property by itself is possible at the public or private notary office in the location of an object or directly at the Agency for State Registration and Land Cadastre. The subjects of the activities of the Agency for State Registration and Land Cadastre are: 

State registration of real estate, rights and transactions with them;



Implementation of the technical inventory of real estate and check the characteristics of real estate;

 

Maintaining a register of prices; cadastral and individual property evaluation and maintenance of a register of the value of real estate;

Advisory services relating to the state registration of real estate and property valuation. All the information about the addresses of notary offices and agencies of state registration in all cities of Belarus can be found at web-sites: www.minjust.by, www.nca.by. If you are going to purchase a land plot for the construction of a facility for commercial purposes, in this case, you may contact the local authorities, which will assist in selection of available lands, designed specifically for the construction of facilities for commercial purposes or for investment projects. 

WWW.INVESTARBY.COM

In spite of the fact that the land can be acquired in the property mostly through auctions, in order to create additional conditions for investment activities in the Republic of Belarus on Aug. 6, 2009 adopted by the Presidential Decree â&#x201E;&#x2013; 1910 "On creation of additional conditions for investment activity in Belarus ", establishing a significant preferences for the investors, that are signing investment treaties in the Republic of Belarus. The list of lands on which is possible to conclude investment agreements and to obtain land without auction can be found in a Single Database. If investors wish to implement their investment projects outside these areas, they may apply to the central governmental authority, other state organizations subordinated to the Government of the Republic of Belarus, regional (Minsk city) executive committee or the Council of Ministers. The official Web site of the State Property Committee of Belarus www.gki.gov.by contains all the necessary information on the land plots. The most complete information on the sale of land plots in the Republic of Belarus you may find at the web site: www.investarby.com. The market prices of the land plots for commercial purposes you may obtain online at: www.irr.by

7.3 Residential Real Estate 7.3.1 Property for rent Rental housing is widespread enough in Belarus. Offer and demand are in balance. Many citizens, having owned two or more apartments, lease them to receive additional income. However, the search for suitable housing requires patience and luck as to find an apartment, that will fully meet your requirements, is difficult. Apartments in Belarus are rented with furniture, and without it. Kitchens in such flats are not always fully equipped. Besides cooker and refrigerators, sometimes there can be a microwave, dishwasher. For example, a 2-bedroom apartment in good condition and fully furnished (one bedroom, living room, kitchen, bathroom) is in Minsk, on average may cost 300-350 euro per month (data for the IV quarter of 2010). Plus, the owners may ask to pay extra for electricity, telephone, gas, water, cable TV.

WWW.INVESTARBY.COM

7.3.2 Property for sale In accordance with the Regulations on the sale of flats (houses), approved by the Council of Ministers of the Republic of Belarus of 31.08.1993, № 589 (changes and additions made to the Council of Ministers of the Republic of Belarus of 22.12.1997, № 1701 and from 20.07. 1999. № 1109), foreigners and persons without a citizenship permanently residing in Belarus and engaged in legal employment, business or other activity, have the right to purchase flats (houses) under contracts of sale in any localities of the Republic of Belarus. While purchasing by foreigners who live in other localities of the Republic of Belarus premises in Minsk, they must obtain permission for registration of such transaction in the Minsk City Executive Committee. Purchase may be authorized, in particular, if the total area of each family member buyer purchased an apartment will be no less than 15 square meters. In exceptional cases, the purchase of apartments in the capital may be authorized by executive committee without complying with this norm of the total area. Under a contract of sale may be purchased: -

apartment (house), built specifically for sale; uninhabited apartment, that are in public housing stock; vacated apartments, that are in public housing stock (including the houses that are to be reconstructed); Flats, owned by legal entities non-state ownership; apartments belonging to citizens on the right of ownership.

Apartments belonging to legal entities can be sold only in cases if they are not populated by tenants. A special procedure is established for the purchase of houses for foreigners and persons without citizenship on the territory of the Republic of Belarus. According to the decree of the Council of Ministers of the Republic of Belarus of 22.12.1997, № 1701 they have the right to purchase flats (houses) in the Republic of Belarus only in accordance with international treaties.

Foreign citizens and persons without citizenship who purchased apartments in the Republic of Belarus, in the appropriate manner shall be issued registration certificates and house books. The purchased property should only be used for permanent residence of citizens. They are not allowed to post offices, warehouses, shops, workshops, etc. to carry out industrial, economic and other activities (not related to the right of permanent residence). Foreign citizens and individuals without citizenship permanently residing in Belarus and engaged in legal employment, business or other activities have the right t o

WWW.INVESTARBY.COM

implement individual or collective housing construction as part of civil society organizations-builders (housing cooperatives, youth residential complexes) as well as a share participant in construction of apartment buildings of various forms of ownership. Market prices for residential property, IV quarter of 2010, depending on the location, the year of construction and its condition. 

Average cost of apartments in the capital of Belarus - Minsk: 1-bedroom apartment of 40 sq.m - from 25 to 35 thousand euro; 2-bedroom apartment of 60 sq.m - from 32 to 57 thousand euro; 3,4-bedroom apartment ranging from 60 to 100 sq.m - from 40 to 100 thousand euro;



Average cost per square meter of housing in the city of Minsk, November 2010: 1-room apartments - from 967 euro; 2-bedroom apartment - from 946 euro; 3,4-bedroom apartment - from 912 and from 900 euro;



Average cost of apartments in the regional centers of Belarus: 1-bedroom apartment of 40 sq.m - from 17 to 22 thousand euro; 2-bedroom apartment of 60 sq.m - from 25 to 35 thousand euro; 3,4-bedroom apartment ranging from 60 to 100 sq.m. - from 30 to 57 thousand euro;

7.4 Legal aspects: construction permit Registration and issuance of permits for construction and installation works at construction objects, regardless of their purpose, ownership and method of construction is carried out by inspections of the Department of Control and construction supervision of the State Standardization Committee of Belarus over regions and Minsk, Specialized Inspection Department's control and supervision of construction of the State Standardization Committee of Belarus. Production of construction works on construction facilities may be initiated only after receipt of the customer, builder permit in the State Construction Supervision. The term of validity of the permit is limited by project duration of the construction of the facility. To obtain a permit, the customer, the developer shall submit to the authorities of the state construction supervision following documents: WWW.INVESTARBY.COM



Application by the customer, developer, indicating details of registration in the Inspectorate of the Ministry of Taxes and Duties.



A copy of the decision (order) of the local executive and administrative body for permission to land users, land owners and land owners of construction, reconstruction, restoration of objects on their designated lots.



A copy of the state expertise of design documentation (which contains the recommendation for approval of project documents without comment).



A copy of the order (orders) of the customer, builder of approval of design estimates



A copy of the construction contract

Permission for construction works or the decision to refuse a permit is issued to the applicant within 10 days from the date of filing an application with all required documents.

7.5 Legal aspects: Plot acquisition by foreign citizens and organizations Land reregulation in the Republic of Belarus is carried out by the Constitution of the Republic of Belarus, acts of the President of the Republic of Belarus, the Code of the Republic of Belarus "On Land", and other legislative acts.Прослушать На латинице

The civil law norms are applied to the land relations, in accordance with the regulations established by land legislation. There can be public and private forms of ownership in the Republic of Belarus. Agricultural lands are owned by the state. Aliens and foreign legal entities, their representation can also be a subjects of land relations in the Republic of Belarus. There are lands that can not be provided into a private ownership, including property in foreign countries, international organizations. They are as follows: 

Agricultural lands



Lands for environmental, recreational, historical and cultural use



Forest lands



Ground water resources



The lands under roads and other transport communications



Lands for public use



The lands where real estate of state ownership are located



Lands affected by radioactive contamination WWW.INVESTARBY.COM

ď&#x201A;ˇ

The areas of land deposits. These areas are approved by the Council of Ministers of the Republic of Belarus

Lands may be privately owned by citizens of the Republic of Belarus, private legal entities of the Republic of Belarus, as well as by foreign international organizations and their representatives. In some cases, such as in the case of close kinship, land can also be the private property of foreigners who are relatives of the testator, if they have received through inheritance of land granted to the testator in private ownership. Lands may be rented by individual entrepreneurs, legal entities of the Republic of Belarus, foreign legal entities and their representatives, foreign governments, diplomatic representatives and consular institutions of foreign states, international organizations and their representatives. Temporary use of land may be provided by legislation on the protection and use of land and the investment activity to the national and foreign investors on the basis of concession contracts for term up to ninety-nine years. Legal entities of the Republic of Belarus, as well as enterprises with foreign investments can have lands in ownership if they carry out investment projects. In this case, resolution of land transfer owned by legal entities of the Republic of Belarus is taken by the President of the Republic of Belarus.

WWW.INVESTARBY.COM

8.LABOR MARKET AND LAW Labor market of Belarus is characterized by liberal labor laws, minor legal restrictions and social stability. Methods of solving labor disputes between social partners (employers and employees) are well established. There are almost no strikes in Belarus. The social security system is based on the principles of solidarity and moral responsibility.

8.1 Employment and unemployment Some 4621,2 thousand people were employed in the national economy in 2009, that is 0,6% more than in 2008. In total employment in the economy of 3,535.4 thousand, or 76.5%, were employees of the companies (except small business of non-state ownership). In addition, there were attracted 149.8 thousand part-time workers and employees working by civil contracts. In 2009, 357 thousand employees (10.1% of the average population) worked in the regime of compelled part-time employment (2008 - 3,9%). In December 2009, in comparison with November of 2009 the number of employees transferred on part-time working week (day), increased by 32,8% and totaled to 59.1 thousand people, number of employees who were provided leaves by employer's initiative, increased up to 1,8 times and totaled about 53.5 thousand people. Number of unemployed, registered in labor authorities in December 2009 totaled 40,3 thousand people. The unemployment rate accounted 0,9% of the economically active population (in December, 2008 â&#x20AC;&#x201C; 0,8%). Average benefit per unemployed in December 2009 accounted Br.45 000, or 17,9% of the budget of average living wage. At the end of 2009, the total number of registered unemployed women accounted for 57% , young people under 30 years old - 41,1%, villagers - 20,2%. General secondary education had 38.6% of unemployed, higher and special secondary education - 26,6% and vocational and technical education - 24%, the total basic education - 10,8% of the unemployed.

WWW.INVESTARBY.COM

8.2 Labor Cost Вelarusian enterprises can set wages independently. However, the majority of Belarusian enterprises of different types of ownership form salary that is structured according to the tariff system. A wage is a compensation, usually financial, received by workers in exchange for their labor. Compensation is a monetary benefit given to employees in return for the services provided by them. Thus, wages may depend on the time of labor; productivity, qualification. While forming wages any factors are taken into account. The Constitution of the Republic of Belarus guarantees to all, including foreigners, the right on labor as the worthiest means of self-affirmation, the right to choose a profession and a worthy reward. Wages are generally established on a contractual basis after negotiations between the employer and the employee. The size of the salary may be fixed. Bonuses and allowances can be added to the fixed part of the salary. The size of wages and payments should be reflected in contract or employment agreement. For protection from exploitation and lower wages in the republic is established social minimum, below which the employer has no right to reduce the remuneration. This social minimum is the state guarantee and it is approved at the highest level. In accordance with the article 59 of the Labor Code, the minimum wage is a state minimum amount of cash required to the employee for his work during the month by the employer. Minimum wage doesn’t include supplements, bonuses and other compensation and incentive payments. In the collective contracts and agreements (Except those organizations that are funded from the budget and use state subsidies) a higher minimum wage may be provided. Among CIS Belarus occupies the third place on the average monthly wage. The size of minimum wages according to the Law № 124-3 is fixed by the Council of Ministers of the Republic of Belarus annually from January 1, based on indexes of the budget of the Republic of Belarus approved for the next fiscal (financial) year, as well as on the following conditions: 

Employment and labor productivity;



Needs of the worker in material goods and services;



Economic empowerment of national and local budgets;



Pensions, stipends, benefits, compensation and other social payments;

WWW.INVESTARBY.COM



Ratio between the size of minimum wage and social norms.

The average wages in Belarus is approximately U.S. $ 300. It should be noted that, in Minsk, the salary level is slightly higher than in regions. Wages in commercial organizations ranges from $300 to $800.

