China-Belarus Industrial Park «Great Stone»: legal characteristics of doing business
as of January 2020
The China-Belarus Industrial Park «Great Stone» (hereinafter referred to as the Industrial Park) is a preferential zone created by an intergovernmental agreement between the People’s Republic of China and the Republic of Belarus in order to provide companies with favorable business conditions. The preferential treatment of the Industrial Park is the most profitable for doing business in the Republic of Belarus, which makes it one of the largest industrial parks in Europe.
The main goal of the Industrial Park was to create a modern international ecological city with the latest production, social and administrative structure to provide high-tech innovative industries with high export potential in such areas as electronics and telecommunications, mechanical engineering, e-commerce, data-storage and processing capabilities, implementation of research, development and technological works (hereinafter referred to as IRDTW), etc.
The Industrial Park is located in 25 kilometers from Minsk (the capital of the Republic of Belarus) on the territory of Smolevichsky district, Minsk region, what is not only one of its many advantages, but also fully meets the purpose of its creation. The unique natural complex of the Smolevichcky district is located near the National Airport «Minsk», the Berlin-Moscow highway, and railway tracks, it also has access to the port of Klaipeda at a distance of 500 km on the Baltic sea coastline.
Since 2012, the Industrial Park’s activities have been managed by the State institution «Administration of the China-Belarus industrial park «Great Stone»» (hereinafter referred to as the Park Administration).
Benefits and preferential entitlements
In addition to the favorable location, legal entities wishing to obtain the status of a resident of the Industrial Park can receive tax and other benefits and preferential entitlements that are guaranteed by the national legislation of the Republic of Belarus.
Tax benefits and benefits for mandatory payments, which are offered to residents of the Industrial Park, include full or partial exemption from taxes and mandatory payments on the following conditions:
|Tax or mandatory payment||Object of taxation||The time of exemption and procedures for payment of tax or mandatory payment|
|Profit tax||Profit obtained from the sale of goods (works, services) produced by a resident on the territory of the Industrial Park||Full exemption within 10 years from the first tax period in which the profit arose. At the end of the 10-year period and to 14.06.2062 – at a rate reduced to 50 %|
|Profit tax||Profit of foreign organizations which do not operate in the Republic of Belarus through a permanent establishment, and individual income taxes on dividends of founders (participants, shareholders, owners) of Industrial Park’s residents||0 % rate for 5 years, starting from the first calendar year in which dividends are payed.|
|Royalty income tax||Income of foreign organizations which do not operate in the Republic of Belarus through a permanent establishment, on royalties accrued by residents of the Industrial Park in the form of remuneration for know-how, license, patent, drawing, utility model, scheme, formula, industrial design or process||Rate of 5 % until January 1, 2027|
|Land tax||Landholdings on the territory of the Industrial Park||Full exemption until 14.06.2062|
|Real-estate tax||Objects located on the territory of the Industrial Park||Full exemption until 14.06.2062|
|Income tax||Wages for employees of the residents of the Industrial Park||Rate of 9 % until January 1, 2027|
|Mandatory insurance contributions||–||For nationals of the Republic of Belarus – 0% of the income exceeding the average monthly salary of employees in the Republic of Belarus; for foreign nationals – 0% of the total income|
|Import customs duties||Goods (technological equipment, commodity and materials) imported for the realization of investment projects that include the construction and equipping of Industrial Park facilities||Full exemption until 14.06.2062|
With regard to value added tax (hereinafter referred to as VAT), residents of the Industrial Park have the right of deduction for VAT when purchasing on the territory of the Republic of Belarus (paid when importing to the territory of the Republic of Belarus) of goods (works, services), property rights used to develop urban projects of the Industrial Park, construction, equipping Industrial Park facilities. This benefit is offered for the duration of the preferential treatment (until 14.06.2062).
In addition to the above-mentioned, the following benefits are also offered:
- Visa-free regime and the right to reside on the territory of the Republic of Belarus within 180 days in a calendar year without obtaining temporary residence permit – for persons involved in the realization of projects in the Industrial Park, founders, participants, employees of resident founders;
- exemption from payment of the State fee for issuing (extending) permissions to involve foreign labour and special work permissions for foreign workers of the Industrial Park’s residents, as well as a guarantee of reduced terms for issuing these documents; from payment of the State fee for registration and obtaining a temporary residence permit in the Republic of Belarus;
- the right to use foreign currency when making payments between residents of the Industrial Park and residents of the Republic of Belarus relating to currency transactions aimed at the design and construction of Industrial Park facilities;
- the right to conduct foreign trade operations with no regard for the restrictions laid down in the the legislation of the Republic of Belarus;
- the right to open accounts in foreign banks without obtaining permission from the National Bank of the Republic of Belarus;
- right to lease (sublease or get a private ownership of) a land plot on the territory of the Industrial Park;
- and other benefits.
The Park Administration also provides guarantees that the business conditions are stationary, these conditions include:
- stabilization clause on non-deterioration of operating conditions for a period of 10 years from the date of conclusion of the agreement on operating conditions in the Industrial Park,
- refusal to conduct reference checks with the consent of the Park Administration in each specific case;
- non-application of currency control requirements to residents of the Industrial Park;
- acceptance of the constructed object on the territory of the Industrial Park under the simplified procedure.
Residents of the Industrial Park
As a rule, legal entities of the Republic of Belarus registered on the territory of the Republic of Belarus can obtain the status of a resident of the Industrial Park, regardless of the country of investments nationality. However, the Park Administration may also grant resident status to persons who do not meet this requirement.
An important condition for registering a legal entity as a resident of an Industrial Park is the realization of an investment project on the territory of the Industrial Park.
An investment project is a reasoning of the economic feasibility, volume and timing of investments.
This project must meet a number of requirements:
- The economic activities that the resident plans to carry out must correspond to the activity directions of the Industrial Park. A full and detailed list of priority activity directions is available on the official website of the Industrial Park: https://industrialpark.by/o-parke/prioritetnye-napravleniya.html.
- The resident must declare a certain amount of investment:
- For investments over 3 years – at least 500,000 dollars or for investments over a longer period – at least 5 million dollars.
- Regardless of the period of investment – at least 500,000 dollars for the realization of the project for the implementation of research, development and technological works.
Procedure for registration of a resident of the Industrial Park
Registration of a legal entity of the Republic of Belarus as a resident of an Industrial Park is carried out by the Park Administration. The legal entity provides the following documents:
- an application for the status of a resident of the Industrial Park in the prescribed form;
- an original and a copy of State Registration Certificate of a legal entity and its constituent documents;
- a justification of the investment project approved by the head of the legal entity or other authorized person;
- a draft agreement on the conditions of activity in the Industrial Park, signed by the head of the legal entity or other authorized person.
The Park Administration considers the above-mentioned documents within 5 days, after which it makes a decision to register a legal entity of the Republic of Belarus as a resident of the Industrial Park or to refuse to register this entity.
Further, the resident of the Industrial Park and the Park Administration conclude an agreement on the conditions of activity in the Industrial Park. The date of conclusion of this agreement is considered as the date of registration of a resident of the Industrial Park.
Since 2015, 59 legal entities have been registered as residents of the Industrial Park.
If you still have any questions related to the terms and conditions of doing business in the China-Belarus Industrial Park «Great Stone», please contact us.