Doing Business in «Great Stone»...

Doing Business in «Great Stone» 2016

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2 Doing Business in «Great stone» 2016

Introduction ...................................................................................................................................... 4 1. Description of the «Great Stone» ........................................................................................... 6

1.1. General Information ........................................................................................................... 6

1.2. Project development .......................................................................................................... 6

1.3. Project opportunities .......................................................................................................... 6

1.4. Management structure of the Industrial Park ..................................................................... 7

2. The Industrial Park resident status obtaining ....................................................................... 9 2.1. The terms of obtaining the industrial Park resident status ................................................. 9

2.1.1. Location ......................................................................................................................... 9

2.1.2. Investment project implementation .............................................................................. 12

2.2. Procedure for resident status obtaining ........................................................................... 12

2.2.1. Necessary documents preparation .............................................................................. 12

2.2.2. Documents consideration and decision making .......................................................... 13

2.2.3. Execution of the Contract on the Resident’s Activity Terms ........................................ 13

2.3. Resident status deprivation. Resident status loss. .......................................................... 14

3. The terms of land use ............................................................................................................ 16 3.1. The terms of land plots provision ..................................................................................... 16

3.2. Specific character of provision of land plots in the Industrial Park ................................... 16

4. Project construction within the Industrial Park ................................................................... 18 4.1. General requirements for participants of construction activities ...................................... 18

4.2. Construction authorizations ............................................................................................. 19

4.3. Procedure for execution of a design contract, a construction contract ............................ 19

4.4. Certain features of project construction within the Industrial Park ................................... 20

4.5. Financing of project construction ..................................................................................... 21

5. Terms of activities carried out by the Industrial Park residents and preferences .......... 22 5.1. Tax concessions .............................................................................................................. 22

5.2. Customs benefits ............................................................................................................. 23

5.3. Benefits in currency regulation ........................................................................................ 23

5.4. Benefits for the Industrial Park employees ...................................................................... 23

5.5. Other benefits and preferences ....................................................................................... 24

6. Preferential terms of activities in the territory of the Industrial Park by other persons (non-residents of the Industrial Park) .......................................................................................... 25

6.1. Benefits for investors of the Industrial Park ..................................................................... 25

6.2. Benefits for other persons carrying out activities in the territory of the Industrial Park .... 25

6.2.1. Tax benefits ................................................................................................................. 26

6.2.2. Exemption from import customs duties ........................................................................ 27

Content


6.2.3. Other benefits .............................................................................................................. 27

6.3. Benefits to branches created in the territory of the Industrial Park .................................. 28

7. Conditions and procedure for realization of certain benefits ............................................ 29 7.1. Exemption of imported goods from the imposed import customs duties and VAT .......... 29

7.1.1. Specific nature of import of the production equipment ................................................ 29

7.1.2. Specific nature of import of raw materials and other materials ...................................... 30

7.2. Deduction of the value added tax in full ........................................................................... 31

7.3. Obtaining a certificate of own production ......................................................................... 34

7.4. Obtaining the country of origin of goods certificate .......................................................... 35


Introduction

The first and the main question asked by the investor by getting acquainted with special economic zone is why this place for doing business shall be chosen. The answer lies in number of advantages and peculiarities of the economic zone.

The China-Belarus Industrial Park “Great Stone” is notable among all other economic zones for:

I. Tax and customs preferences – this regime of the Industrial Park presupposes unprecedented provision of tax and customs benefits for this region: - exemption from income tax, real-estate tax, land tax (full exemption for 10 years

and reduction by 50% for the next 10 years); - exemption of goods imported for the implemented investment projects in the

Park from customs duties and VAT imposed by the customs authorities; - VAT offset while purchase of goods aimed at implementation of investment

projects; - dividend tax and royalty privileges; - possibility to import and process raw materials not paying customs duties; - possibility of free movement of goods using the regimes of customs warehouses

and free economic zone. II. Industrial Park geographical and customs advantageous location:

- near transnational highway Moscow-Berlin; - 25 km far from Minsk, the capital of the Republic of Belarus, which provides

access to highly qualified human resources; - introduction to the Silk Road as a key platform; - free entrance to the Eurasian Economic Union market.

III. State policy and security safety; - nowadays the Industrial Park is the main investment project of the Republic of

Belarus and its fundamental legal principles and guarantees are stipulated by the Agreement between the Government of the Republic of Belarus and the Government of People’s Republic of China on China-Belarus Industrial Park;

- cooperation with the residents and investors is on the basis of “one stop” service.

IV. Infrastructure: - modern, highly developed infrastructure specially built for realization of

manufacturing investment projects in the Industrial Park and ability to include special needs of the specific investor;

- modern infrastructure of the warehouses and customs created by the biggest logistic company China Merchants Group helps to improve the movement of goods and conduct of export-import procedures;

- receipt of the land plots on lease or ownership at the discretion of the resident and investor.

V. Partnership advantages: - Joint “Industrial Park Development Company” maintains not only engineering

infrastructure construction but renders services on construction of objects necessary for the client;

- opportunity to do business together with the best companies. Thus, usually investor before making a decision shall get acquainted with the

detailed information but not only with general one.


This review is prepared to provide understanding of peculiarities how to do business in the Industrial Park on all stages of project implementation and to be an investor’s guideline at the beginning of its activities in the Industrial Park.


1. Description of the «Great Stone»

1.1. General Information Official title: The China-Belarus “Industrial Park “Great Stone”. Location: the Republic of Belarus, Minsk region, Smolevichi district. The Park is located not far from the international airport “Minsk”, railway lines, roads and transnational highway М1/Е30. The distance to Minsk, the capital of the Republic of Belarus, is 25 km. Total area: 9150,1 ha.

1.2. Project development On September 18, 2011 at the intergovernmental level an agreement on the China-

Belarus Industrial Park was signed and ratified by two countries on January 30, 2012. The Industrial Park in Belarus was created on the model of one of the successful projects - China-Singapore Suzhou Industrial Park (China).

On June 5, 2012 a special legal regime of the special economic zone is defined followed by tax and tariff concessions, other preferences and favorable conditions in order to stimulate investors’ interest in participating in the project.

On August 27, 2012 China-Belarus Joint Stock Company “Industrial Park Development Company” was established.

On September 26, 2012 the Administration of the China-Belarus Industrial Park was created;

On June 4, 2013 the government of the Republic of Belarus approved the master plan of the Industrial Park;

On June, 2014 official construction of the Industrial Park began; On August 31, 2015 President of the Republic of Belarus guaranteed maintenance

and establishment of the best legal regime to the Industrial Park compared with other privileged regimes in Belarus and EEU countries.

1.3. Project opportunities The Industrial Park “Great Stone” is an intergovernmental project aimed to create

favourable conditions for investment and trade cooperation. Advantageous location, privileged regime of doing business provides investors with beneficial approach to EEU and CIS markets. The main purpose the Industrial Park is to maintain favourable conditions to develop high-quality and innovative production and also its territories by attraction production companies applying preferential regimes of doing business.