8.3 Labor legislation Labor legislation of the Republic of Belarus contains the rights and abilities of employers and employees. Labor legislation is regulated by: 

The Constitution of the Republic of Belarus



Labor Code (amendment from 2006)



Law on Trade Union



Law on External Labor Migration

If you are planning to do Business in Belarus you are required to know all the aspects of labor legislation. From the beginning, it is recommended to find a local lawyer in Belarus, that will explain you the rules of hiring and will provide all the information of any legislation amendments. The aim of the Labor legislation of the Republic of Belarus is to protect both employees and employers. This sector is intended to regulate and predict all possible disputes, to provide guarantees in the implementation of job duties. Legislation acts have advantages over collective agreements. Regulations of the labor contracts, agreements and collective agreements can not deviate from normative acts, especially in cases where the deteriorating legal status of employees. If the law regulations are not mandatory, and dispositive, then the relationship can be resolved in a collective agreement, employment agreement or contract. 8.3.1 Employment Agreement (contract) Employment agreement or a contract is a written agreement between employer and employee, regulating the order of employment, terms of payment of wages, the term of employment, the rights and obligations of the parties and etc. Belarusian legislation considers the issue of the conclusion of a labor agreement (contract), categorically and unequivocally: the rights of the employees must be 100% protected , and, therefore, the

WWW.INVESTARBY.COM

employer can not require more than is written in the agreement concluded between the parties. Employer is obliged to recruit an employee by signing an employment agreement or contract in writing form. In addition to the employment agreement (contract), the Company has internal acts, that employee is required to learn, for example, work rules, job descriptions, as well as nondisclosure agreements. In this case, employment contracts and contracts usually include only mandatory rules: the order of payment, the name of the profession, wage conditions, the validity of the contract, the rights and responsibilities, work and rest regime. Each company is obliged to have standards Occupational safety and health, fire safety to protect workers. Belarusian legislation separates the concept of an employment agreement and a contract. Employment agreement is considered to be freer kind of agreement, where is one drawback for the employer – it is an employee`s opportunity to leave the job at any time and regardless of the term of the contract, notifying the employer one month beforehand. Contract is the kind of the employment agreement. Nowadays most of employers uses a contract form of employment. Although in Belarus exists the appropriate model of contract (it contains all the necessary conditions of the contract), employer and employee may agree on other terms and conditions, to add into the contract more of the rights and duties, the premium pay and much more. Employment agreement in Belarus is concluded for: 

Indefinite term



Definite term



Definite term to perform a specific job



Season



Temporary period to replace an absent employee

Employment agreement may be terminated under the following circumstances: 

By mutual agreement of the parties



On initiative of one of the parties



On circumstances, beyond the will of the parties

Labor legislation of Belarus establishes the grounds on which employers can terminate the contract. The rules of firing are detailed in Article 42 of the Labor Code.

WWW.INVESTARBY.COM

8.3.2 Termination of an employment agreement, terms, protection of the employee`s rights The order of termination of employment agreement and contract is clearly regulated in Belarus. Neither employee, nor employer can violate the statutory procedure of dismissal. There are a lot of grounds for dismissal in the law, but the main are as follows: 

The end of an employment contract for a specified period of time



Changing of the material conditions that the employee must be warned about in advance



By mutual agreement of the parties



Labor law violation by the employer



The death of an employee



Loss of trust and confidence (for positions)



Imprisonment of an employee

This is, certainly, not complete list. There is no such an option as termination of an employment agreement on the employer`s initiative. But there exist an option such as termination of an employment agreement on the employee`s initiative. Thereby, employee`s rights are completely protected. But this rule can’t be applied in the following cases: liquidation of a company, layoff , absenteeism, systematic non-fulfillment of the duties, thefts at the workplace, coming to work in alcohol intoxication. The terms of the termination of an employment agreement can be defined individually. But general mandatory rules set minimal terms. Both, the employer and employee should notify the desire to terminate the agreement not later than one month. Employee continues to go to work and receive pay for work until the end of the employment agreement or contract. It will give opportunity for both an employer and employee to find a decent replacement. If the employer and employee agree to terminate the agreement or contract in advance - they can do it easily. It is prohibited to dismiss on racial reasons, because of disability, because of the pregnancy of the employee.

8.3.3 Benefits for Employed Women Employed women in Belarus have the right for a maternity leave. Currently Belarusian employed women are provided: 

126 days of paid maternity leave (140 days in case of medical complications) WWW.INVESTARBY.COM

ď&#x201A;ˇ

3 years unpaid leave to care for a child, during which a woman remains her job

ď&#x201A;ˇ

In case of birth of another child during these three years the right to maternity leave will be guaranteed again.

8.3.4 Collective Agreement This kind of agreement between an employer and employee is not very common in Belarus recently, but still exist in many companies. A collective agreement is an agreement between employers and employees which regulates the terms and conditions of employees in their workplace, their duties and the duties of the employer. Usually collective agreements contain the following terms: professional development and training of employees, the size of bonuses and allowances, sanitary-health resort treatment, providing nursery, construction of houses for employees. If there is a disagreement between an employer and employee, the parties usually try to resolve it through negotiations. These negotiations may join trade unions that are created by companies to protect employees' interests. Another instance is the committee on labor disputes, and for the collective labor disputes - conciliation commission. The commissions include representatives of the quarreling parties. When it is impossible to resolve the dispute in the committee on labor disputes, the dispute is transmitted in to the Court. But in a collective dispute, the parties may apply to the mediator, either in labor arbitration which is formed from the scientific community, other employers, and government officials.

8.3.5 Trade Unions Companies can create Trade Unions (but this is not obligatory), an organization of workers that have banded together to achieve common goals such as better working conditions, to protect labor and socio-economic rights and interests of the employee. Union membership is open to any citizen. Employers are obliged to consult with and advise the trade unions, and in some cases, coordinate their actions, if are affected interests in the following areas: termination of an employment agreement, liquidation or reorganization of a company, mass dismissal, change of ratios and costs of labor, working time.

WWW.INVESTARBY.COM

8.4 Work & Leisure 8.4.1 Working Hours In Belarus, as in many countries, there are time limits for workers. Working time is the time during which the employees in accordance with employment, collective agreements, internal regulations must be in the workplace and carry out their duties. Working time also applies to the time that exceeds the working time (overtime, work on public holidays, weekends and holidays). According to the Labor Code the length of the working time should not exceed 40 hours in a week. There are some categories of workers that are provided reduced working time. This reduction of working time is intended to protect non-adults, disabled, workers, working on the contaminated territories. For the workers engaged in work with harmful and (or) dangerous conditions is established shorter working time - no more than 35 hours per week. Norms of maximum working hours set by law and remain unchanged for several decades. Due to the characteristics of a company, the needs of the worker, working hours may exceed 40 hours. It is possible if a company uses summarized account of working hours, flexible schedules. But any way the company should set a period (for example: month) taking into account 40-hours working week. And the worker can`t work over the set norm. There are many opportunities to make the work schedule fit the needs of the enterprise. As examples there can be flextime, working in shifts or permanent schedule (7 x 24 hours x 365 days). 8.4.2 Overtime Overtime - is the amount of time someone works beyond normal working hours. If a worker exceeds the normal working hours as well as carry out a job functions for shift work, workers, home workers, while working part-time with the same employer by his initiative is not considered to be overtime. There are restrictions for overtime work in Belarus. It is prohibited to attract for overtime work the following categories of workers: pregnant women with children under three years old, non-adults, students, people with disabilities. No more than four hours in two consecutive days or 120 hours per year is permitted for overtime work.

WWW.INVESTARBY.COM

The Government of the Republic of Belarus has the right to reduce a fixed term limit for the number of overtime in the Republic, either by industry or by specific areas in order to enhance the employability of the unemployed. Employers are obliged to keep accurate records of overtime work carried out by each worker. This information is available to the employee at his request. Each hour of overtime work is paid: 1. To workers with the efficiency wage â&#x20AC;&#x201C; not less than double piece rates; 2. To employees with time rate system â&#x20AC;&#x201C; not less than double time wage rates. By arrangement with the employer, the employee may obtain another day off for overtime work.

8.4.3 Shift Work Shift work is an employment practice designed to make use of the 24 hours of the clock, rather than a standard working day. Shift work is implemented in those cases when the duration of the production process (work) exceeds the set duration of daily work, as well as for more efficient use of equipment, increase production (works, services). Working hours for shift work schedule is determined by the shift. Duration of a shift can`t exceed 12 hours. Duration for certain categories of employees may be established by the Government of the Republic of Belarus. Work during two consecutive shifts is prohibited. The minimum duration of daily rest between shifts (from one end of the next) should be together with the time interval for rest and food at least double the length of time work in the preceding rest shift.

8.4.4 Work at night, on weekends and public holidays Night work is generally the period between 10.00 pm and 6.00 am. Working at night time, the duration of daily labor is reduced by one hour. Disabled people, persons under 18 years old as well as pregnant women are prohibited to work at night. For each hour of work during the night or the night shift should be provided at least 20% of the hourly wage of the employee. Night shift is considered to be if an employee works for at least three hours during the night time period. Each person has the right for rest and may use it by his discretion.

WWW.INVESTARBY.COM

Duration of weekly uninterrupted rest in the country should be at least 42 hours. If a company establishes a mode of operation, when an employer can not provide such a weekly rest period (shift work, flexible regime), the rest is set for another period. If a weekend coincides with a public holiday, the weekend is not transferred to another day, and a day off is not provided. Generally, Saturday and Sunday are considered to be a weekend, but sometimes because of certain circumstances (for example: trade organization) may provide other weekend. Employer in exceptional cases has the right to bring an employee to work on a day off without his consent, if there is necessary to: prevent a catastrophe, industrial accident; eliminate accidental or unexpected circumstances that may violate proper functioning of water supply, gas supply, heating, lighting, sewerage, transport, and communications. Labor law allows to work no more than 12 days off per year per employee. Work on a day off can be compensated either by provision of an additional day of rest, or may be paid at double the rate. In the Republic of Belarus there are about 50 public holidays, 9 of them are declared non-working days. Work on public holidays can be compensated either by provision of an additional day of rest, or may be paid at double the rate.

8.4.5 Annual leave In accordance with the Constitution of the Republic of Belarus, each employee has the right for an annual leave. Holiday leaves are divided into main leave and additional leave. The right for an additional leave appears according to the following conditions: on maternity leave, while studying, for family reasons. Main leave is provided to all employees without exception and its duration should not be less than 24 calendar days. The law provides more long holiday for the following categories of employees: teachers, persons engaged in hazardous industries, non-adults, disabled persons. If an employee is set long working day, by encouraging their workers and their long collaboration - the employer provides additional leave. Employees always have the right to interchange a part of the leave that exceeds 21 days into cash compensation. The employer determines the period when a worker will have a leave, but employee`s desire is usually taken into account. But it is very difficult to meet the needs of all employees on leave. In Belarus there is a list of employees who are granted the right of holiday choice first: non-adults, War veterans, disabled persons and others.

WWW.INVESTARBY.COM

It is possible to divide vacation into parts, but one of them must be at least 14 calendar days. In addition, an employee in the company may receive additional paid leave (time off), Bereavement, weddings, visiting a doctor. It is not enshrined in law, but as a rule, it has become the custom in all companies.

8.5 Short-time Work and Mass Dismissal Even in a developing companies there may happen an event of crisis. Employer has to reduce expenses. One of the ways to retain the staff is a short-time employment. Companies reduce working hours, thus payment is reduced as well. This measure is aimed at saving jobs. If it doesn`t help - the enterprise reduce the number of staff, including mass layoffs. In this case, the employer must take all possible steps to transfer the employee to another job, even with retraining. Notice of reduction should be directed to the employee not less than 2 months, and if it is mass dismissal â&#x20AC;&#x201C; the notice is sent to the State employment service.

8.6 Social Insurance In Belarus there exist rules of compulsory and voluntary insurance. After hiring and signing an employment agreement (the contract), the employer bears the burden of the employee insurance at his own expense. The size of compulsory insurance is enshrined in law. Voluntary insurance is carried out by a contract between the insurer and insured in accordance with the law. The conditions of voluntary insurance are defined in the rules of appropriate kind of insurance approved by insurer or association of insurers and coordinated by the Ministry of Finance. Validity of contracts of voluntary life insurance and supplementary pensions can not be less than three years. Compulsory insurance is carried by government insurance organizations an (or) insurances companies in the authorized capital of which there are more than 50% of the shares (common(ordinary) or other voting shares) are owned by the Republic of Belarus and (or) its administrative and territorial units.

WWW.INVESTARBY.COM

The Government guarantees insurance payments by type of insurance relating to life insurance, compulsory insurance if the insurance contracts are concluded with public insurance companies.

