According to the GOB, priority sectors for FDI include pharmaceuticals, biotechnology, nanotechnologies and nanomaterials, high technologies, new materials, petrochemical and chemical industries, mechanical engineering and production of machines and equipment, transport and transportation infrastructure, civil engineering, production of construction materials, agriculture, food industry, tourism, and information and communication technologies. Potential investors should be aware, however, that following the February 2022 Russian invasion of Ukraine, independent Belarusian media claims approximately one-half of all IT workers in Belarus have left the country. Industry insiders expect the outflow of tech workers to continue.
The NAIP maintains a database of investment proposals at https://map.investinbelarus.by/en/investbase/offers/
The GOB offers various incentives and programs for FDI depending on the sector and region. If an investor enters into a specific investment agreement with the GOB, the agreement may accord preferential incentives and benefits including but not limited to:
- Allocation of a land plot without auctioning the right to lease it;
- Removal of vegetation without compensation during construction;
- Full VAT deduction for the purchase of goods, services (works), or property rights;
- Exemption from import tariffs and VAT on the imports of production equipment;
- Exemption from fees for the right to conclude a land lease;
- Exemption from duties for employing foreign nationals;
- Exemption from compensation for losses sustained by the agriculture and/or forestry industries due to the use of a land plot under the investment agreement;
- Exemption from land tax on land plots in government or private ownership, and from rent on land plots in government ownership, for a period starting from the first day of the month in which the investment agreement came into effect until December 31 of the year following the year in which the last of the facilities scheduled under the investment agreement started operations.
- In 2022 the Investment Law was amended to include a clause on providing investors who have concluded an investment agreement in Belarus with a guarantee against adverse changes in tax legislation.
Investment agreements concluded by the Belarusian Council of Ministers and with the permission of the President of Belarus may offer additional incentives and benefits not expressly provided for in legislation. Such incentives are provided on a case-by-case basis. In addition, preferential treatment is offered via a number of options described in detail in the “investor roadmap” at the following link: https://map.investinbelarus.by/en/preferential-treatments/
In 2022, Belarus did not develop or introduce any incentives for investment in green energy production or distribution.
Foreign Trade Zones/Free Ports/Trade Facilitation
Each of Belarus’ six regions has its own free economic zone (FEZ): Minsk, Brest, Gomel-Raton, Mogilev, Grodno Invest, and Vitebsk. The tax and regulatory pattern applicable to businesses in these zones is simpler and lower than elsewhere in Belarus. To become a FEZ resident, an investor needs to make a minimal investment of EUR 1 million, or at least EUR 500,000, provided the entire sum is invested during a three-year period, as well as engage in the production of import-substituting products or goods for export.
In 2005, Lukashenka signed the edict that established uniform rules for all FEZs. The list of main tax benefits for FEZ residents was revised in 2016 to include certain exemptions from the corporate profit tax (CPT), real estate tax, land tax, and rent on government-owned land plots located within the boundaries of the FEZ, among others. As of 2017, FEZ residents benefit from a simplified procedure of export-import operations. Resident enterprises are exempt from customs duties and taxes on facilities, construction materials, other equipment used in implementation of their investment projects. They are also exempt from customs duties and taxes on raw materials and inputs to the process of manufacture of the products sold outside the territory of the Eurasian Economic Union. Otherwise, FEZ residents pay VAT, excise duties, ecological tax, natural resource extraction tax, state duty, patent duties, offshore duty, stamp duty, customs duties and fees, local taxes and duties, and contributions to the Social Security Fund according to the general guidelines. For more details please visit:
Employing three percent of Belarus total workforce in 2022, Belarus’ six FEZs attracted 25 percent of all FDI, accounted for 22 percent of total exports, generated 18 percent of all industrial production, and contributed 5.6 percent of the country’s GDP.
Created in 2005 to foster development of the IT and software industry, the High Technology Park (Hi-Tech Park or HTP) is a “virtual” legal regime that extends over the entire territory of Belarus. A physical campus of the HTP is found in the eastern part of Minsk and a satellite campus is located in Hrodna. The legislation behind the HTP was updated in 2017 with the signing of Presidential Decree No. 8 “On the Development of the Digital Economy.” The decree extended the HTP preferences from 2022 until 2049 and expanded the list of business activities in which HTP residents may engage, including but not limited to software development; data processing; cryptocurrency and token-related activity; data center services; development and deployment of Internet-of-Things technologies; ICT education; and cybersports.