The Industrial Park shall become the platform for projects developing the following spheres:

• hi tech production (electronics; pharmaceuticals, fine chemistry, biotechnologies, engineering, new substances);

• research and technology works in these spheres; • logistics.


The Industrial Park master plan determining strategy for functional territory development was approved. A significant part of its territory was rendered for development of its industrial and logistics facilities. Besides investors are provided with possibilities to pursue social projects. The Industrial Park infrastructure, in addition to manufacture facilities, includes objects of social, entertainment, recreation, shopping designation providing opportunities for investment in any business area.

1.4. Management structure of the Industrial Park Management structure of the Industrial Park has three levels:

The Administration of the Industrial Park is a governmental body developed by the

Government of the Republic of Belarus and controlled by it. The Head of the Administration of the Industrial Park presiding over the Administration is appointed to and discharged from the post by the President of the Republic of Belarus. The Head of the Administration of the Industrial Park has several Deputy Heads appointed to and discharged from the post by the Head order.

Structural subdivisions of the Administration of the Industrial Park are: • Department of economic entities and investors service; • Department of infrastructure development and functioning; • Department of legal and large-scale organization work.

Joint Industrial Park Development Company is a China-Belarus Joint-Stock Closed Company “Industrial Park Development Company” founded by Belarus and China companies.

The Intergovernmental Coordination Council

•Develops the Industrial Park general strategy;

•Solves issues of intergovernmental level.

The Industrial Park Administration

•Manages the Industrial Park activities;•Registeres Park residents; •Fulfils administrative functions.

Joint Industrial Park Development Company

•Provides land plots to ithe residents and nvestors;

•Constructs infrustructure, attracts investors, renders community facilities upon agreement with the government of the Republic of Belarus.


32,00%

30,86%

20,00%

13,71%

2,29%0,57% 0,57%

The distribution of the authorized capital of CJSC "Industrial Park Development Company"

China National Machinery Industry Corporation (SINOMACH)

Minsk Region Executive Committee

China Merchants Group

China CAMC Engineering Co., Ltd.

Harbin Investment Group

Minsk City Executive Committee


2. The Industrial Park resident status obtaining The investors irrespective to their residence shall enjoy equal rights to found and do

business in the Industrial Park. Thus, only legal bodies registered in the Republic of Belarus are to do business in

the Industrial Park as the residents. Consequently, foreign investors or private individuals – the residents of the Republic of Belarus may carry out an investment project only through partnership with legal bodies of the Republic of Belarus.

2.1. The terms of obtaining the industrial Park resident status Obtaining of the Industrial Park resident status is a separate administrative

procedure which requires compliance with the number of terms.

2.1.1. Location

Only legal bodies founded in the Republic of Belarus and located in the territory of the Industrial Park can be registered as the residents of the Industrial Park.

Thus, in order to be registered as a resident of the industrial Park it is necessary for the company to be located in the territory of the Industrial Park.

If company is founded in the territory of the Industrial Park it may not change its legal address to become the resident of the Industrial Park. In order to found and register the legal body in the territory of the Industrial Park the following terms shall be observed.

Legal body registered by other registering bodies but for the Administration of the Industrial Park may become the resident of the industrial Park. However, such a legal body is to send to the Administration of the Industrial Park a written notification on relocation to the territory of the Industrial Park, before it shall submit necessary documents to the Administration of the Industrial Park. The relocation procedure is stated hereinafter.

Foundation and registration of the legal body in the territory of the Industrial Park is carried out according to the Decree of the President of the Republic of Belarus as of 16.01.2009 № 1 “On State Registration and Liquidation of Business Entities”.

Legal bodies of the Republic of Belarus shall have: ü title; ü authorized capital*; *authorized capital may be formed within a year from the state registration of the

legal body; the lower limit for the authorized capital is defined only for Joint Stock Companies;

ü governance body. The following legal forms of organizations are stipulated by the Belarusian

legislation:

Legal forms Shortenings

Additional Liability Company ALC Limited Liability Company LLC Joint Stock Company (open and closed) OJSC, CJSC Farm Enterprise Farm Enterprise Unitary Enterprise Unitary Enterprise Production Cooperative Production Cooperative General Partnership General Partnership Limited Partnership Limited Partnership


Sequence of steps necessary to register legal body in the territory of the Industrial Park:

1. make the decision to found legal body in the territory of the Industrial Park;

2. choose legal form of the legal body;

3. confirm the title of the legal body;

4. form governance bodies, execute and sign documents by the legal body's founders;

5. submit documents to the Industrial Park Administration (registering body) and pass state registration within the same day, obtain the certificate;

6. make a stamp of the legal body;

7. legalize labour relations with company's Chief-Executive Officer and Chief-Accountant;

8. open bank settlement account;

9. execute an agreement for custody and advisory service; register shares with the authorised governmental body.

Additional step for Joint Stock Companies


Expenses for company registration

Compulsory expenses

Purpose of payment Price

State duty for legal body registration 1 basic unit equals to ≈ 10 Euro

Authorized capital of the legal body The lower limit for the authorized capital is not defined. Exceptions: CJSC – 1000 Euro OJSC – 4000 Euro.

Stamp ≈ 20 Euro

Possible additional expenses

legalization, Russian translation of the extract from the commercial register of the foreign country, notarization of translator’s signature

Russian translation of one page – 6-12 Euro, depends upon target language. Notarization of one translator’s signature ≈ 7 Euro.

Translation of passport or other ID into Russian (Belarusian) and notarization of translator’s signature


Legalization, Russian translation and notarization of translator’s signature if Power of Attorney is necessary


Relocation procedure

Procedure of the legal body relocation shall comply with notification requirements and do the following:

Ø notify governmental bodies: a) within 10 working days from the relocation date - governance body of new

location. If legal body is relocating to the territory of the Industrial Park its Administration shall be notified;

b) within 10 working days from the relocation date – tax authority of the previous location;

c) within 5 working days from the relocation date – department of the Social Protection Fund of the previous location;

d) within 1 month from the relocation date – Belgosstrakh. Ø make changes into the license within one month from the relocation date if legal

body carries out licensed activities; Ø notify employees and if necessary receive their agreement to relocation; Ø notify third parties including contractors and servicing bank.


2.1.2. Investment project implementation

The second requirement, which the legal body shall meet in order to become the resident of the Industrial Park, is to implement investment project in legally identified field.

Investment project of the legal body to be registered as the resident is to comply with the following criteria:

*If legal body wants to carry out another type of activities or define other investment

amounts it shall apply to the Administration of the Industrial Park. All suggestions to carry out another type of activities or change investment amounts

necessary for the residence obtaining executed in written form and attached to the suggestions are submitted by the Administration on discussion (approval) of the Council of Ministers of the Republic of Belarus. By preparing such suggestions all recommendations of the Joint Company are to be considered.