8.6.1 Accident Insurance Compulsory insurance against industrial accidents and occupational diseases – is one of the most large-scale insurance programs implemented in Belarus. It is carried out by Belarusian Unitary Insurance Enterprise «Belgosstrah». Monthly insurance payments are necessary. They guarantee an employee to obtain compensation for harm to life and health (including mental) caused by the discharge of his duties. Currently, the procedure and conditions are governed by the Regulations on conducting insurance activity in the Republic of Belarus approved by Decree of the President of the Republic of Belarus of 25 August 2006 № 530 "On insurance activity"(Chapter 14 "The procedures for the compulsory insurance in case of industrial accidents and occupational diseases"). Provides financial protection for property interests of the insured and other individuals related with the loss of health, occupational disability or death due to industrial accidents and occupational diseases. Policyholders are the organizations (including foreign), their branches, as well as individuals who, in accordance with the laws provide jobs to the citizens of the Republic of Belarus, foreign citizens and persons without citizenship residing in the Republic of Belarus. Insured citizens are considered to be: 

The citizens carrying out the work under the employment agreement (contract);



Working under civil contract on the territory of the insured and acting under the control of the insured for the safe conduct of work or working under the supervision of the insured for the safe conduct of work outside of the insured;



Carrying out work on the basis of membership (participation) in organizations of any organizational and legal forms;



Students of educational institutions of all kinds, medical residents, graduate students, doctoral students and involve during the period of work experience (internship);

WWW.INVESTARBY.COM

The size of payments made by the employer for the employee for insurance from industrial accidents and occupational diseases is in general cases - 0.6 percent of wages. The particular size of the payment is determined depending on the type of activity, which provides enterprise-payer. www.belgosstrakh.by

8.6.2 Disability Insurance, Pregnancy In case of temporary disability, care for maternity leave, sharply raises the question of detention for children, buying medicine, getting paid medical services. In this case, the employee is insured in case of temporary disability, pregnancy and childbirth. The mandatory insurance premiums in case of temporary disability, pregnancy and childbirth, care for a child up to three years for the employer accounts for 6 percent of salary. Temporary disability benefits are provided in the following cases: Disability, due to illness or injury; Care for a sick family member Care for a child under the age of 3 years and a disabled child under the age of 18 years, in case of illness of the mother or other person, actually caring for the child; During isolation period. Temporary disability benefits shall be appointed at a rate of 80 per cent of the average daily earnings per weekday schedule of the employee occurring during the first 6 calendar days of incapacity, and 100 per cent of the average daily earnings for the next working days (hours) of continuous incapacity for work. Generally, temporary disability benefits are calculated from the daily average earnings for the 2 calendar months preceding the month in which occurred a temporary disability. The reason for the appointment of temporary disability benefits is a sick-list, issued and executed in the order established by the law.

8.6.3 Health Insurance Compulsory health insurance in the country is provided only for aliens and persons without citizenship, as all medical services in the country mostly are free.But it is not forbidden to insure the life and health on a voluntary basis - insurance will reduce expenses on medicines and services that are not free. The cost of health insurance for aliens and persons without citizenship is from 2 to 85 euro, depending on the period of staying on the territory of the country.

WWW.INVESTARBY.COM

8.6.4 Unemployment Insurance Unemployment insurance is not provided on the territory of the country, but jobless people may be appointed for unemployment benefits, after resolution of authorities responsible for the appointment of benefits.

8.7 Staff Search There are many ways to find job candidates: 

Advertisements in newspapers or specialized magazines



Internet offers



Notices on bulletin boards at universities



Engage consultants



Cooperation with the employment agencies, etc.

Which option will choose an employer, will depend on his needs and budget.

8.7.1 Private Employment Agencies Nowadays, with the increasing development of the labor market, recruitment or employment agencies are engaged in searching for personnel. Contract for services between an employer and recruitment agency serves as a guarantee of service. It is necessary to fill in an application to search for an employee, to specify individual data of your organization: sphere of activity, job position, wages and professional skills. In additional information you can specify the gender, age, experience, education level, work schedule and even marital status. All these data a candidate fills in his application for a job while searching a job at an employment agency. All employment agencies or recruitment agencies have a database of applicants, if there is no an appropriate candidate in the database, the agency provides a wide search. Recruiting agency, as an additional service, may assist in preparing for an interview. Also, recruitment agencies will help to compose correctly an application form for the employer. Agencies search for the candidates in accordance with the request, and may carry the preliminary interview, if it is necessary. After this the employer receives a summary on the basis of which he chooses and appoints the interview. www.mintrud.gov.by

WWW.INVESTARBY.COM

9.Belarusian Capital Market

9.1 Banking System 9.1.1 Banking System Structure The National Banking System is a dynamically and effectively developing sector of the economy, which is formed in accordance with the objectives of socio-economic development and reflects international standards and regulations. The Banking system of Belarus is one of the most important structures of the market economy. The banking system of Belarus is a two-level system consisting of the National Bank of the Republic of Belarus and of commercial banks including banks with foreign capital and banking subsidiaries of foreign banks that are registered on the territory of Belarus. First level: The National Bank of the Republic of Belarus. It serves as the country`s Central Bank: it carries out the state registration and banks regulation, licensing of banking activities, regulation of credit relations. It develops the Republic of Belarus Monetary Policy Guidelines and pursue, in concert with the Government of the Republic of Belarus, common monetary policy of the Republic of Belarus in the manner prescribed by legislative acts of the Republic of Belarus. It has an exclusively right to issue money. Since 1992 The National Bank of Belarus cooperates with IMF. Since 1996, he is a member of the Group of Banking Supervisors from Central and Eastern Europe (BSCEE Group), which is the regional structure of the Basel Committee on Banking Supervision, as well as establishes and develops contacts and exchange of information with supervisory authorities of foreign countries. The second level: Commercial banks and non-bank financial institutions. As of 1 January 2009, the Belarusian banking system comprised 31 functioning banks. Of these, 25 were foreigninvested. 8 banks were fully foreign-owned. In 2008, were registered 4 banks, 3 of them were bank-dominated foreign investment: Joint-Stock Company "Belarusian Bank for Small Business (UK, Netherlands, U.S. and other investors), JSC" Zepter Bank (Switzerland), CJSC "TK Bank ( Iran). WWW.INVESTARBY.COM

Minimum authorized share capital for the registration of a commercial bank is 5 million euro. In performing its activities, the National Bank shall be guided by the Banking Code of the Republic of Belarus. This legislation establishes the principles of banking, the legal status of the subjects of banking relationships, regulates relations between them, and also determines the order of creation, operation, reorganization and liquidation of banks (non-bank financial institutions). www.select.by

9.1.2 Supervision The system of banking supervision has developed in the country, mostly corresponding to the world standards. It includes the following steps: banks and non-bank financial institutions licensing remote supervision on the basis of statements supervision in the form of inspections, as well as the application of appropriate measures against banks that violate the banking law or in crisis financial position reorganization and liquidation of banks, if it is necessary. Belarus provides information transparency of banks` activities which is one of the most effective methods of strong competition; maintain high discipline in the banking market, protecting the interests of creditors and depositors. In accordance with the Banking Code of the Republic of Belarus, Banks are required to publish in the official national media's annual report (balance sheet and profit and loss account, statement of changes in equity), confirmed by the auditing organization, not later than 25 April of the year following the reporting. The information is also posted on the website of the National Bank, published in the ÂŤBankovsky VestnikÂť Journal "(newscast). www.nbrb.by

WWW.INVESTARBY.COM

9.1.3 Services Belarusian banks provide a wide range of financial products and services for both private and corporate clients. As far as the Banking system of Belarus is based on the principles of universality, all banks may offer different banking services, including: Provision of credits and loans Asset management and advice on investing Payment transactions Working with deposits Working with securities (stock exchanges) Underwriting Financial analyses The income of the commercial banks are formed as: Interest income – 64,04% Commission income – 24,25% Income on foreign currency transactions – 3,29% Income on securities transactions – 0,18% Dividend income – 0,04% Other income – 8,2%

9.1.4 Deposit Insurance There are two documents, governing the safety of citizens' savings: The Law of the Republic of Belarus "On Guaranteed Refund of Bank Deposits (deposits) of individuals" and Presidential Decree "On guarantees of safety of funds of individuals, the accounts and ( or) in bank deposits (deposits)». In accordance with the regulations a new system of deposit guarantee have been created, which is based on the creation of the Agency on reimbursement of bank deposits (deposits) of individuals. Thus, the current system guarantees the confidence that the money of depositors is not wasted. Even if the bank is not able to return deposits to the

WWW.INVESTARBY.COM

client, this will do the Agency on reimbursement of deposits. Currently 26 commercial banks are registered at the Agency, all those that can attract deposits from the public. On the day of creation of the Agency, its capital amounted to only Br 275 billion. It was formed primarily from the guarantee fund, which had been transferred to accounts of the agency, as well as contributions from the Government and National Bank. In the future the capital of the Agency is going to increase up to 5% of all household deposits. The agency accumulates banks` deposits, on the basis of which is formed the reserve for payment of deposits. Each bank, which has special permission to accept deposits, must be registered at the Agency. TO ENTER THE Agency it is necessary to pay an accounting fee. Afterwards, each quarter the banks are required to pay contributions. The agency informs the banks on the ratio between the size of its reserve and the total amount of attracted deposits of individuals. Money that accrue as a result of deductions of banks, the Agency is not just keeps on their accounts, and invests in securities of National Bank and the Government. Nowadays in accordance with the legislation of the Republic of Belarus, there are one hundred percent guarantee of safety of savings regardless of the amount of the deposit. It is worth emphasizing that in the world today, there are few countries in which the state would guarantee a full refund of deposits. Recently in Austria, Germany, Greece, Ireland and certain other countries there exists one hundred percent guarantee of safety of contributions. These countries include Belarus as well www.infobank.by

9.1.5 Taxation of Savings Income The income of the population received from interest on bank deposits according to the Belarusian legislation are exempt from taxation. Income of enterprises from interest on cash balance on current accounts is recorded in the accounting as a non-operating income and taxed as ordinary revenue in the prescribed manner.

9.2 Belarusian Stock Market Basic infrastructure for the development of the stock market in Belarus was created in mid-1990's. Belarusian Currency and Stock Exchange operate in Belarus. The National Bank of Belarus, the Committee on Securities of the Republic of Belarus, the Central Depository of Securities of the Republic of Belarus are responsible for the stock market

WWW.INVESTARBY.COM

development. The country has created a powerful information-analytical system that reflects information about the issuers and the securities market, stock news and financial markets of the Republic of Belarus. One of the main reasons for underdevelopment of the country's stock market is the fact that Belarus is one of the few post-socialist countries, which have not yet been carried out a full-fledged privatization of state property. The share of public sector in the country's economy is estimated at 60-70%. However, by the opinion of the majority of Belarusian analysts, soon in Belarus will start a large-scale privatization. And the professional securities market participants will finally have opportunity to earn at the national stock market. A favorable business environment is formed, along with the intensification of the privatization process. The rent of capital structures, buildings (structures), isolation facilities, located both in public and in private ownership are regulated, the procedures of granting land plots are simplified and the terms are reduced; registration of prices (tariffs) on new goods (works, services) have been abolished; the list of goods (services) which are subject to price regulation have been shortened; more attractive conditions for applying the simplified taxation system have been created; supervision over the activities of economic entities in the form of audits (inspections) before the coming into force of the head of state, regulating a single procedure for the control (surveillance) activities in the Republic of Belarus is suspended; up to 40% was reduced the range of products and services, subjected to mandatory certification, and a list of products subject to the state hygienic registration; were developed draft regulations on the disposal of state assets, licensing of certain activities, innovation and introduction of new high-tech products, investment and insurance. Thus, due to the established infrastructure and investment potential of the national economy, there have appeared good prospects for the entry of foreign investors into the strategically important market of the Republic of Belarus.

9.3 Commercial and Real Estate Financing Creating a business is generally aimed at having medium or long-term goals. As a rule it requires initial significant investments and a project finance. Banks particularly insist on a thorough market analysis and professional management. The main types of investment in Belarus are investments in residential and commercial property. At specialized on the topic of real estate web-sites you can find the facilities and investment projects, to learn the latest trends in residential real estate market: WWW.INVESTARBY.COM

- Commercial property - www.investar.by - All the real estate - www.realt.by - All the banks of Belarus - www.select.by

9.3.1 Financing of a Current Business Loans and own funds are the source of financing of the current activity of an enterprise. Currently, the role of loans is extremely high. Rational policies of attracting funds include shape, terms and amounts optimization of financing, receiving funds at the lowest cost. Current legislation provides for the possibility of using different ways of financing the current activities. The main are as follows: Commercial (commercial) credit; bank loan; loan; factoring Currently, commercial loan is the most common form of financing of current activities of domestic enterprises. Commercial loans are bank loans that are granted to different types of business entities. In some cases, the commercial loan is extended to assist a company with short term funding for basic operational functions, such as meeting payroll or purchasing supplies that are used in the production of the goods manufactured and sold by the company. At other times, the commercial loan may be utilized to purchase new machinery that is directly connected to the operation of the business. The commercial loan is often thought of in terms of a short-term source of cash for a business. The commercial loan is often thought of in terms of a short-term source of cash for a business. Some bankers offer a commercial loan format that is known as a renewable loan. Renewable loans allow the business to secure necessary funds, repay the balance within terms, and then roll the loan into a second or renewed period. This type of commercial loan is often employed when a company needs funds to secure resources to handle large seasonal orders from customers while still providing goods to other clients. As with most types of loans, the credit worthiness of the applicant will play a major role in the securing of a commercial loan. The business normally must present WWW.INVESTARBY.COM

documentation that proves the stable cash flow of the company, thus ensuring the lender that the loan can be repaid according to terms. If approved, the borrower can anticipate to pay a rate of interest that is in keeping with the prime lending rate. One of the advantages to a commercial loan is that many banks offer these types of loans at very competitive rates of interest. Often, the rates will be lower than for other types of loans, especially asset-based loans. This means that the borrower will have a smaller amount to repay the lender. Bank loan is an alternative to commercial loan. Bank loan is money provided by the bank to another person on terms of repayment, interest payment, maturity and security (p.1 Instructions on the order of (offering) the banks money in the form of the loan and their return, approved by the Board of the National Bank of the Republic of Belarus of December 30, 2003 â&#x201E;&#x2013; 226, with additions and amendments). To choose this source of funding it is necessary to analyze the cost of finance (lending rates and fees). Credit resources are used mainly for payment of the settlement documents without loan amount credited to the current account. Loans are granted a one-time provision of funds or by opening a credit line. Credit line provides the right to acquire cash within specified period with setting issuance limits and debt limits. The limits of the issuance - it is the limit of the total available fund. The limit of the debt â&#x20AC;&#x201C; it is limit of the amount of the debt for each specific date.