The HTP provides residents with beneficial tax preferences, including but not limited to exemptions from VAT and CPT on sale of goods or services; exemptions from customs duty and VAT on certain kinds of equipment imported into Belarus for use in investment projects; and immovable property tax and land tax benefits with regard to buildings and land within the boundaries of the HTP campuses. Following continued human rights abuses by Belarusian authorities in response to the protests and the February 2022 Russian invasion of Ukraine, independent Belarusian media claims approximately one-half of all IT professionals have relocated outside of Belarus. Lukashenka has repeatedly referred to the HTP as a destabilizing element of the Belarusian economy, which, in his estimation, does not adequately contribute to Belarus’ wellbeing and prosperity. Industry insiders expect the outflow to continue as the government continues its repressive tactics and as Western sanctions make doing business with international partners more difficult.
Foreign nationals who are hired on contract by an HTP resident company, who are founders of a HTP resident company, or who are employed by such founders are eligible for visa-free entry into Belarus for a stay of up to 180 days per year. Foreigners employed by HTP residents are not required to have working permit in Belarus and are entitled to apply for a temporary residence permit for the duration of their contract.
For more information on HTP, please visit: http://www.park.by/
The Great Stone Industrial Park is a special economic zone of approximately 112.5 square kilometers located adjacent to the Minsk National Airport. Before the launch of Western sanctions against Belarus and the start of Russia’s invasion of Ukraine, Great Stone resident companies had access to Lithuania’s Klaipeda seaport on the Baltic Sea. According to a master plan approved in 2013, Great Stone was planned to eventually include production facilities, dormitories and residential areas for workers, offices and shopping malls, and financial and research centers. Great Stone is primarily a Belarus-PRC joint venture, but any company – regardless of its country of origin – can apply to join the industrial park. Interested companies must submit either a business project worth at least USD 500,000, to be invested within three years from the moment of the business’ registration; submit a business project worth at least USD 5 million without any time limit for investment; or submit a business project worth at least USD 500,000 tied to research and development.
As of 2020, Great Stone residents received, among other preferences, certain exemptions on income tax, real estate and land taxes, and dividend income; the right to import goods, including raw materials, under a preferential customs regime; full VAT repayment on goods used for the design, building, and equipment of facilities in Great Stone; exemptions from environmental compensatory payments; and a preferential entry/exit program allowing Great Stone residents and their employees to stay in Belarus without a visa for up to 180 days. Great Stone residents are also exempt from any new taxes or fees through 2027 should the government make adverse changes to the tax code. Great Stone residents are permitted to purchase land in the zone whereas foreign land ownership in the rest of Belarus is highly restricted. The special preferential legal regime of Great Stone will be valid until 2062. The list of priorities planned for implementation in the park include projects in electronics, biomedicine, chemistry, and mechanical engineering.
Following the start of the war in Ukraine in late February 2022, several residents of Great Stone have terminated their operations in the special economic zone and departed Belarus.
For more information on Great Stone, please visit https://en.industrialpark.by
Small and medium-sized cities and rural areas in Belarus are defined by a 2012 presidential decree as settlements with populations under 60,000. Individual entrepreneurs and legal entities working in rural settlements of less than 2,000 people receive additional tax benefits and exemptions.
Since 2012, companies and individual entrepreneurs operating in all rural areas and towns enjoy the following benefits in the first seven years after registration: exemption from profit tax on the sale of goods, work, and services of a company’s own production; exemption from other taxes and duties, except for VAT, excise tax, offshore duty, land tax, ecological tax, natural resources tax, customs duties and fees, state duties, patent duties, and stamp duty; exemption from mandatory sale of foreign currency received from sale of goods, work, and services of a company’s own production, and from leasing property; no restrictions on insuring risks with foreign insurers; exemption from import tariffs on certain goods brought into Belarus that contribute to the charter fund of a newly established business. The special legal regime does not apply to banks, insurance companies, investment funds, professional participants in the securities market, businesses operating under other preferential legal regimes (e.g. FEZ or HTP), and certain other businesses.
Performance and Data Localization Requirements
The GOB does not mandate local employment. Foreign investors have the right to invite foreign citizens and stateless persons, including those without permanent residence permits, to work in Belarus provided their labor contracts comply with Belarusian law. The GOB often imposes various conditions on permission to invest and pursues localization policies. Other performance requirements are often applied uniformly to both domestic and foreign investors.
According to official Belarusian sources, licenses are not required for data storage. Law enforcement regulations governing electronic communications do not include any requirements specifically for foreign internet service providers. Beginning in 2016, internet service providers are required by law to maintain all electronic communications for a one-year period.
In October 2022, Lukashenka signed a decree entitled “On the interaction of telecommunication operators, telecommunication service providers and owners of Internet resources with bodies carrying out operational-search activities.” The decree obliges owners of internet infrastructure and resources to provide Belarusian security services with access to users’ information upon request.