2.2. Procedure for resident status obtaining

2.2.1. Necessary documents preparation

In order to be registered as the resident of the Industrial Park, the legal body shall comply with necessary requirements and prepare the following documents:

Application; Application form, stipulated by the Head of the Administration of the Industrial Park,

shall contain information on investment project, type (types) of business activity planned to be developed in the territory of the Industrial Park, investments amount and terms. Application form is available on the Industrial Park website on the Internet.

Finance criterion

Necessary investments amounton investment

project realization - not less than 5 mln. US

dollars

If project is engaged in research and advanced development - not less than 1 ml. US dollars

Criterion of the activities type*

Production spheres: electronics;

pharmaceuticals; fine chemistry, biotechologies,

new substances.

Research and advanced development of the said

speres.

Infrostructure construction and devеlopment.


Originals and copies of constituent documents verified by the legal body Executive; This document is the Articles of Association. Original and copy of certificate of the legal body registration verified be the

Executive;

Investment project basis; Investment project basis is a document containing the main aspect of the future

investment project. Investment project basis shall stipulate: • investment plan (investments amount and terms); • type of business activity to be carried out in the territory of the Industrial Park; • peculiar methods to create and develop high-quality production competitive on

external markets; • types and production output of goods (works, services); • statement for their production need; • anticipation profit from investment project implementation; • other technical-and-economic parameters.

2.2.2. Documents consideration and decision making

The Administration of the Industrial Park is authorized to make a decision on registration of the legal body as the resident of the Industrial Park.

The Administration of the Industrial Park considers the documents and makes the decision to register or refuses to register the legal body as the resident of the Industrial Park within 5 working days from the document receipt, or within 15 working days if the documents are send on the approval of the Councils of Ministers of the Republic of Belarus.

Refusal to register the legal body as the resident of the Industrial Park occurs if: • legal body location fails to comply with the location terms of the Industrial Park; • type of business activity to be carried out or carried out by the legal body in the

Industrial Park does not correspond with the types of the Industrial Park business activities stipulated by the law;

• investments amounts to be spend by the legal body on the investment project do not comply with the investment amounts defined by the law;

• the Council of Ministers of the Republic of Belarus rejects the proposal of the Administration of the Industrial Park on carrying out other types of business activities or changing the investment amounts for the legal body to be registered as the resident of the Industrial Park;

• there is any free (not leased, subleased, privatized by the resident or investor) land plot which meets the requirements necessary for investment project implementation and stated in the Application for residence registration;

• the legal body fails to submit or duly execute necessary documents.

2.2.3. Execution of the Contract on the Resident’s Activity Terms

If the Administration of the Industrial Park makes positive decision it sends to the legal body within seven days from the decision date the Contract on the Resident’s Activity.

This is a standard-form Contract which contains information on: • investment objects, investments terms and amount; • the terms for investment project realization in the Industrial Park;


• number of resident’s obligations as to documents provision upon the request of the Administration of the Industrial Park;

• obligations of the Industrial Park resident if it fails to comply with said investment project requirements;

• terms and procedure for changing, extension of the Contract’s duration and termination;

• other information connected with resident’s activity. Day of the agreement is the date of legal body registration as the resident of the

Industrial Park.

2.3. Resident status deprivation. Resident status loss. Resident status termination is possible in two cases: • residence deprivation; • residence loss. Residence deprivation is termination of the residence caused by acts of will either of

the resident itself or the Administration of the Industrial Park. Residence loss is caused by the actions not depending on the legal body’s will or

other external circumstances.

Resident status deprivation Resident status loss

Basis 1. Application of the Industrial Park resident. 2. If resident of the Industrial Park fails to duly perform or neglects its obligations defined by the Contract on the Resident’s activity terms and this Provision. 3. When the resident of the Industrial Park fails to comply with the conditions necessary to be registered as the resident.

1. Liquidation of the Industrial Park resident. 2. Restructuring of the Industrial Park resident in a form of merger and division to another legal body. 3. Termination of the Contract on the Resident’s activity terms. The resident losses its status from the date of this Contract termination. 4. Relocation of the Industrial Park resident outside the territory of the Industrial Park. 5. If the territory where the legal body is located was excluded from the Industrial Park borders. 6. The Industrial Park liquidation.

Decision making procedure

The Administration of the Industrial Park is to make a decision within one month from the creation of said basis.

The Administration of the Industrial Park is to make relevant entry into the Industrial Park residents register during one working day and inform governmental bodies on such a decision within three days.

Consequences If the legal body was deprived from the resident status upon the clause 3, it is no longer entitled to use residents’ benefits from January 1 of the year when

Residence loss does not cause any negative property consequences.


necessary requirements were not met until the decision on residence deprivation is made and shall pay taxes and other duties stipulated by the legislation.

Deprivation or loss of the resident status is a basis for termination of the Contract on the Resident’s Activity Terms.


3. The terms of land use

3.1. The terms of land plots provision Pursuant to the legislation of the Republic of Belarus lad plots may belong to the

legal bodies on the rights of: • ownership; • permanent and temporary use; • tenancy. One of the main principles of land legislation is to use land plots according to their

designation purpose. In the event of failure to comply with this principle, the land title and right of ownership shall be involuntary forfeited.

The land plots use in the Republic of Belarus is maintained on a paying basis. Land tax shall be paid for use of the land plots, which are in private ownership, permanent or temporary use. If the leased land plots are used rental fee is to be paid.

The President of the Republic of Belarus defines rental fee amount paid for state-owned land plots use. Land Rental Agreement stipulates rental fee amount for privately owned land plots use.

3.2. Specific character of provision of land plots in the Industrial Park The Administration of the Industrial Park provides the Joint Company with land plots

within the territory of the Industrial Park as the territory of the Industrial Park is actually being reclaimed according to the master plan of the Industrial Park approved by the Government of the Republic of Belarus, as well as by plans for detailed planning of the territory. Land plots are provided to the Joint Company to be owned or leased for 99 years.

In order to obtain a land plot within the Industrial Park, an Industrial Park resident or an investor shall apply to the Joint Company with a corresponding request, in its turn the Joint Company shall consider such request and shall make a relevant decision upon results of such consideration.

As a rule, an Industrial Park resident or an investor indicates the following information in the request:

• a purpose for which a land plot is requested; • a property right to a requested land plot; • description of a construction object including its functionality and approximate

dimensions; • a planned location of a land plot and its approximate area. While choosing a land plot an Industrial Park resident or an investor shall comply

with the master plan of the Industrial Park that determines a strategy for spacial and territorial development of the Industrial Park and for its land use, as well as with plans of detailed planning.

According to the master plan of the Industrial Park territories included therein are combined in functional zones and land use is carried out in conformity with purposes of such zones. A land plot location is approved in terms of a type of activities for which an Industrial Park resident or an investor requests a land plot, as well as in terms of functional zoning of the territory of the Industrial Park, sanitary, ecological requirements, along with the pace of the territory development.

The Industrial Park development company shall ensure creation of engineering and transport infrastructure facilities for a land plot chosen by and provided to an Industrial Park resident or an investor.