9.3.2 Mortgages In 2009 in Belarus there was adopted the Law "On mortgage", which provides an opportunity to pledge land, buildings, apartments and other real estate. According to the law, under the mortgage in Belarus is understood - a pledge of immovable property (land, capital structures, etc.) and other property, which is equated to immovable things. Land plots that are in private property of the citizens of Belarus, may be the subject to collateral as security for repayment of bank loans in time. It is important to note, that in Belarus pledge on the property that is in the state ownership is prohibited. Property in state ownership: land (except land transferred to private ownership), forests and other natural resources, inland waters, mineral WWW.INVESTARBY.COM

resources, airspace, as well as special objects in the case of their historical, cultural or other values. Before coming into the force of the law «On mortgage» the mortgage was regarded as one of the types of collateral. Therefore, all the relations connected with the transfer of real estate as collateral, were regulated primarily by the law "On Pledge" as well as the Civil Code. The law "On mortgage" introduced several innovations. Appeared opportunity to pawn their property, which is already in the pledge of one undertaking to secure the performance of another obligation. That is, it was possible to pawn the same property a few times. The new law gives the mortgagee the right to transfer or assign another person of their rights under the mortgage. Finally, the most important innovation that emerged in Belarus with the entry into force of the new law is the institution of mortgages. Under this Act, a mortgage – is a document certifying the right of the mortgagee of the obligation secured by a mortgage, and the contract of mortgage. The mortgage is a security. All together - this opens a "green light" in Belarus for the development of secondary market for mortgages and to create a simple mechanism for "remortgage" credit apartments. It is expected to remove a major obstacle and will contribute to more dynamic development of mortgage lending in Belarus. Other factors hindering the development of the mortgage market in Belarus are the lack of cheap long-term resources in banks (so-called "long money"), which could be aimed at lending for real estate. Partly the problem can be solved by issuing mortgage bonds, which can be reapplied in the market. But in Belarus today, such bonds are issued for a short period - from 1.5 to 5 years. In addition, the yield on them is low, it just above the refinancing rate (10,5%). Therefore, the issuance of such securities is still quite small compared to the housing loan debt. Finally, while banks do not have explicit guarantees, as the expense of the mortgaged housing they can meet their requirements for borrowers if they will not perform its obligations under the mortgage. Banks expect a near-term mechanism to regulate the eviction of the citizen and his family from the mortgage apartment. At present, the period of mortgage in Belarus does not exceed 20 years, and at most banks it is even less - from 10 to 15 years. The size of the loan is limited to a sum at least 90% of the value of the acquired property. In most banks of Belarus (except Priorbank and Belrosbank) there is a requirement of additional collateral in the form of guarantee of individuals. The main barriers for the development of the mortgage in Belarus – high interest rates and short terms loans - can be withdrawn as a result of the newly emerging secondary market for mortgages and banks to reduce the risks associated with the inability of WWW.INVESTARBY.COM

foreclosure on the mortgaged property. In the new edition of the Housing Code of Belarus, which will come into force in 2011, the procedure of eviction of defaulters on a mortgage (no matter how many children) of the unpaid apartment is simplified. Thus, banks will be protected, and the mortgage law will operate. Banking sector in Belarus has opportunity expand operations for Housing Mortgage Lending, creating for themselves a stable and promising market of financial services to the public. Investors get the opportunity to invest free cash in the new reliable long-term financial instruments that are created on the bases of long-term housing loans, secured by a mortgage. The Government of Belarus is gradually trying to remove the remaining barriers to mortgage lending. www.infobank.by

9.4 Venture Capital Venture capital market in Belarus is potentially attractive to venture investors as the country has a high scientific and technical potential, low-cost skilled labor. Belarus provides the opportunity of co-financing of projects: 30-50% of the funding can be carried out by the Belarusian side, and the share of foreign venture capital funds may account for 50-70% of the project financing. Today in Belarus, there are a few private companies that are positioning themselves as venture capital funds. However, until recently, most of them have been used for tax optimization, construction projects or resale of assets. The total mass of the "Venture" in Belarus - Scheme, although the schemes used are different: from construction to customs, from agricultural to commercial. Nevertheless, all these operations can hardly yet be attributed to the classical schemes of venture investing. In 2010, The State Venture Company has been established. The authorized fund of Belarusian venture company is formed from the state budget. From the beginning, functions of this company were transferred to Belarusian Innovation Fund. Additionally, there are being prepared a number of methodological papers that will determine the criteria and parameters for the selection of venture capital projects, making decisions. These institutional steps will complete the creation of venture capital financing, which will attract investments of venture capitalists to develop high-tech projects in Belarus. For technology transfer centers, technology parks and their residents in Belarus is set the profit tax rate of 10%. Income of venture organizations and the Belarusian innovation fund, derived from the provision of innovative organizations is not taxed. This WWW.INVESTARBY.COM

exemption is applied if the share of proceeds from the sale of an innovative organization of high-tech goods (works, services) is at least 50% of total revenue.

9.5 Government Support To support the development of private small and middle-sized business in Belarus, the state established public funds to support entrepreneurship, business incubators, centers for the promotion of youth employment and development of youth entrepreneurship. The principal government agency responsible for supporting and developing small and middle-sized business in Belarus is the Department of the Ministry of Economy. This is a structural subdivision of the Belarusian Economy Ministry that is coordinating the activities of state bodies, local executive and administrative bodies in the field of small business. The Department`s structure includes several public funds for the support of the development of small and medium-sized businesses - the Fund for Support of Small and Medium-sized Businesses, the Belarusian Fund for Financial Support of Entrepreneurs, regional funds for financial support. The Belarusian Fund for Financial Support of Entrepreneurs was established in 1998 for financial support of public policies, to support and develop small business in Belarus. The Fund is a legal entity, operates in cooperation with the Ministry of Economy and other republican bodies of state administration, banks and non-bank financial institutions, public associations of entrepreneurs and other legal entities and individuals. Belarusian Fund of Financial Support of Entrepreneurs provides guarantees for soft loans. I accordance with the terms and conditions, the amount of the guarantee shall not exceed 70% of the loan amount. Preferential loans â&#x20AC;&#x201C; are the loans provided by banks in Belarus to small business in accordance with the regulation on provision state financial support to small business entities and infrastructure to support small businesses at the expenses provided in the programs of state support of small business. Annually in Belarus is carried out a competitive selection of investment projects. Belarusian Fund of Financial Support of Entrepreneurs has developed rules for competition of investment projects of small businesses to receive state financial support. Support is funded under the Program of State Support of small Business in Belarus. Program`s funds include the national budget, allocated by the Belarusian Fund of Financial Support of Entrepreneurs, as well as funds remaining at the disposal of the fund from its activities. The state support is carried out on return basis or gratis, as well as by providing equipment on a lease (financial lease). The participants are: individual entrepreneurs, small organizations with an average number of employees up to 15 persons, including, small organizations numbering from 16 to 100 people. Priority is WWW.INVESTARBY.COM

given to the entrepreneurs who create and expand production of goods (works, services), develop the production of export-oriented, import-substituting products, use energysaving, implementing new technology. State financial support is provided to small businesses, implementing investment projects, for purchase of equipment, special devices and accessories, as well as purchase of components and raw materials for domestic production. Local authorities also provide funds for Support of Small businesses. For example, in Minsk there was created the Guarantee Fund for Small Business. Co-financing and technical assistance in the creation of this fund have provided the International Finance Corporation in Belarus and the European Bank for Reconstruction and Development. There is a "State Program to Support Small Businesses in 2010-2012Âť in Belarus. For the implementation of 43 measures of the program aimed mainly at financial support and development of the infrastructure to support small businesses, from the republican and local budgets in 2010 was allocated $ 10 million. In Belarus, with the support of the state, were created the first business incubators and centers to promote youth employment and development of youth entrepreneurship. Young people aged under 31 are offered to get advisory and educational services, to obtain free training and educational seminars, to get assistance in finding employment, that is given the opportunity of further education. Those who are willing to start their own businesses may get information how to realize their ideas and how it is relevant today. Business incubators are established on the basis of the State Universities. Currently, on the basis of BNTU operates "Polytechnic" technopark, which is one of the most successful business incubator. These incubators are created in Belarus in cooperation with experts from Germany and other developed countries.

9.6 Inflation In Belarus, inflation is measured by consumer price index. During the last 4-5 years in Belarus according to official statistics there is an annual inflation of 10-12% per year. This is much higher than in countries with developed market economy, but much less than 10 years ago, when in Belarus, inflation reached 25-50% per year. Nevertheless, the discount rate to justify the investment projects which are being prepared for implementation in Belarus, the annual inflation rate mortgage is recommended to set 20-30%, because the methodology for calculating the consumer price index in Belarus does not fully conforms to the Special Data Dissemination Standard (SDDS) IMF, and at least twice the volume underestimates the real inflation. WWW.INVESTARBY.COM

10.

TAXATION SYSTEM IN BELARUS

Up to 2010 the legislation that determined the order of tax payments in the Republic of Belarus totaled for more than 30 legal acts. Since January,1st , 2010 a Single Law came into force. It contains almost all the information about taxation of organizations, individual entrepreneurs, legal entities, residents and non-residents of the country. Tax Code contains the system of taxes, dues (duties) levied by the central and (or) the local budgets, the basic principles of taxation in the Republic of Belarus. Tax Code also regulates the power interrelations concerning the establishment, introduction, change, termination of taxes and duties (dues) and relations arising at the process of fulfilling the tax obligation, exercising of tax control, appealing the decision of tax bodies, actions (omissions) of their officials and establishes the rights and duties of payers, tax bodies and other participants of the relations. Payers of taxes, levies and duties are the organizations and individuals, which according to the Tax Code, Customs Code of the Republic of Belarus and / or acts of the President of the Republic of Belarus have the responsibility for paying them. Tax law defines the organization as follows: -

Legal entities of the Republic of Belarus Foreign and international organizations, including non-legal entities. It should be mentioned that in accordance with the Investment Code of the Republic of Belarus, under the commercial foreign organizations is defined the legal entity of the Republic of Belarus in the authorized capital of which foreign investment accounts for 100 per cent; Ordinary partnerships (parties of the treaty on joint activities) Economic groups

For branches, representative offices, separate divisions of legal entities of the Republic of Belarus, which have separate balance sheet and a bank account with the granting of the right to dispose of such account to officials of the separate divisions. For tax purposes under the definition of individuals are understood: -

The citizens of the Republic of Belarus The citizens of foreign countries Persons without citizenship.

WWW.INVESTARBY.COM

Foreign organizations have a tax liability only for activities that are carried out in the Republic of Belarus, or for income from sources in the Republic of Belarus and for property located on the territory of the Republic of Belarus. In the Republic of Belarus there are established republican taxes, dues (duties) and local taxes and fees.

10.1 Republican Taxes Republican taxes are the taxes, dues (duties) that are established by the Tax Code or by the President of the Republic of Belarus and considered to be mandatory for payment on the territory of the Republic of Belarus. Table â&#x20AC;&#x201C; Republican Taxes Type of tax

Payer

Subject of Taxation

Tax rate, %

Value Added Tax (VAT)

- organizations;

- revenues from sales;

- 0%;

- individual entrepreneurs;

- import into the territory of the TC

- 10%;

- individuals, for the goods imported into the territory of Custom Union. Excise tax

- 20 %; - 9,09; 16,67; 0,5; 24 %.

- organizations;

Realization of excisable goods - in absolute - individual - import of . excisable goods amount entrepreneurs; per physical - individuals, for unit of the goods imported excisable into the territory of goods; Custom Union. - Interest from . the cost of excisable goods

WWW.INVESTARBY.COM

Tax on profits

- organizations;

- gross profit; -Dividends and similar income

- 24% overall rate; - 10%; - 5%; - 12%.

Tax on income - Foreign of foreign organizations, organizations profiting on the territory of Belarus

- fee for transportation freight forwarding services - interest (coupon) income on debt

- 6 %; - 10 %; - 12%; - 15%;

- royalties;

- 5%.

- dividends; - proceeds from the sale of goods; - revenues from concerts and entertainment events; - income in the form of penalties (fines, penalties; - revenue from the provision of guarantees and sureties; - revenues from the alienation of immovable property, businesses, securities, shares; - revenues from services; - revenues from immovable property transferred in trust. Income tax

Individuals

- personal income

- 12% overall rate;

WWW.INVESTARBY.COM

- 9%; - 15%; - fixed amounts. Property tax

organizations;

- buildings and constructions - 1%;

- individual s

- 0,1%; - 2%.