Land plots are provided to the Industrial Park residents and investors to be owned, leased or subleased.

Titles to land plots provided

On the basis of the above chart a non-resident investor is entitled to a land plot to

be leased or subleased only. Certain features of provision of land plots in the Industrial Park

A sale contract or a lease contract is signed between an Industrial Park resident / an investor and the Joint Company.

The standard form of a land plot lease contract existing in the Republic of Belarus is not used while executing a contract. Therefore, terms of such lease contract are determined by agreement of the parties. That enables the parties to specify just those terms in the contract which are essential for the parties to implement a project.

The Industrial Park residents have a benefit of exemption from a land tax in respect of land plots located within the Industrial Park. This benefit is applied only to land plots purchased by an Industrial Park resident to be owned. The benefit is valid within 10 years commencing on the date when a company is registered as an Industrial Park resident.

The cost of a land plot under a sale contract, as well as an amount of a lease payment under a land plot lease contract signed between the Joint Company and an Industrial Park resident / an investor are determined by the parties in the specified contracts.

Private property

Industrial Park resident;

Investor (not a state-owned legal entity of the Republic of Belarus);

Lease (sublease)

Industrial Park resident;

Investor (not a state-owned legal entity of the Republic of Belarus);

Other investors;


4. Project construction within the Industrial Park

4.1. General requirements for participants of construction activities Under the applicable laws of the Republic of Belarus participants of construction

activities may be residents of the Republic of Belarus and non-residents (a customer, a contractor, a designer, etc.).

At the same time the legislation specifies certain requirements for participants of construction activities carried out in the territory of the Republic of Belarus, which are also applied to project construction within the Industrial Park.

In particular, currently construction activities (performing functions of a customer, a contractor, a designer), engineering surveys, engineering services, technical supervision, structural surveys are carried out only by legal entities having compliance certificates issued according to the procedure established by the Council of Ministers of the Republic of Belarus. It is forbidden to carry out the abovementioned activities without compliance certificate.

The organization authorized to carry out attestation of participants of construction activities and to issue compliance certificates is the Republican Unitary Enterprise “BELSTROYCENTR” (RUP “BELSTROYCENTR”).

Qualification requirements to the participants of construction activities for a compliance certificate obtaining depend on a complexity class of a project in respect of which a company intends to carry out construction activities and are stipulated by the Decree of the Ministry of Architecture and Construction of the Republic of Belarus № 25 as of 02.05.2014. Classes of projects are listed in STB 2331-2015 “Buildings and constructions. Classification. General guidelines” approved by Resolution of the State committee for standardization of the Republic of Belarus as of February 14, 2014 No. 7.

The main objective of the attestation is to check whether an applicant complies with the criteria established by law which allow to examine if an applicant has the personnel with the required qualification, as well as assets necessary for performance of works and a quality control system of works performed.

Besides, the legislation stipulates a possibility to involve an engineering organization with the transfer of customer’s functions to such organization (both fully and partially). In the event an engineering organization is involved to provide services in integrated management of construction activities with the transfer of customer’s functions in full, there is no requirement for a customer to have a compliance certificate.

It is prohibited to carry out construction activities without a compliance certificate. The consequences of the breach are confiscation of the income received from such activities (an income amount is recognized as the whole amount of proceeds received net of expenses), as well as a penalty up to 500 basic units (which makes about 4 400 Euro as of the date of publishing).

In addition, in order to exercise functions of a contracting agency such company shall have:

• technical expertise certificate of production supervision system; • safety compliance certificates with regard to construction works subject to

mandatory certification and performed by a company itself.


For reference: Pursuant to the Technical regulations “Buildings and constructions, construction

materials and products. Safety” (TR 2009/013/BY) the following types of works in construction are subject to mandatory certification:

1. Building of monolithic concrete and reinforced concrete constructions; 2. Filling of window and door apertures; 3. Installation of inner engineering structural systems; 4. Installation of wooden constructions; 5. Installation of masonry and reinforced masonry constructions; 6. Installation of lightweight enclosing structures; 7. Installation of external supply lines and constructions; 8. Installation of concrete and reinforced concrete build-up frames; 9. Installation of steel constructions; 10. Antirust coating of structural units of buildings and constructions; 11. Roadway surfacing of pedestrian areas with walkway slabs; 12. Installation of insulation covering; 13. Roofing; 14. Handling of foundations, construction bases; 15. Handling of thermal insulation for enclosing structures of constructions.

4.2. Construction authorizations Construction of buildings and structures in the Republic of Belarus shall be

authorized. Local executive committees, departments thereof, as well as specialized municipal unitary enterprises upon requests of interested organizations execute and issue authorizations depending on a construction type and a location thereof.

The required authorizations include the following basic documents: • a decision made by a local executive committee to authorize design and survey

works and project construction; an architectural and designing requirement specification; • resolutions of authorizing bodies; • technical conditions of project’s engineering facilities. Availability of authorizations is a critical requirement for a customer to enter into a

contract on development of project documentation and an independent work contract to carry out works on object construction.

The project documentation is subject to mandatory state expert examination that is carried out for fee upon the declarative principle by specially established state enterprises. The state examination of project documentation of the Industrial Park objects is performed by the Republican unitary enterprise “Glavgosstroyexpertiza”.

Construction and installation works on construction sites may start only after a customer has received an authorization to perform such works issued by state construction supervision bodies.

4.3. Procedure for execution of a design contract, a construction contract The legislation stipulates special requirements for the procedure for executing

construction contracts, in particular, in respect of choosing a contracting agency to construct a project.

A contracting agency is determined pursuant to a procurement procedure with regard to construction which includes tendering or negotiations. The Joint Company, the Industrial Park residents, investors thereof and participants of project construction in the


Industrial Park are not subject to tendering and may enter into contracts upon results of negotiations.

4.4. Certain features of project construction within the Industrial Park Customers of project construction within the Industrial Park may be:

• the Joint Company;

• the Industrial Park residents;

• the Industrial Park investors; • the Administration of the Industrial Park with regard to construction of

transport and engineering infrastructure facilities (structures and utility systems of electric power, heat, gas and water supply, as well as a waste water disposal system, telecommunications, motor ways and other service lines) outside the Industrial Park, carried out fully or partially using the funds of the republican budget and (or) local budgets for construction (including execution of project documentation) and necessary to ensure complete and timely development of the territory under the master plan.

Furthermore, the Joint Company ensures project construction (including execution of project documentation) under the master plan of the Industrial Park, including transport and engineering infrastructure facilities. Therefore, when an Industrial Park investor / resident obtains a land plot to develop, as a rule, there are service lines and driveways necessary for project construction available up to boundaries of such land plot.

The decision to authorize design and survey works and project construction in the territory of the Industrial Park, including infrastructure facilities, is the responsibility of the Administration of the Industrial Park. Other features of construction activities within the Industrial Park:

The legislation stipulates a possibility to carry out project construction within the Industrial Park simultaneously with developing, examining and approving project documentation according to an established procedure for each stage of construction, which is a direct exception to the law for projects implemented in the territory of the Industrial Park, moreover it considerably facilitates the construction process.