Land tax

- organizations;

- land

- 0,015 â&#x20AC;&#x201C; 12%;

- individual s

- fixed rates. Environmental - organizations tax - individual entrepreneurs

- emissions - Discharge of sewage, - Storage and disposal, - Processing, transportation of petroleum and petroleum products - Production and (or) import of goods containing more than 50% of volatile organic compounds,- production and (or) the import containers after use to form harmful waste

- fixed rates, with coefficients of 0.006 to 15.

Tax for the extraction (removal) of natural resources

- extraction (removal) of natural resources according to the list

- fixed rates.

- - organizations; - individual entrepreneurs.

WWW.INVESTARBY.COM

10.1.1 Personal Income Tax A personal or individual income tax is levied on the total income of the: 1. Individuals who are the tax residents of the Republic of Belarus, receive income from the sources of Belarus and outside 2. Individuals who are tax non-residents of the Republic of Belarus, receive income from the sources of Belarus. There are several types of income, not taxable by this tax (the cost of permits, except for the tourist, spa and wellness facilities, paid for by the social insurance funds, as well as from the republican and local budgets, and all kinds of social benefits, with the proceeds from the sale of personal property (real estate - every five years, and vehicles - once a year), revenues from sales of products produced on private plots, etc.). From the individuals income tax is levied at a rate 12 percent. Payers may use the standard, social and other tax deductions. In determining the amount of the tax base payer is entitled to receive the following standard tax deductions: 

At a rate 64 euro for each month of the year concerning the income that is not more than 390 euro a month;



At a rate 18 euro for each child under the age of 18 or (and) each dependent for each month of the year;



At a rate 90 euro for each year for the following categories of the payers: veterans of wars, disabled groups I and II of all types of disabilities.

Payer is entitled to receive social tax deduction: 

At the amount paid during the year for education or training of a family member in the educational institutions of the Republic of Belarus in case of obtaining the first higher or specialized secondary education;



At the amount not exceeding four base units (33 euro) for each month of the tax period, paid as premiums under voluntary life insurance and supplementary pension, made for a term not less than five years as well as under voluntary insurance for medical costs.

10.1.2 Profit Tax Payers of profit tax are legal entities of the Republic of Belarus, foreign legal entities and international organizations that are operating in the Republic of Belarus through the representatives, partnerships, business groups. WWW.INVESTARBY.COM

Taxable profit is defined as total revenue from sales of goods (works, services), other property (including fixed assets, material assets, securities), property rights and income from non-sales transactions that are reduced by the amount of expenditure for these operations. Profit tax rate is 24 per cent. Tax incentives in the form of lower tax rates are set by law for: 

Organizations engaged in the production of laser and optical equipment, whose share of this technology in terms of value in their total production is at least 50 percent (pay tax at a rate of 10 per cent);



Those on the list of high-tech organizations, approved by the President of the Republic of Belarus (the tax rate is reduced by 50 per cent).

From taxable profit shall be deducted the amount of revenue to finance capital investments for production purposes and housing, as well as to repay bank loans obtained and used for these purposes. From profit tax are exempted: 

Organizations where more than 50 percent of workers are disabled;



Organizations operating an roadside service for five years from the date of commissioning of such facilities;



Other organizations, specified by the government.

10.1.3 Tax on foreign legal entities not engaged in commercial activities in Belarus through a permanent representative office Foreign legal entities not engaged in commercial activities in Belarus through a permanent representative office are obliged to pay income tax. Tax rates: 

freight in connection with the implementation of international traffic, as well as provision of freight forwarding services - at a rate 6 per cent;



income from debt of any kind - 10 percent;



dividends and income from the sale of shares in the share capital (stocks, shares) organizations in the territory of the Republic of Belarus - 12 percent;



others – 15 percent.

WWW.INVESTARBY.COM

10.1.4 Value Added Tax (VAT) Value added tax payers are legal entities of the Republic of Belarus, foreign legal entities and international organizations, ordinary partnerships, economy groups, individual entrepreneurs, as well as organizations and individuals, involved in the transfer of goods across the customs border of the Republic of Belarus in accordance with the laws of the Republic of Belarus. The amount of tax payable by the payer to the budget, defined as the difference between the total amount of tax calculated for the tax period and tax deduction. If the tax deduction exceeds the total amount of tax a taxpayer fails to pay, and the difference between the amount of tax deductions and the total amount of tax deducted in the next tax period. Nomenclature of turnover on sale of goods (works, services) in Belarus, as well as goods being imported to the customs territory of Belarus which are tax exempt, is specified by the applicable legislative acts. Are not recognized as subject to VAT: 

Amounts received by the competent authorities for legal actions committed in providing organizations and individuals of certain rights (state fee, patent fees, consular fees, stamp duty), payments to the budget or in the state budget funds;



property contributed as payment (deposit) to the statutory fund established by the organization's founding documents;

the amount of rent transferred into the budget received from the lease, including finance lease (leasing) of the whole enterprise as a property complex that is in the state ownership. Taxation is subject to the following tax rates:  The rate is 0% applies for: Export goods; Works (services) on tracking, shipment, reloading and similar works (services) directly related to sale of exports; Export transportation services, including transit carriage, as well as export works (services) on production of goods from tolling raw materials. 

The process of 0% rate application is defined by the President of the Republic of Belarus.  A lower rate of 10% applies for: Sale of crops (except flowers, ornamental plants) and store cattle , fish and bee farming produced in Belarus;

WWW.INVESTARBY.COM

100

Import and (or) sale in the customs territory of Belarus of food and goods for children as in the list established by the President of the Republic of Belarus.  Rate of 20% applies for: Realization and import into the territory of Customs Union of other goods and services which are not applied the rates at 0 and 10 %. In addition, the turnover of sales of goods (works, services) at regulated prices (tariffs) subject to tax, levied at the rate of 9.09 and 16.67 per cent. There is a list of goods that are exempted from VAT: medicine, medical equipment, medical devices, veterinary and health services, according the list approved by the President of the Republic of Belarus; services for carrying of children in day care centers, educating children and adolescents in the groups, clubs and studios, music schools and specialized training and sports facilities; education services relating to the educational process; services in the field of culture and art, according to the list approved by the President of Belarus; banking and insurance services, communication services, provided for legal entities. The following groups of products are exempted from VAT while importing into the territory of Belarus: 

Vehicles in accordance with the list approved by the President of the Republic of Belarus;



goods intended for official use by diplomatic missions and consular institutions of foreign countries or for the personal use of diplomatic and (or) administrative and technical staff of these offices and agencies, including staying with them their families (if they are not citizens of the Republic of Belarus) international organizations and their missions, diplomatic mail;

10.1.5 Excise tax Excise tax payers are the organizations, individual entrepreneurs, producing excisable goods and importing these goods into the customs territory of the Republic of Belarus and realizing them, as well as individuals that are entrusted with the obligation to pay excise duties levied on goods imported into the customs territory of the Republic of Belarus. Excise tax levied on the following goods: 

Alcoholic beverage WWW.INVESTARBY.COM

101



Beer



Non-food alcohol containing products



Tobacco



Minibuses and cars, including converted into trucks



Motor gasoline, diesel fuel, biodiesel fuel, marine fuel, gas, LPG and compressed natural gas fuel used as motor fuel;



Oil for diesel and (or) the carburetor (injector) engines

The Republic of Belarus has unified rates of excise tax for goods manufactured excise payers, and for goods imported excise payers into the customs territory of the Republic of Belarus and (or) sold in the customs territory of the Republic of Belarus. Excise tax rates are set in Annex 1 to the Tax Code of the Republic of Belarus. Alcoholic beverages and tobacco products intended for sale shall be marked with excise stamps. Excise taxes are not levied on excise goods exported outside the Republic of Belarus. When excisable goods are used as a raw material for the manufacture of finished products on which excise taxes have already been paid on the territory of Belarus, the amount of excise tax payable is reduced by the amount of excise tax on the used raw materials.

10.1.6 Real EstateTax The payers of the property tax are legal entities, foreign legal entities and international organizations, ordinary partnerships, economy groups and individuals. The tax base is the following: buildings, constructions, including those under construction, that are owned or are in possession, under economic or operating control of organizations – tax payers: buildings and constructions, including those under construction, including residential property, garden houses, dachas, residential premises (flats, rooms), household outbuildings owed by individuals – tax payers; buildings and constructions leased by individual entrepreneurs that are tax payers in accordance with the applicable legislation. The annual tax rate is the following: -

for organizations – 1 %;

WWW.INVESTARBY.COM

102

for individuals including those registered as individual entrepreneurs, as well as for garage cooperatives and cooperatives running parking areas, horticultural partnership â&#x20AC;&#x201C; 0,1%; for organizations owing, having under economic and operating control above-level fixed assets under construction and engaged in construction of new objects â&#x20AC;&#x201C; 2% of the value of the above-level fixed assets under construction, excluding fixed assets financed by the budget and housing projects.

Property tax is not levied on the buildings and socio-cultural, buildings and structures of organizations belonging to the Society of Disabled People and buildings intended for environmental protection and environmental improvement, accommodation (apartment, room) apartment buildings owned by individuals on the right property and buildings (except for designated and (or) used in the prescribed manner for doing business), owned by pensioners and the disabled, etc.

10.1.7 Land Tax Land fees charged annually in the form of either land tax or rent for land plots which belong to the state and lessors being rural, town or district executive and administrative bodies. The amount of land tax payable is decreased by the amount of tax calculated proportionately to the relative revenue received from carrying out residential premises construction works (modernization) and modernization of buildings into residential ones in the total amount of revenue generated from sale of goods (works, services) for the respective (reporting) quarter net of VAT. Investors-developers who pay land tax are exempt from land tax on land plots given under construction of a residential building for the period of construction. The rate of the land tax is determined based on the quality and location of the land plot and is dependant on the results of operating and other activity of the land tenant, land user and land owner. The rate of the land fee for agricultural lands for farming purposes are determined based on the cadastral valuation. The land tax is established in the form of annual fix payments per hectare of land area which are determined on the basis of rates specified in the law of the Budget of the Republic of Belarus for the next financial year. Land tax is not levied on contaminated lands, reserves, lands of historical-cultural purpose, land of organizations engaged in social and cultural activities, as well as plots

WWW.INVESTARBY.COM

103

of some categories of citizens (war veterans, pensioners, disabled persons and persons affected by the Chernobyl accident, large families).

10.1.8 Ecological Tax The payers of the ecological tax are organizations and individual entrepreneurs. The tax base is: 

The volume of natural resources used (recovered, extracted)



The volume of oil and oil products processed by entities engaged in processing of oil and oil products



Volumes of pollutant emissions (discharges)



Oil and oil products relocated in Belarus



Residual products placed in waste disposal objects



Volumes of produces and (or) imported plastic and glass containers, paper and carton package and other goods which ordinate waste as a result of loss of their consumer properties of harmful environmental impact and that requires systematic organizations for collection, deactivation and (or) use; volumes of imported goods packed in plastic or glass containers, paper or carton packaging.

The volume of produced and imported goods containing more than 50% of volatile organic compounds. Tax rates for use of mineral resources are set by the President of the Republic of Belarus, except for payments for oil and oil products processing by entities engaged in oil processing. Ecological tax exemptions are established by the Tax Code of the Republic of Belarus. Environmental taxes are not levied on: 



Emissions of pollutants into the air by mobile sources;



Ddischarge of wastewater discharged into the environment rain water system with a built-up area on which they were formed as a result of rainfall;



disposal of wastes, such wastes of the population, in the amount of burial of such waste and less than 50 tons per year;



imports of plastic, glass containers, packaging based on paper and cardboard used for packing of goods sold for export, provided separate accounting

10.1.9 Severance Tax The payers of the severance taxes are organizations and individual entrepreneurs. Tax for the extraction (removal) of natural resources subject to the actual volume extracted

WWW.INVESTARBY.COM

104

particular types of natural resources according to the list of the Tax Code of the Republic of Belarus : 

Oil gas extraction



extraction of soil, sand and gravel sand used for production of activities on overcoming the consequences of the Chernobyl accident;



extraction of groundwater and surface water for fire-fighting water supply

 extraction of underground water used for geothermal energy. Severance tax rates are set by the Tax Code of the Republic of Belarus, depending on the types of natural resources.

10.2

Charges levied in the Republic of Belarus (Republican)

10.2.1 Charges for import of ozone-depleting substances into the territory of Belarus The payers are organizations and individual entrepreneurs. The subject of taxation for import of ozone-depleting substances into the territory of Belarus is considered to be the import of ozone-depleting substances into the territory of Belarus, including those contained in the products.

10.2.2 Charge for transit of vehicle automobiles from foreign countries on public roads of the Republic of Belarus The payers are organizations and individuals – the owners of vehicles of foreign countries who use public roads of the Republic of Belarus. The objects of taxation are the automobile vehicles of foreign countries: -

entering the territory of Belarus; transit moving on the territory of Belarus.

10.2.3 Charges for issuing permits to travel on the vehicles of

the Republic

of Belarus on the territory of foreign countries The payers are organizations and individuals – the owners of vehicles of the Republic Belarus, carrying out international road transport of passengers and cargo.

WWW.INVESTARBY.COM

105

The object of taxation is the obtainment by the payer a permit to travel on the vehicles of the Republic of Belarus on the territory of foreign countries.

10.2.4 Offshore Levy The offshore levy payers are Belarusian organizations and entrepreneurs. Offshore levy base is the following: -

Funds transferred by residents of Belarus to non-residents of the Republic of Belarus registered in an offshore zone or other persons under obligations to the resident or to an account opened in an offshore zone Settlement of non-cash obligations to a non-resident of Belarus registered in an offshore zone Transfer of property rights or obligations due to replacement of persons in commitments where the parties are residents of Belarus and non-resident of Belarus registered in an offshore zone.

10.2.5 Stamp Duty The stamp duty payers are organizations and individuals. Stamp duty is imposed for: -

Transmission and reception of simple bills and bills of exchange, their copies and copies of bills of exchange in order to change the type of ownership or other rights on them; presentment for payment drawn (issued), endorse or avalized in Belarus simple bill or bill of exchange, its copies, details of which are not represented in the RUE "Republican Central Securities Depository.

10.2.6 Consular Fee The consular fee payers are organizations and individuals who apply for the commission of legal actions, including the provision of certain rights or the issuance of certain documents in the diplomatic and consular missions of the Republic of Belarus, as well as the main Consular Department and the Consular offices of the Ministry of Foreign Affairs of the Republic of Belarus in the Republic of Belarus.

WWW.INVESTARBY.COM

106

10.2.7 State taxes The state tax payers are organizations and individuals that: -

apply for the commission of legal actions, including the provision of certain rights or the issuance of certain documents in authorized state bodies, other authorized organizations, officials or private notaries; sued (the debtors) in the ordinary courts or arbitration courts, if this court decision was not in their favor, and the plaintiff released from state duty in accordance with this Code or the acts of the President of the Republic of Belarus.

10.2.8 Patent fees The patent fees payers are organizations and individuals that appeal to the state agency, "National Intellectual Property Center" for the legally significant acts or persons acting on their behalf.

10.3 Local taxes and duties Local taxes and duties are established by local administrations and municipalities. Local self administrations may establish a range of local taxes and duties. These taxes are required to pay only for certain areas. The list of local taxes and duties is set by the Tax Code of the Republic of Belarus. The list includes: -

Service tax (tax rates can not exceed 5 percent of the tax base); Tax for owning dogs (the tax rate shall be established depending on the height at the withers; Tax on the development of the territories (the tax rate will not exceed 3 percent of gross income (profit) remaining at the disposal of the payer after the payment of income tax (for individual entrepreneurs - the income tax); Tax on harvested products (tax rates can not exceed 5 percent of the value of harvested products (mushrooms, berries, etc.); Resort fee (tax rates can not exceed 3 percent of the cost of spa vouchers).

Local councils in accordance with the Tax Code of the Republic of Belarus determine the payers, objects of taxation, tax rates, tax period, calculation, procedure and terms of payment of local taxes and fees, as well as the timing of the tax authorities of tax returns (calculations) for local taxes and levies.

WWW.INVESTARBY.COM

107

Local councils in accordance with the laws of the Republic of Belarus may establish tax exemptions on local taxes and fees.

10.4 Tax incentives. Types of government support Tax incentives are incentives provided to certain categories of taxpayers in accordance with the Code and other acts of tax legislation compared with other payers, including possibility not to pay taxes, dues (duties), or pay them a smaller amount. Tax incentives are established in the following forms: -

exemption from taxes, dues or fees; additional tax deductions or rebates that reduce the tax base or the amount of tax, duty; lower tax rates in comparison with conventional; compensation of the amount of paid tax, dues, fees;

Tax incentives are established by the President of the Republic of Belarus and the Tax Code.

10.5 Special Tax Regimes In Belarus, for certain categories of taxpayers (small businesses, individual entrepreneurs engaged in retail trade (at work and providing public services), agricultural organizations and others) are established special tax regimes. The special tax regimes are: 

Unified tax for producers of agricultural goods;



Single tax on individual entrepreneurs and other individuals;



Unified tax on business entities subject to simplified taxation;



Tax on the gambling industry;



Tax on income generated by lottery sales;



Taxation of electronic interactive games;



Unified tax on agricultural producers;



Unified tax on agricultural tourism In accordance with the applicable legislation producers of agricultural products have the right to pay the unified tax. The rate of unified tax for organizations

WWW.INVESTARBY.COM

108

producing agricultural products is 2% of gross revenues from the sale of goods (work, services), other property and income earned on non-operating transactions.

Single tax on individual entrepreneurs and other individuals is applied by individual entrepreneurs that carry out retail trade of goods that correspond the list of groups of goods, and provide consumer services (works) in accordance with the list of services (works). Tax rates are determined by regional and Minsk municipal Council of Deputies in terms of base tax rates determined by the applicable legislation. Tax rates depend on: 

The settlement where the activities are carried out;



The place of the business within locality;



Time of working;



Other.

The tax is paid at a rate of 8 percent of gross revenue. For organizations and individual entrepreneurs that pay VAT, single tax rate under the simplified system of taxation is set at 6 percent. The tax rate of 3 per cent is provided for organizations and individual entrepreneurs that export goods outside the Republic of Belarus. Organization with the average number of employees for each month not exceeding 15 persons and individual entrepreneurs, the gross revenues of not more than 1 billion rubles a year, retailers and (or) providing catering services, may be used as tax base, gross income calculated as the difference between gross revenue and purchase price of goods sold for the tax period. The tax rate for such organizations is set at 15 per cent of gross income. The subjects of the tax on the gambling industry are gaming tables, slot machines, sweep stake cashier, bookmaker cashier. Tax rate is 1 Euro per unit of the object of game equipment. Tax on income generated by lottery sales is determined as the difference between the proceeds from organizing and performing the lottery and the amount of the accrued prize fund. Tax rate is 8%. Taxation of electronic interactive games. The tax base is revenue generated from holding electronic interactive games. The base is determined as the difference between amounts of revenue from holding electronic interactive games and composed winning fund. The tax rate on income from holding electronic interactive games is 8%.

WWW.INVESTARBY.COM

109

Taxation of craft activity is carried by individuals engaged in craft activities. Tax rate is set at one basic amount for the calendar year. Tax on services in the field of rural tourism is used by individuals and private farms engaged in service activities in the field of rural tourism. Tax rate is set at one basic amount for the calendar year.

10.6 The system of agreements to avoid double taxation About 64 countries have signed the agreements on Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital This list includes - Austria, Armenia, Azerbaijan, Bahrain, Belgium, Bulgaria, Canada, UK, Canada, Chile, China, Denmark, Egypt, Israel, India, Iran, Ireland, Italy, Japan, Kazakhstan, Qatar, Cyprus, China , Democratic People's Republic of Korea, Kyrgyzstan, Kuwait, Latvia, Lebanon, Libya, Lithuania, Macedonia, Malaysia, Moldova, Mongolia, Netherlands, Norway, United Arab Emirates, Oman, Pakistan, Poland, Romania, Russia, Saudi Arabia, Slovakia , Syria, USA, Tajikistan, Thailand, Turkey, Turkmenistan, Uzbekistan, Ukraine, Finland, France, Germany, Croatia, Switzerland, Sweden, Czech Republic, Estonia, Yugoslavia, South Africa, Japan. In accordance with international law, International Agreements have priority over the laws of the countries participating in International Agreements. The Regulations of the Agreements, as a rule, apply to taxes on income, corporate profit tax, income tax on individuals, real estate tax in the Republic of Belarus and on the income tax (revenue) organizations, income tax from the citizens. The Agreement sets out certain features, and more preferential treatment in taxation of these types of income and assets. Legislation establishes the order of application of international agreements on avoidance of double taxation, Decree of the Ministry of Taxes and Dues of the Republic of Belarus approved the Regulations on the application of international treaties of the Republic of Belarus on tax matters, completion and submission of tax returns on income of foreign organizations that are not operating in the Republic of Belarus through the permanent representative office. www.minfin.gov.by

WWW.INVESTARBY.COM

110

11.

INFRASTRUCTURE

Due to a dense network of highways, railroads and airlines, Belarus is closely integrated into the European transport infrastructure. Numerous and reliable means of communication provide quick and smooth delivery of passengers and cargo. Energy services, water supply, electricity and postal services are always ready to serve to the customers.

11.1 Transport Perfectly developed transport infrastructure creates solid foundation for the delivery of goods and services around Belarus. In the Republic are highly developed network of roads and railways. The public transport system operates perfectly. Trains and buses run frequently and on schedule. Minsk subway - is the first and the only underground railway network in the country.

11.1.1 Road Network Belarus has established an extensive network of roads, which allows year-round communication with all the localities. The length of the road network is over 81 thousand kilometers. Highway M1/E30 Brest-Minsk-Russian border (592 km) is the continuation of the European highway Cork - London - Berlin -Warsaw. Road Kaliningrad - Kaunas - Vilnius - Minsk - Gomel crosses Belarus from northwest to southeast and provides transportation of goods to the largest seaports. The largest highway, stretching from St. Petersburg to Odessa through Vitebsk, Orsha, Mogilev and Gomel, links the north-western region of Russia and the Scandinavian countries with Ukraine and Black Sea ports. Important route Minsk - Grodno - Gdansk is the shortest connection of the northern part of Western Europe through the seaport of Gdansk in Poland with Belarus, Russia and Ukraine.

11.1.2 Railways The Belarusian Railway is one of the key links in the transport sector of the country and plays an important role in the diversification of the economy of the Republic of Belarus.

WWW.INVESTARBY.COM

111

Ticket sales for the Belarusian Railways is fully automated and is implemented through the ASU "Express". Passengers have opportunity to buy tickets to any station on the railway network of the Commonwealth of Independent States and Baltic countries at 165 points of sale at the stations of the Belarusian Railway. Tickets sale technologies are permanently improved. International ticket offices are opened in fourteen cities of the republic: Minsk, Orsha, Molodechno, Baranovichy, Luninets, Grodno, Brest, Gomel, Mogilev, Vitebsk, Polotsk, Soligorsk, Osipovichy, and Bobruisk. Online booking of tickets is organized. In international transport timetables envisaged 59 trains running of the formation of the Belarusian Railways. Major transshipment facilities are sending deliveries to over 70 countries. Belarusian Railways link Belarus with Amsterdam, Berlin, Warsaw, Prague, Bratislava, Varna, Bucharest, Vienna, Sofia, Budapest, Constanta, as well as capital and administrative center of Russia, Ukraine, Moldova, Lithuania, Kazakhstan. Advantageous geographical location of the Republic of Belarus, which is a natural bridge between Russia and Western Europe, allowed the Belarusian railway to occupy a worthy place in the system of international economic integration to become a reliable partner of leading European powers in the provision and development of efficient transport links to the European continent. www.rw.by

11.1.3 Air Communication Nowadays Belarus has 7 well-equipped airports including 4 international ones: National Minsk Airport, Airports Minsk-1, Gomel, Grodno, Brest, Mogilev and Vitebsk that carry out domestic flights, regular international flights to foreign countries, as well as charter passenger services. Airport Minsk-1 is designed to operate aircraft TU-134, Yak-42, AN-24, Yak-40 and the lower class, airports, Gomel, Grodno, Mogilev, Vitebsk - IL-76, TU-154, B-737, B -757 and the lower class, airport Brest - AN-124 (Ruslan), IL-76, TU-154, A-310-300, B-767200 and the lower class. Belarusian Airlines are represented by three airline companies: RUE «National Airline «Belavia», «Airport Gomelavia», and the largest Belarusian transport airline «Transaviaexport». «Transaviaexport» has over a dozen of transport planes IL-76 can easily bring cargo to any point of the globe. And the largest passenger airline BELAVIA

WWW.INVESTARBY.COM

112

connects Belarus with many large airports of Europe, America and Asia. Airline Belavia is a member of the International Air Transport Association (IATA), representing more than 220 airlines worldwide. Nowadays the air fleet of «Belavia» is equipped mainly with Boeing 737-500 aircraft, TU154, Tu-134A and AN-24, YAK-40, CRJ -100. Along with «Belavia», the second largest domestic passenger airline is «Gomelavia». The airline operates regular daily flights between Minsk and regional centers of the Republic: Gomel, Brest, and Grodno. The capital of our country is connected by regular air communication with the capitals and major industrial and resort towns of CIS states, capitals, major industrial and tourist centers of Western Europe, the Middle East. In accordance with the commercial agreements, the National Airline «Belavia» through Shannon, Warsaw, Vienna, Prague carries transportation of passengers to the U.S. (New York, Boston, Chicago) and Canada (Montreal and Toronto) .