The benefit term is as follows: project documentation for a certain construction stage shall pass state expert examination and be approved as required by law.

It is allowed to apply technical regulatory acts of the People’s Republic of China, as well as of other foreign countries in order to develop urban planning projects of the Industrial Park, to execute and approve project documentation, to perform construction works.

The benefit terms are as follows: • urban planning and project documentation shall pass state expert examinations

in the Republic of Belarus. Such examination is aimed to check whether construction documentation complies with mandatory requirements set forth by the legislation of the Republic of Belarus with regard to physical integrity and mechanical stability, fire safety, labor safety, environmental protection;

• the Joint Company, the Industrial Park residents, investors thereof, participants of project construction in the Industrial Park shall ensure safe conditions for performance of works within the boundaries of a construction site;

• materials and equipment used in the construction process, installation thereof, adjustment, operation, as well as maintenance of the Industrial Park projects shall be safe, including with due regard to natural and climatic conditions, and shall not cause disasters,


damage the Industrial Park projects and other objects, threaten human life and health, as well as the environment within the whole period of construction and operation;

• authorizations for project construction in the Industrial Park, documents proving acceptance and operation of such projects, as well as documents required for state registration of the Industrial Park projects and rights thereto shall be executed in the Russian (Belarusian) language or in the Chinese language (other foreign language) with translation into Russian (Belarusian) notarized by a notary public.

The goods imported with the purpose of developing urban planning in the Industrial Park, constructing and equipping the Industrial Park projects shall not be subject to mandatory certification of compliance in the National system of compliance certification of the Republic of Belarus, unless otherwise is specified by international treaties of the Republic of Belarus;

A master design organization, a master contracting agency, a design organization, a contracting agency, an engineering company and other organizations involved to design and construct the Industrial Park projects, as well as to perform works in respect of the Industrial Park projects, to supply wares for constructing and equipping thereof shall be determined by the Joint Company, the Industrial Park residents, its investors, participants of project construction in the Industrial Park via negotiations without tendering (tendering to purchase construction wares).

4.5. Financing of project construction The legislation specifies no limitations on sources of financing in respect of project

construction within the Industrial Park, that enables residents and investors thereof to use both own funds and funds raised, including bank credits.


5. Terms of activities carried out by the Industrial Park residents and preferences

For the Industrial Park residents the legislation of the Republic of Belarus specifies a particular range of benefits and preferences. Provided preferences become valid on the date when a legal entity is registered as an Industrial Park resident. As from this date special favourable treatment commences, so far this treatment is one of the most favourable ones to carry out business activities in the territory of the Republic of Belarus.

5.1. Tax concessions The Industrial Park residents within 10 years from registration thereof as the

residents are exempt from the following taxes: a profit tax with regard to the profit received from selling goods, works, services of

own production manufactured, preformed and rendered in the territory of the Industrial Park;

a real estate tax with regard to projects located within the Industrial Park regardless of their usage;

a land tax with regard to land plots within the Industrial Park. Within subsequent 10 calendar years the above taxes are levied at the standard

rates reduced by 50 percent.

Dividends. There is a preferential zero rate of a profit tax applied to dividends

accrued by the Industrial Park residents in favor of their founders within 5 years from a gross profit date, as well as a preferential zero rate of an income tax for foreign companies not engaged in activities in the Republic of Belarus through a permanent representative office.

Royalty. Till January 1, 2027 a royalty tax rate accrued by the Industrial Park residents to foreign companies not engaged in activities in the Republic of Belarus through a permanent representative office, in the form of a fee for the information on industrial, commercial or scientific experience (including know-how), payments for a license, a patent, a blueprint, a utility model, a scheme, a formula, an industrial design or a process, amounts to only 5 percent, that three times less than the standard royalty tax rate.

Value added tax. The Industrial Park residents are entitled to deduct in full amounts of a value added tax in respect of goods (works, services) purchased (paid while import into the territory of the Republic of Belarus) in the territory of the Republic of Belarus as well as property rights, used for development of urban planning projects, along with construction, equipping building and structures located within the Industrial Park, but not later than December 31 of the year following the year of putting such buildings and structures into operation.

• from the date of registration as the Industrial Park resident and within subsequent 10 calendar years;

• within subsequent 10 calendar years of the Industrial park residence;

- 100% of taxes

- 50% of taxes


5.2. Customs benefits The Industrial Park residents may apply for a customs procedure of a free customs

zone, which makes it possible to import foreign goods into the territory of the Industrial Park without paying customs duties and taxes.

Goods (processing equipment, components and spare parts thereof, raw stuff and materials) imported into the Republic of Belarus to be used only for implementation of investment projects within the Industrial Park are exempt from import customs duties and VAT levied by customs authorities.

5.3. Benefits in currency regulation It is allowed to use foreign currency between the Industrial Park residents and

residents of the Republic of Belarus while making settlements on exchange transactions aimed at development of urban planning projects of the Industrial Park and its project construction.

Till January 1, 2027 the Industrial Park residents are released from the compulsory sale of foreign exchange earnings received from activities in the territory of the Industrial Park. It is worth mentioning that residents of the Republic of Belarus must sale foreign currency in the domestic foreign exchange market in the amount of 30% of foreign exchange earnings.

5.4. Benefits for the Industrial Park employees There are tax concessions set forth for employees of the Industrial Park residents.

Till January 1, 2027 an income tax in respect of individuals is levied at the rate of 9 percent of the income received under employment agreements (contracts) from the Industrial Park residents.

There are also benefits with regard to compulsory contributions for insurance:

• the Joint Company, the Industrial Park residents, participants of the Park project construction, customers, as well as employees thereof which are foreign citizens temporarily residing (staying) in the territory of the Republic of Belarus and engaged to implement investment projects within the Industrial Park, are exempt from compulsory contributions for insurance from payments accrued in favor thereof;

• in respect of the employees of the Joint Company and the residents of the Park compulsory contributions for insurance are not calculated on the income part exceeding one average monthly salary of employees in the Republic of Belarus.

Pursuant to the Belarusian legislation employers must pay to the Social protection fund 34% of all payments accrued in favor of employees. The Industrial Park residents have a benefit to pay such contributions only from the income exceeding an average salary, that is over 6 837 600 Belarusian rubles (as of October 2015).

Dividends

0%

Royalty5%

VAT

Taxcredit


5.5. Other benefits and preferences The Industrial Park residents are released from:

• reimbursement for losses of agricultural or forestry industries, incurred in connection with seizure or temporary acquisition of agricultural land and forestry;

• compensation payments of the cost of removed, transplanted plant objects, for a detrimental effect on animals and their habitat;

• payments of a state due to issue permits for recruitment of foreign workers to the Republic of Belarus, special permits for foreign citizens and stateless persons to be employed in the Republic of Belarus.

The above benefits and preferences do not apply to banks, insurance companies, as well as to business entities carrying out lottery activities in the territory of the Industrial Park, gambling activities and activities on organization and holding of electronic interactive games.

It is worth mentioning that foreign investors are guaranteed with the right to transfer outside the Republic of Belarus without any restrictions the profit received in the Republic of Belarus as a result of investment activities in the Industrial Park.


6. Preferential terms of activities in the territory of the Industrial Park by other persons (non-residents of the Industrial Park)

The legislation of the Republic of Belarus provides for the possibility to use the preferential conditions for the implementation of activities in the territory of the Industrial Park not only for its residents, but also for other persons.

Benefits are provided for by special norms on the industrial Park, as well as other legislative acts of the Republic of Belarus.

6.1. Benefits for investors of the Industrial Park Investors of the Industrial Park are persons investing in creation or development of

Park objects and are not residents of the Park. The special legal regime established in the Industrial Park, among others, provides

for benefits for such categories of persons who are not residents of the Park, but invest in its development.

The main advantage for investors is the possibility of obtaining a land lot for rent or purchase it in private ownership. A land lot is provided for rent or is transferred into ownership without an auction. While as a general rule, land lots in the Republic of Belarus are provided according to the results of auctions for the sale of land lots in private ownership or sale of the right to lease a land lot.

In addition to the possibility of obtaining a land lot for the construction, investors are also exempt from:

• reimbursement for losses of agricultural and (or) forestry production caused by withdrawal or temporary occupation of agricultural lands and forest lands, as well as of compensatory planting and compensation costs of removed, transplanted flora objects, compensation costs for the adverse effects on the fauna objects and (or ) their habitat;

• mandatory sale of proceeds in foreign currency on the domestic currency market of the Republic of Belarus received from activities in the territory of the Industrial Park, till January 1, 2027;

• payment of state fees for the issuance, extension of the term of permits for attracting foreign labor force into the Republic of Belarus, special permits for work in the Republic of Belarus for foreign citizens and stateless persons involved for investment projects in the Park boundaries.

6.2. Benefits for other persons carrying out activities in the territory of the Industrial Park

Belarusian legislation provides for a number of tax and other benefits for business entities registered in the medium, small towns, rural areas (hereinafter - the countryside).

Taking into account that the territory of the Industrial Park refers to the category of the countryside, all business entities (individual entrepreneurs)of the Republic of Belarus who will be registered within the boundaries of the Industrial Park, including investors of the Park, are entitled to claim the benefits set by legislation.

In such a case the benefits are provided according to the Decree of the President of the Republic of Belarus as of May 7, 2012 № 6 “On Stimulating Entrepreneurial Activity in the Territory of Middle, Small Urban Settlements, Rural Area”.


6.2.1. Tax benefits

Profit tax Commercial organizations are exempt from payment of profit tax for 7 calendar

years starting from the date of state registration, provided that the following conditions are observed:

Real estate tax

Exemption from real estate tax is provided for 7 years starting from the date of state registration, if:

Important! Provision of property for rent (lease), other compensated and uncompensated use is not considered a sale of goods (works, services) of own production. Thus, if the organization is engaged exclusively in the provision of property for rent, it is not entitled to apply real estate tax exemption.

Exemption from local taxes and dues

Registration in the countryside and carrying out activities in these territories connected with production of goods (performance of works, providing services)

Profit has been received from the sale of own-produced goods (works, services), i.e. provided that a certificate of own production is availiable

Production of goods (works, services) is performed in fixed capital assets and using the work of employees staying in the terrritory of the countryside

Separate accounting of proceeds from the sale of own-produced goods (works, services)

Registration in the countryside and carrying out activities in these territories connected with production of goods (performance of works, providing services)

The sale of own-produced goods (works, services) was performed by a commercial organization in the preceding quarter

Real property is located in the countryside


6.2.2. Exemption from import customs duties

Commercial organizations are also exempt from import customs duties in relation to certain goods that were produced not more than 5 years ago and that are imported as non-monetary contribution to the statutory fund of such commercial organization. Such goods, in particular, include:

Boilers; Gas generators; Internal-combustion engines; Snowploughs; Electric engines and generators; Transport for industrial purposes; Cruise ships, trucks and other floating structures; Musical instruments; Furniture; Merry-go-rounds and other amusement rides; Other types of goods.

Important! These goods should be contributed namely as contributions to the statutory fund of an organization, but not be purchased at the expense of the founders.

6.2.3. Other benefits

Obligatory sale of foreign currency; Exemption from obligatory sale of foreign currency received from transactions with

non-residents from the sale of goods (works, services) of own production, as well as from renting the property out.

Exemption from payment of state due for the issuance of the special permit (license);

Possibility to use the preferential change when participating in the state procurement procedures.

Commercial organizations located in the countryside are entitled to claim the above mentioned benefits, mainly if they have certificates of own production for the goods produced (performed works, rendered services). This certificate is also a ground to apply a preferential change to the participant’s offer in the amount of 15 per cent when participating in state procurement procedures.

Important! The above mentioned benefits are not applied to: Banks, investment funds, insurance organizations; Professional participants of securities market; Residents of free economic zones and High-Tech Park, special tourist-

recreation Park Augustow Canal, China-Belarus Industrial Park; Commercial organizations when carrying out:

− real-estate activities; − gambling business activities; − lottery activities; − activities in organizing and holding electronic interactive games; − production, sale of excise goods; − production, sale of jewelry made of precious metals, precious stones; − production of securities, banknotes and coins, postage stamps; − activities within simple partnership.


6.3. Benefits to branches created in the territory of the Industrial Park Benefits may also be granted to branches and other separate subdivisions

established by commercial organizations in the territory of the countryside. In particular, during 7 years from the date of taking a decision on the establishment of a branch, the following benefits are available to it.

123

Exemption from profit tax in respect to the proceeds gained by a separate subdivision from the sale of goods (works, services) of own production;

Exemption from real estate tax from the cost of the real estate located in the territory of the Industrial Park;

Exemption from obligatory sale of foreign currency.


7. Conditions and procedure for realization of certain benefits

7.1. Exemption of imported goods from the imposed import customs duties and VAT

Decree No. 326 provides for the exemption of goods (production equipment, accessories and spare parts, raw materials and other materials), imported into the territory of the Republic of Belarus to be used exclusively for the implementation of investment projects within the boundaries of the Industrial Park from import customs duties and VAT charged by the customs authorities.

In order to apply the exemption of goods (production equipment, accessories and spare parts, raw materials and other materials), imported into the territory of the Republic of Belarus to be used exclusively for the implementation of investment projects within the boundaries of the Industrial Park from import customs duties and VAT, it is necessary to negotiate the lists of imported production equipment and (or) raw materials and other materials with the authorized state organization.

The state organization authorized to negotiate the lists of imported production equipment and (or) raw materials and other materials is Administration of the Industrial Park.