From CIS regular flights to Minsk carry such Airlines as: Airlines Transcaucasia and Central Asia, AZAL, Armavia, UM Air, Turkmenistan Airlines. Airlines «Atlant-Union» operates regular flights from Moscow Airport «Vnukovo» to Minsk. The capitals of Belarus and Russia are connected by regular flights from Minsk-1 Airport and the Minsk-2 Airport to Moscow airports: Sheremetyevo, Vnukovo, Domodedovo. High political and economic stability in the country, consistent policy of the Government of the Republic of Belarus for the protection of the national air transportation market (including the lack of airlines- discounters) make the possibility of regular flights to our country more attractive. www.mintrans.by

11.2 Energy Energy supply is ensured everywhere, in all areas of the country. Fuel and energy complex (FEC) in the economy of any country is a crucial part in the operation and development of productive forces, higher living standards. And for Belarus, the country that meets deficit of its own energy, optimizing the development and functioning FEC – is one of the priorities of the legislative and executive authorities, all producers and consumer to ensure the competitiveness of products on the market. Fixed assets of fuel and energy sector accounts for 25% of manufacturing assets in industry. WWW.INVESTARBY.COM

113

Fuel and Energy Complex of the Republic of Belarus includes: production of peat and its processing, oil production and its processing; extensive network of gas pipelines, oil pipelines, production, transmission and distribution of electricity and heat. Volumes of fuel resources, annually extracted on the territory of the Republic (fuel peat, oil, landfill gas, wood, etc.) are at the level of 4,5-5,2 million tons. i.e, about 15% of primary energy needs. The republic has explored more than 9000 total peat area within the boundaries of industrial deep deposits of 2.54 million hectares from the original peat reserves of 5.65 billion tons. Currently the remaining geological reserves are estimated at 4.3 billion tonnes, which corresponds to 75% of the original. The development of a network of transmission and distribution pipelines is being carried on. Length of trunk gas pipelines â&#x20AC;&#x201C; is over 6 thousand kilometers. Gas transportation is provided by 7 compressor stations with total capacity of 710 MW. The distribution of gas is carried out from193 branch pipelines through the system of gas distribution networks by 122 distribution stations. The key areas of development in the energy sector of the economy of Belarus are the following: -

reducing energy intensity of gross domestic product; energy saving; imports of energy resources for the sustainable operation of existing generating capacity; partial deficiency of electricity and heat through alternative energy sources development of nuclear energy.

www.minenergo.gov.by

11.3 Water supply Belarus is rich in water resources. Resources of fresh groundwater are estimated at 49.6 million m3 on the territory of the Republic. More than 251 deposits with total reserves of more than 6 million m3/day have been explored. There have been developed over 147 fields, the annual extraction of about 3 million m3/day. Minsk, regional cities, large industrial enterprises are provided with supplies of fresh groundwater for the future. www.minpriroda.by

WWW.INVESTARBY.COM

114

11.3.1 Potable Water The Government of the Republic of Belarus has adopted a law on ÂŤDrinking water supplyÂť. The law establishes legal guarantees to meet the needs of individuals and entities in the drinking water in accordance with standards for drinking water and drinking water standards water consumption, industrial and economic bases of drinking water supply, government guarantees of reliability and safety drinking water supply; establishment of rights, duties and responsibilities of state agencies, and other legal entities and individuals in the area of drinking water, as well as responsibility for violations in the area of drinking water. The main source of centralized water supply in Belarus is the underground water, which quality meets the sanitary requirements, except for iron content and, in some cases, manganese. Almost all the cities of Belarus consume artesian water that is protected from pollution by artesian aquifers. Upper Proterozoic complex is used for water supply. Moreover, in Baranovichi and some other water utilities have been embraced research of Japanese Dr. Masaru Emoto about the memory of the crystal water filters. In the hall of filters constantly plays classical music, which positively influence on the water, and also creates a good mood of the employees. Before entering the water in to the water pipe the quality of water is being examined - it must correspond to the State standards, which indicate the maximum allowable concentrations for various pollutants. The main indicator of water quality is considered to be its effect on human health. Our drinking water corresponds to the stringent hygiene requirements, it is safe, has a favorable organoleptic properties. Quality control of drinking water carries a chemical-bacteriological laboratory of drinking water, which fully meets the criteria of the accreditation system of the Republic of Belarus, accredited to the requirements of STB ISO / IEC 17025. www.minpriroda.by

WWW.INVESTARBY.COM

115

11.3.2 Waste water disposal and water pollution control In the Republic of Belarus from January 2, 2006 were enacted Sanitary rules and regulations on "Hygienic requirements for protection of surface waters from pollution". They are intended to prevent diversion of wastewater that contain infectious agents of bacterial, viral and parasitic nature into the water. Sewage, hazardous according epidemiological criterion, can be discharged into water only after appropriate cleaning and disinfection. According to the statistics in the Republic of Belarus there are 259 municipal sewage treatment facilities. Wastewater treatment is necessary to maintain aquatic ecosystems in the long term Due to the modern means of sewage treatment, all of the many rivers and lakes of the country are suitable for swimming without risk to health. 11.4 Communication The social and economic significance of information and communication technologies (ICT) is growing rapidly. In Belarus approximately every fourth of households are equipped with computers. The high degree of dissemination of information and communication technologies in Belarus households is a good foundation for further development of private e-commerce. 11.5 Postal Services The field of postal service is an integral part of an industrial and social infrastructure of the Republic of Belarus and functions in its territory for satisfaction of requirements of citizens, state bodies, defence, safety, protection of the law and order of the Republic of Belarus, physical and legal persons in postal services. According to the Law of the Republic of Belarus «About postal service» the National operator of postal service - the Republican unitary enterprise of a postal service "Belpochta" (RUE "Belpochta") provides trouble-free work on rendering of services to the population in the territory of all republic. RUE "Belpochta" consists of: 6 regional branches and manufacture «the Minsk mail», branch «The node of special communication» and motor transportation manufacture, 117 regional nodes of postal service, 3763 offices of postal service (732 city, 2880 rural and 61 mobile). Postal service consists of a reception, processing, transportation, delivery to addressees of the written correspondence, parcels, remittances, distribution, forwarding and delivery of printing mass media, payment of pensions and grants.

WWW.INVESTARBY.COM

116

Besides, postal offices grant more than 40 kinds of not profile services: reception of various kinds of payments, dealer services in connection to networks of operators of a cellular mobile communication, granting of services of access to WWW Internet, bank services, mail advertising dispatch, a x-copying, delivery of the goods under catalogues, etc. One of strategic directions of development of system of non-cash payment and realisation of principe of «one window» in postal offices is granting to clients of maximum quantity of rendered services on devices of self-service - payment and information terminals. With the help of such devices payers can subscribe to newspapers and magazines, send an electronic remittance across Belarus, pay municipal and other services, issue and pay the order in Internet shop RUE "Belpochta" by themselves, without participation of the operator. There are more than 350 information terminals which function in postal offices for today. Introduction of devices of self-service has allowed to reduce turns in postal offices and to raise availability of given services. The Belarus postal service is in constant development. It improves habitual services and developes new, daily confirming the motto «Speed, reliability, availability». www.belpost.by

11.6 Healthcare 11.6.1 Medical Care The health care sector is supervised by the Ministry of Health through health care departments of oblast executive committees and the health care committee of the Minsk city council. The national-level health care institutions are subordinate directly to the Ministry of Health. In the Republic of Belarus the Health care system is affordable and provides the following services: -

free medical care in public health care facilities; medical care at public health institutions, nongovernmental organizations, public health and individual entrepreneurs engaged in medical activities, at their own expenses, corporate funds and other sources not prohibited by the laws of the Republic of Belarus; availability of medicines; measures for the sanitary-epidemic welfare of population WWW.INVESTARBY.COM

117

Aliens and persons without citizenship permanently residing in Belarus have the right to get affordable health care as well as the citizens of the Republic of Belarus. Aliens and persons without citizenship temporarily residing in the Republic of Belarus, have the right to obtain health care at their own expenses, expenses of legal entities, and other sources, not prohibited by the legislation of Republic of Belarus.

11.6.2 Health insurance In the Republic of Belarus there are compulsory medical insurance for foreign citizens and persons without citizenship temporarily residing in the Republic of Belarus, in case of providing emergency medical assistance by public medical institutions in case of sudden illness or accident. According the legislation of the Republic of Belarus, all the foreign citizens must take out health insurance. The contract of insurance can be purchased at the points of sale of Belgosstrakh immediately on arrival into the country or a foreign citizen can be insured in advance by his relatives or friends in Belarus. In the absence of an insurance policy by aliens and its refusal to conclude a treaty of obligatory medical insurance, it can be denied in passing through the state border of the Republic of Belarus www.belgosstrakh.by

WWW.INVESTARBY.COM

118

12.

EDUCATION AND RESEARCH

Education in Belarus – is one of the main priorities of state policy. The main objective of the national education system – is the formation of a free, creative, intellectual and physical development of personality. The country guarantees free accessible education. Recently, on the educational system have been allocated about 6% of GDP. The level of adult literacy and youth, the number of children in primary and secondary schools, the number of students in higher educational institutions of the Republic of Belarus is equal to the level of developed countries in Europe and America. Every third resident of the Republic is studying. According to the Human Development Report, prepared by independent international experts, Belarus is ahead of all CIS countries in terms of adult literacy (99.6%), and also has one of the world's highest literacy rate of youth (99,8% ). The national system of education and upbringing of the Republic of Belarus guarantees every citizen the right to receive education, which provides: -

development of a network of educational institutions of all forms of ownership, various forms of training and education, creation of conditions for general and vocational education according to national traditions, individual needs and abilities of students; access to free education in state educational institutions of general and initial vocational (vocational) education; On competitive basis, free vocational (specialized secondary), post-graduate education in public institutions, to obtain this level of education for the first time within the state education standards; partial or full cost of maintaining people in need of social assistance during their studying.

In accordance with Article 14 of the Law "On Education in Belarus", all public and private educational institutions in the territory of the Republic belong to the national education system of the Republic of Belarus, which includes: 

Pre-school education



General secondary education



Vocational training system

WWW.INVESTARBY.COM

119



Secondary specialized secondary education



Higher education



Post-graduate and doctoral courses



Advanced training and retraining



Self-education of the citizens. 12.1 Pre-school education and general secondary education

Learning of the curriculum at pre-school institutions starts at the age of 4-5. The education at general secondary school begins at the minimum age of six. Pre-school education is provided through pre-school institutions which differ in type and specialization: day nursery, day nursery kindergarten, kindergarten, kindergartenschool. Steps are being taken to develop new forms of preschool education with a short stay of children (family day care (kindergarten at home), games, seasonal playground). In the system of the Ministry of Education operate 3,893 (in rural areas - in 2643, and in urban areas - 1250) Public educational institutions with an enrollment of 1,145,131 pupils (in rural areas - 283,951 pupils in urban areas - 861,180 students). Particular attention is paid to the development of secondary education in rural areas. In rural areas is being developed the network of learning and teaching complexes "kindergarten-school" (currently of 857 educational institutions of this type of 830 (96,8%) are located in rural areas). Optimization of the network of educational institutions, organization of transportation students to their place of study allow to organize the educational process is predominantly in one shift. 12.2 Vocational training system and secondary specialized secondary education The priority is to ensure functional literacy through the development of a network of vocational and specialized secondary education. Consistently is carried out the work on transformation of institutions of vocational education into vocational high schools and vocational colleges, which, being multidisciplinary and multi-functional, provide citizens greater access not only to a specialized secondary, but and Higher Education. The system of Vocational and Technical Education of the Republic of Belarus includes 224 schools, 72 vocational schools, 61 vocational colleges, 91 vocational-technical high school. More than 114 thousand people are trained in vocational and technical

WWW.INVESTARBY.COM

120

institutions. On graduating, all graduates receive a professional and complete secondary education. About 70% of the graduates receive two or more professions. About 8 thousand of students receive secondary vocational education, integrated with vocational, 8% of graduates of vocational-technical schools are enrolled in colleges and universities.