Approval of lists of imported production equipment and (or) raw materials and other materials are separate administrative procedures (clauses 1.26.1 and 1.26.2 of the unified list of administrative procedures carried out by public bodies and other organizations in relation to legal entities and individual entrepreneurs.).

Term for the implementation of the administrative procedures is 10 working days. The cost of implementation - for free.

The procedure of application of this exemption differs depending on the imported goods - production machinery, accessories or spare parts to it or raw materials and other materials.

7.1.1. Specific nature of import of the production equipment

The criterion for referring goods to the production equipment, accessories and spare parts to it is their compliance with one or several following conditions:

1) are classified according to the unified FEACN of the Customs Union in commodity headings (subheadings) 7309 00, 7311 00, 8402 - 8408, 8410 - 8431, 8433 - 8443, 8444 00, 8445 - 8448, 8449 00 000 0, 8450 - 8466, 8468, 8471 - 8475, 8477 - 8481, 8483, 8484, 8486, 8487, 8501, 8502, 8503 00, 8504 - 8508, 8514 - 8517, 8523, 8528 - 8531, 8535 - 8537, 8543, 8545, 8603, 8604 00 000 0, 8605 00 000, 8608 00 000, 9010 - 9013, 9015, 9016 00, 9022, 9023 00, 9024, 9026, 9027, 9030 - 9032;

2) are referred by the technical and other normative legal acts of the Republic of Belarus to the production equipment;

3) are inseparable part of the investment project that is being implemented in the territory of the Republic of Belarus according to the design and estimate documentation for the object provided for in the investment project.

Algorithm of import of production equipment, accessories and spare parts to it without payment of customs duties and VAT

1. Submission of the application on approval of the list of production equipment to the Administration of the Industrial Park according to the form established by the Administration of the Industrial Park.


The application should reflect the following information:

• name of the investment project and term for its implementation; • name of the object provided for in the investment project, for which the

production equipment, accessories and spare parts to it are imported; • full name and payer’s identification number of the applicant (for legal entities

and individual entrepreneurs) or full name and citizenship of the applicant (for individuals); • details of the foreign trade contract; • details of the legislative act of the Republic of Belarus that stipulates exemption

of the production equipment, accessories and spare parts to it (subclause 5.4 of cl. 5 of the Decree No. 326).

The following documents should be attached to the application: I. list of production equipment, accessories and spare parts to it according to the

foreign economic contract with indication of their names, quantity and total cost. Each page of the list of production equipment, accessories and spare parts to it should be agreed upon by the organization performing (having performed) design and estimate documentation for the object of the investment project by means of making corresponding notes;

II. electronically filled in registry form of information about the issued resolutions on the approval of the list of production equipment, accessories and spare parts to it, imported (having been imported) for the exclusive use in the territory of the Republic of Belarus in order to implement the investment project corresponding to the priority type of activity (sector of the economy);

III. copy of the design and estimate documentation (if available). 2. Consideration of the submitted application within not more than 10 working days

by the Administration of the Industrial Park. 3. Issuance of the resolution on the approval of the list of production equipment to

the applicant by the Administration of the Industrial Park. Not later than on the day of issuance of the corresponding resolution, the Administration of the Industrial Park forwards information about the issued resolutions to the competent customs bodies.

4. Import of the equipment, accessories and spare parts to it without payment of customs dues and VAT on the basis of the received resolution on approval of the list of production equipment.

7.1.2. Specific nature of import of raw materials and other materials

An additional condition for the application of the benefit in respect to the imported raw materials and other materials is a condition that the imported raw materials and other materials are not produced in the countries of the Customs Union, or are produced in insufficient quantities or do not correspond to the technical characteristics of the investment project.

Algorithm of import of raw materials and other materials without payment of customs duties and VAT

1. Submission of the application on approval of the list of raw materials and other materials to the Administration of the Industrial Park according to the form established by the Administration of the Industrial Park.

The application shall reflect the following information: • name of the investment project and term for its implementation;


• name of the object provided for in the investment project, for which the production equipment, accessories and spare parts to it are imported;

• full name and payer’s identification number of the applicant (for legal entities and individual entrepreneurs) or full name and citizenship of the applicant (for individuals);

• details of the foreign trade contract; • details of the legislative act of the Republic of Belarus that stipulates exemption

of the production equipment, accessories and spare parts to it (subclause 5.4 of cl. 5 of the Decree No. 326).

The following documents should be attached to the application: I. list of raw materials and other materials according to the foreign trade contract with

indication of: - name; - producers; - information about their nature (characteristics); - quantity; - total cost;

II. electronically filled in registry form of information about the issued resolutions on the approval of the list of raw materials and other materials, imported (having been imported) for the exclusive use in the territory of the Republic of Belarus in order to implement the investment project corresponding to the priority type of activity (sector of the economy); III. approval of the required amount of raw materials and other materials for the

implementation of the investment project provided by a design organization that carried out in accordance with the regulatory technical documents the development and approval of the technical documentation; IV. confirmation by the Administration of the Industrial Park of the implementation of conditions for granting tariff preferences in respect of raw materials and other materials, established by the regulatory legal framework of the EEU, including the conditions that raw materials and other materials produced in the countries - participants of the EEU do not meet the specifications of the investment project that is being implemented.

2. Consideration of the submitted application within not more than 10 working days by the Administration of the Industrial Park.

3. Issuance of the resolution on the approval of the list of raw materials and other materials to the applicant by the Administration of the Industrial Park. Not later than on the day of issuance of the corresponding resolution, the Administration of the Industrial Park forwards information about the issued resolutions to the competent customs bodies.

4. Import of raw materials and other materials without payment of customs dues and VAT on the basis of the received resolution on approval of the list of raw materials and other materials.

7.2. Deduction of the value added tax in full The Joint Company and residents of the Industrial Park on the basis of the agreed

by the Park Administration list of goods (works, services), property rights acquired in the territory of the Republic of Belarus (imported into the territory of the Republic of Belarus) and used for:

the development of city-planning projects of the Industrial Park; construction (including the development of design documentation) of the objects

in the territory of the Industrial Park; equipment of buildings and structures located in the territory of the Industrial

Park


are entitled to deduct the full amount of value added tax, regardless of the amount of the calculated value added tax, but not later than on December 31 of the year following the year of acceptance into operation of such buildings and structures.

This list should contain the following information about:

the names of buildings and structures for which goods (works, services), property rights were purchased in the territory of the Republic of Belarus (imported to the territory of the Republic of Belarus );

full names and payer’s identification number – for a Joint Company, resident of the Industrial Park;

name, quantity and cost of goods (works, services), property rights; amounts of the value added tax presented when purchasing in the territory of

the Republic of Belarus (paid upon when importing into the territory of the Republic of Belarus) goods (works, services), property rights;

details of documents confirming the purchase in the Republic of Belarus (import into the Republic of Belarus) of goods (works, services), property rights, their use and payment of value added tax on goods imported to the territory of the Republic of Belarus (name of the document, date of its execution, its number, if any).