12.3 Higher Education There are 407 students per 10 000 residents of Belarus. Yhis ratio is among the highest in Europe. Annually there are being created new specialties that require the needs of the contemporary labor markets and are closed those that lost their relevance to the economy. Over the past 10 years, the list of specialties of higher education updated up to 40%. The training of specialists is carried out on 354 occupations. Altogether there are 44 higher state owned educational establishments, and 12 private educational establishments. Every establishment occupies its particular niche in training of highly qualified staff for various branches of national economy. Classical and profile universities as well as institutes are classified as higher educational establishments of university type and provide a two level system of higher education with academic degrees of Bachelor and Master. For foreign citizens who have degrees of bachelors, master is organized training on individual educational program with a twoyear of studying. In addition Belarusian students participate in international scientific conferences and competitions. www.minedu.unibel.by

12.4 Advanced training and retraining Professional development, training and retraining of workers is carried out to ensure the effective functioning of organizations and industries, filling the labor market by managers and specialists with high professional qualifications and competence, a common culture, provide staff support to meet the needs of workers in professional development. Belarus has approved the Regulations ÂŤOn the professional development, training and retraining of workersÂť. The Regulation indicates that the training and retraining of WWW.INVESTARBY.COM

121

workers can be carried out only in educational institutions. And internships can be conducted in other organizations, regardless of their subordination and forms of ownership. It is necessary to have a special license to conduct training and retraining of workers. Advanced training relates to additional education and gives opportunity to improve knowledge and skills of workers at different levels of prior basic education and provides a certificate of advanced training of a standard pattern. Advanced training is carried out at least once every five years. Duration is for one â&#x20AC;&#x201C; two weeks. Employees have the right for advanced training both within the country and beyond. 12.5 Research Capacity There are about 300 research institutions in the country. Research and development in the field of technical sciences dominate in the Republic. Major human and financial resources are concentrated in the National Academy of Sciences of Belarus, ministries of education, health, industry, Belneftekhim. The National Academy of Sciences of Belarus is the highest state scientific organization of the republic, which is tasked to develop and co-ordination of national science and the formation of the state science and technology policy. A guaranteed source of funding for research and development budget is the republic Budget. About half of the costs of research and development is provided by the national budget. State scientific and technical policy is directed to priority support for the most promising scientific research, scientific and technological developments and innovative projects aimed at addressing socio-economic development. Control system research and development is based on the use of program-target methods. Training of researchers through postgraduate and doctoral studies, organization of scientific activity of students. There are provided conditions for qualification of applicants academic degrees and titles. 12.6 International Scientific Cooperation International scientific and technical cooperation is an integral part of the state science and technology policy. Republic of Belarus has signed over 30 bilateral and over 10 multilateral (within the CIS), treaties and agreements on cooperation in science and technology. It cooperates with international organizations such as the International Association for Cooperation with scientists from the New Independent States of the Former Soviet Union (INTAS), International Science and Technology Center (ISTC), International Center for Scientific and Technical Information (ICSTI), Joint Institute for Nuclear Research, European Organization for Nuclear Research (Switzerland), NATO Science Committee, SCOPES and others. WWW.INVESTARBY.COM

122

The priority in the field of science is the cooperation with Russia within the Union of Belarus and Russia and CIS countries. Have been implemented the first joint scientific and technical programs, financed from the joint budget of Belarus and Russia - "Laser Technologies of XXI Century" and "High component of engineering application, are being carried the programs" Supercomputer " and ÂŤBelRosTransgenÂť, new alliance of "Triada" and "Space" are being developed.

WWW.INVESTARBY.COM

123

13.

LIVING IN BELARUS

Due to high quality and safe living conditions, life expectancy in Belarus is one of the highest in the world. Virgin nature, variety of cultural activities and opportunities for leisure activities and opportunities attract not only tourists but also skilled personnel from abroad. In Belarus there have been created absolutely all the conditions for people who are used to having an active lifestyle.

13.1 Safety and Quality of Life Belarus is a country with high level of safety and quality of life. As a rule, the country receives high marks for the living conditions in both urban and rural areas on such key indicators as income level, state of health, climate and geographical location, political stability and security, as well as on personal freedoms, family and public life. In Belarus, anyone each person is guaranteed freedom of movement and security. Children go to school unaccompanied, and usually on foot.

13.2 Telephone, Internet and Television Today the population can choose among numerous providers of landline and mobile telephone, VoIP and Internet services. Velcom, MTS and Life are the major providers of mobile telephone services. All services are also available to foreign nationals who are living in Belarus temporarily. However, registration is compulsory (even for prepaid plans). Setting up Internet access is easy. State enterprise Beltelecom provides Internet access services, including under the trademark ÂŤByflyÂť, and also provides hosting services in their data centers (DPC). Multiple data centers are in Minsk and one - in each of the regional centers. With Cablecomâ&#x20AC;&#x2122;s analog cable connection, which is already installed in half of all Belarusian households, you can get approximately 40 television channels with any television set. An additional receiver is required for digital reception. As of June 25, 2010 coverage of the republic digital television broadcasting standard DVB-T is 83.08%. And of course you can also receive television channels via satellite. Anyone listening to the radio or watching television in Belarus must always pay reception fees. These fees WWW.INVESTARBY.COM

124

must be paid regardless of which programmes are watched or listened to or how they are received.

13.3 Insurance Voluntary insurance is carried out by a contract between the insurer and insured in accordance with the law. Conditions, under which the contract of voluntary insurance is signed, are determined in the rules of the appropriate type of insurance, approved by insurer or association of insurers and approved by the Ministry of Finance. The terms of the contracts of voluntary insurance of life and additional pensions cant be less that three years. Insurance rate by type of voluntary insurance is established by insurers in accordance with the Ministry of Finance. Compulsory insurances are as follows: Compulsory insurance of the constructions owned by citizens; Compulsory insurance of civil liability of vehicle owners; Compulsory medical insurance of foreign citizens and persons without citizenship, temporarily arriving or residing on the territory of Belarus; Compulsory insurance of the civil liability of carriers to passengers; Compulsory insurance for commercial entities engaged in real estate activities, for causing harm in connection with its implementation; Compulsory insurance with state support for agricultural crops, livestock and poultry; Compulsory liability insurance temporary (crisis) management in a case on economic insolvency (bankruptcy); Compulsory insurance against industrial accidents and occupational diseases; State insurance (provided in law as compulsory life insurance, health and (or) property of the citizens at the expense of the corresponding budget); other types of compulsory insurance, determined in the Act of the President of the Republic of Belarus. Insurance rate on the types of compulsory insurance is established by the President of the Republic of Belarus. WWW.INVESTARBY.COM

125

13.4 Public Transport The total length of the route network of Belarus on all types of regular bus service is about 226,000 kilometers. Daily regular buses carry more than 4 million passengers. Passenger service is carried out at 244 passenger terminals, including 98 bus stations. So it is not difficult to get anywhere in Belarus. There is a wide range of tickets and passes for public transport. The basic rule is that the longer a pass is valid, the cheaper it is.

13.5 Leisure activities Belarus is a country with a rich cultural heritage. If you like to get acquainted with the Belarusian culture closer, enjoy the music, you will not be disappointed. In most cities of Belarus there are theaters, museums, art galleries. Here you can watch performances of amateur teams. Belarusians are very fond of nature and often spend time outdoors. There are many parks and green zones in the towns of Belarus. Belarusians are also fond of sports. The country has many upscale sports facilities:



Ski resorts;



Sport facilities



Swimming pools

Annually in the country are carried a great amount of outdoor activities: 

mass sports events



festivals



fairs

WWW.INVESTARBY.COM

126

Belarusians are proud of their nature. Unique natural ecosystems are protected by the state: there are five major national parks, one of them is Belovezhskaya Puscha that is in the List of World Cultural Heritage by UNESCO. Restaurants and bars in Belarus. In Belarus there are a lot of restaurants and bars. In most Belarusian restaurants you will be offered menu in English. However, in small cafes and restaurants outside the capital, you will meet difficulties with the language. Good restaurants are popular, and it is recommended to book a table in advance. Your hotel will kindly do this for you. In Belarus there are many restaurants where you can try dishes of Belarusian or International cuisine. Many restaurants offer performances and live music. In Belarus there is developed night club industry. The nigh life of Minsk is especially exciting. Night clubs are opened the whole night. In most clubs there is pop-music. Also Minsk clubs can offer billiards and casino. Night clubs are popular among youth and adults.

13.6 Income and Cost of Living Belarusian households consist on average of 2.55 persons and have a monthly earned income of $530 per family, or $208 per person. In general, the country has the resources of the average household in 2009 amounted to Br1606, 9 thousand, or $ 575.4 at an average annual rate (in 2008 this figure stood at $ 660). Average per capita disposable resources totaled Br633, 7 thousand per month ($ 227, and in 2008 was $ 256). The lion's share of this amount - cash (94,3%). Value of consumed food produced in personal subsidiary plots, was 4.8%, and the benefits and subsidies - only 0,9%. The largest disposable resources recorded in the big cities - Br1, 65 million, the lowest in rural locations Br1, 29 million In the families of retirees per capita disposable resources in the month amounted to Br659 thousand or $ 236. WWW.INVESTARBY.COM

127

Traditionally, the greatest income per one household in 2009. recorded in Minsk Br1, 95 million, the lowest - in the Mogilev region Br1, 31000000. In the capital, the biggest income comes from entrepreneurial activity, the lowest - in the Vitebsk region. Maximum income from personal subsidiary farms have family in the Grodno region Br101, 4 thousand a month, minimum - in Minsk, Br49, 7 thousand. Total monthly household income of the lowest quintile (20 percent) of households (the poorest) amounted to little more than Br1 million, and in the top quintile - Br2, 16 million. Difference in cash income - Br909 thousand against Br2, 1 million. Salaries in the lowest 20 percent group was Br540, 5 thousand, and the highest - Br1, 486 million (in 2,7 times more). Surprisingly, income from the sale of agricultural products in the group of 20% of the richest families is greater than the poorest 20% (Br17, 6 thousand against Br10, 7 thousand). State benefits for families in the group of poorest 20% of families were Br56, 5 thousand per month ($ 20.2). Were received benefits in the group of the richest households, at $ 7.5 per month. Individual farms are popular regardless of the size of income: in the families of the lowest quintile of monthly income under this heading amounted to Br78, 2 thousand ($ 28), and among the richest 20% - Br70, 5 million ($ 25.2).

WWW.INVESTARBY.COM

128

14.

ATTRACTION OF INVESTMENTS

Promotion of investment in the Belarusian economy is an important element of economic policy in Belarus. Belarus â&#x20AC;&#x201C;is the only country in the CIS, which adopted an Investment Code. Government of Belarus has taken and continues taking several measures to improve the investment climate in the country: A list of legislative acts were adopted which provide additional benefits to the investors; Was simplified the procedure of granting land for construction; Was approved the privatization plan by the end of 2010; Were taken a decision to reincorporate all public enterprises by the end of 2013; Was introduced the declarative principle of registration of business entities; Was simplified the licensing of all activities; Were improved procedures relating to the design, construction and commissioning of facilities; Was simplified procedure of auctions and tenders; Was simplified procedure for the calculation and payment of several taxes, levies and customs duties; Were improved procedures for conducting economic insolvency (bankruptcy); Was created an automated information system of the unified state register of immovable property, rights and deals with it; Was created an automated information system of cadastre evaluation of lands www.investarby.com

14.1 Competent Authorities The National Investment Agency - www.invest.belarus.by is the main government agent for attracting foreign investment. It was established in 2006 and reformed in 2010. The most important and experienced government organization in the field of business relations with overseas business and attracting foreign investment into our country is the Belarusian Chamber of Commerce and Industry (BCCI) - www.cci.by

WWW.INVESTARBY.COM

129

In Belarus, operates several offices of international companies offering their services in the field of legal support of investments and investment consulting. KPMG - www.kpmg.by Ernst & Young - www.ey.com Sorainen - www.sorainen.com Uniter - www.uniter.by CHSH - www.chsh.com Coliers international - www.colliers.by Glimstedt - www.glimstedt.by

Almost all major Belarusian law firms have experience with foreign partners and are ready to provide services on legal support of foreign investment. Here are some of them: BKSlaw – www.bkslaw.by SPP - www.spplaw.by Vlasova Mikhel & Partners - www.vmp.by Argument – www.argument.by

Private company «Paternus Terra» in Belarus, has created a web site, which contains the most complete and current information about investments in Belarus. The database contains a thousand projects that are open for investments as well as lots of other useful information for the foreign investor - www.investar.by.

14.2 Service on Investment Promotion Foreign investors may apply to any of the companies listed in the previous section to obtain support. Investment company «Paternus Terra» also assists in attracting direct foreign investment in Belarus. Middle-sized and small foreign companies, as well as private investors are the main focus of our organization.

WWW.INVESTARBY.COM

130

Despite the fact that the amounts of investments of such companies are not dominant in the total amount, we appreciate that these private investors are willing to come to Belarus to engage in real activity, creating jobs. The company «Paternus Terra» has created a complete database on all the investment projects and offers of Belarusian enterprises. In addition to the work done, the company organizes business investment tours to Belarus. The structure of the visits offers meeting with engaged representatives of provincial or municipal and district administrations. Organization of business meetings with all engaged in attracting investments by business entities, representatives of the Free Economic Zone (SEZ) in a particular region. Also they are supposed to be introduced with the possibilities and conditions of business in small towns, visiting the most important sights and places of recreation. Our company may offer its services on investment advisory and property management. With our assistance you may: 

Receive a report about the presence of interesting places in the Republic of Belarus.



Receive report on possible sale or privatization



Obtain a list of facilities or land satisfying the conditions of your investment project.



Obtain assistance for adapting your investment project to the specific conditions and to a particular place, which involves getting the necessary information, if necessary, order the analytical and legal support from reputable consulting and law firms.



Obtain assistance in familiarization visit of the object of investment, which includes meeting, accommodation, organization of visits to objects of interest, organizing meetings with local officials, the organization of negotiations with engaged parties.

With the implementation of several development projects with the participation of our specialists, the company has created branches, which are directly engaged in the operation of finished objects. As a result, management and operation of commercial real estate has become another focus of our company.

WWW.INVESTARBY.COM

131

As a management company we can offer the following services: • • • • • •

Recruitment and settlement of tenants. Maintenance contracts with tenants. Operation of utilities building. Organize and conduct maintenance. Cleaning of premises and surrounding area. Organization of access mode.

www.investarby.com 14.3 Tax Incentives for Foreign Investors Incentives

Basis

Providing the land on lease without auction Phased execution of documents for allotment of land simultaneously with the construction