Condition for the deduction of the value added tax in full: Possibility to exercise the right to deduction of the value added tax in full occurs

when the amount of tax deductions exceeds the total amount of the value added tax, calculated on the sale of goods (works, services), property rights. In this situation, a business entity does not pay a value added tax and becomes entitled to offset the difference against taxes, dues (duties), other payments to the budget, or return the difference from the budget.

Terms and procedure for return: 1. Filing of an application An application for the return of the difference between the amount of tax deductions

and the total amount of value added tax, calculated on the sale of goods (works, services), property rights is filled in according to the form established by the legislation and sent to the tax body on paper or in electronic form.

The procedure for filling in the application for the return of the difference depends on the current situation of the payer in accordance with which he takes one of the following decisions:

to offset the full amount of the difference against the current payments and repayment of penalties and tax debts, dues (duties), other compulsory payments to the budget and fines (if the amount of the difference does not exceed the amount of these payments);

to return the full amount of the difference to the account (if there is no amount of current payments and tax debts, dues (duties), penalties, fines and other compulsory payments to the budget);

to offset part of the difference, and the rest return to the account (if the amount of the difference exceeds the amount of current payments, penalties and tax debts, dues (duties), other payments to the budget and fines).

Filling in the corresponding lines and graphs of the application is made taking into account the decision taken by the payer.

To return the difference through its offset against the value added tax payable on the realization in the next reporting period, it is not required to submit an application,


because such a return is made by tax authority without taking a decision on making the return. It is enough for the payer to submit a declaration for the next reporting period.

2. Tax inspection Tax body is entitled at its own discretion or at the payer’s initiative to conduct an

unscheduled inspection to check the relevancy of the return (offset) of the difference. In case of a tax authority inspection, it is appointed not later than 2 working days from the date of submission of the application for the return by the payer.

The term of the inspection is not more than 15 working days from the date of submission of the application for the return.

3. Taking a decision by tax authority The decision to return the difference is taken by the tax authority not later than 2

working days from the date of submission of the application for the return of the difference by the payer on the basis of the declaration submitted to the tax authority. In the situation of the inspection, a decision about the return is taken not later than 2 working days after the end of the inspection.

A decision taken by the tax authority not later than 5 calendar days from the date of its adoption is sent to the payer on paper or as electronic document.

Organizations where amounts of the difference appear monthly may have earlier unperformed decisions. A decision taken by the tax authority in respect to the application for the return of the difference during the time of making offsets from previous decisions is to be enforced:

either with full offset of the difference from previous decisions, or one month after the date of adoption of the previous decision.

4. Offset procedure Within one month from the date of taking a decision on the return by the tax

authority, the difference between the amount of tax deductions and the total amount of value added tax, calculated on the sale of goods (works, services), property rights shall be offset against:

current payments of taxes, dues (duties) and other obligatory payments to the budget;

repayment of tax debt and tax interest, dues (duties) and other obligatory payments to the budget;

repayment of arrears in fines imposed by tax authorities. The offset of the difference is made in three directions, which are indicated in the

application for the return of the difference, not later than 5 working days from the day following the day when the decision on the return was taken. The tax authority informs the payer about the performed offset not later than five working days from the date of the offset.

In case a debt appears in taxes, dues (duties), interest, other obligatory payments to the budget and fines, including those not listed in the application for the return, the offset of the difference is performed against this debt. Such setoff is carried out not later than 5 business days from the day following the day of the debt incurring.

The period established for conducting offsets (one month from the date of taking a decision on the return by the tax authority), the amount of the difference shall not be subject to the offset to the payer’s account.


5. Return of the difference to the payer’s bank After one month the difference remaining after the offsets is to be returned from the

state budget by transferring funds to a bank account of the payer according to the procedure stipulated by law.

7.3. Obtaining a certificate of own production A certificate of own production is a document, which is the basis for applying the

stipulated profit tax benefits for residents of the Industrial Park and the Joint Company (cl. 5.1. hereof), as well as for obtaining benefits by business entities registered in the countryside (cl. 6.2., 6.3. hereof).

Conditions and criteria for the recognition as a producer of own-produced products

For recognition as a producer of own-produced products it’s necessary to ensure the observance of all the following conditions:

persons engaged in the production process should be employed by the organization;

Engagement of the staff is also possible under contracts for work and labor. The cost of the work and services performed under such contracts should not exceed 15 percent in the cost of the production and a direct producer (organization) should ensure characteristics of the finished product to materials using his own resources.

land lots, premises, other real estate objects, equipment, tools, appliances used in the manufacture of production should be in the ownership (economic management, operational management) of the producer or used by him on the basis of the rental contract or uncompensated use;

basic material, raw material, component products should be owned by the producer.

If the stated conditions are observed, the business entity or individual entrepreneur are recognized as producers of the products which carry out the activity aimed at production of products using works and services of production nature performed (rendered) on the basis of contractor contract by third parties if the producer carrying out production and technological activity impart the property of end products to raw materials.

When the conditions of recognition as a producer of own-produced products are met, own-produced products include production entirely made by the producer or sufficiently reprocessed in the territory of the Republic of Belarus.

Products completely made by the producer include, among others, natural resources mined from the subsoils of the Republic of Belarus, in its territory; scrap and waste products resulting from the production, technical or other processing operations.

At the same time, taking into account the specific nature of the projects planned to be implemented in the territory of the Industrial Park, a criterion of sufficient processing in the territory of the Republic of Belarus is considered to be more important for the recognition as a producer of goods.

The products sufficiently processed by the producer in the Republic of Belarus are the products, the degree of processing of which corresponds to any of the following criteria:

change in the classification code according to a unified product portfolio of foreign economic activity of the Eurasian Economic Union at the level of any of the first four digits;


difference is not less than 30 percent between the selling price of the manufacturer’s products and raw material (other material) cost used for its production (excluding a value added tax in these prices).

observance by the manufacturer of the necessary conditions, production and technological operations, and if they are performed goods are considered as originating from the country in which they took place.

Important: legal entities are not recognized as manufacturers of products, if they carry out one or more operations that do not provide source materials with features of the finished products (for example, connection of components (nodes) for the purpose of creating a final product, preparation of products for sale, or transportation, etc.).

Conditions for recognition as a producer of works and services

For the recognition as a producer of works and services it is necessary to perform all the following conditions:

persons engaged in the performance of works, provision of services should be employed by the organization;

land lots, premises, other real estate objects, equipment, tools, appliances used in performance of works, provision of services should be in the ownership (economic management, operational management) of the producer or used by him on the basis of the rental contract or uncompensated use;

Obtaining a certificate of the production, works, services of own production Certificates of production, works, services of own production are issued by the

Belarusian Chamber of Commerce and Industry. Stages:

1) passing the examination of the conformity of products, works and services with conditions and criteria imposed on goods, works and services of own production. The examination is conducted on the basis of the service contract for conducting the examination concluded with the Belarusian Chamber of Commerce and Industry. According to the results an act of examination is issued;

2) turning to the Belarusian Chamber of Commerce and Industry with the purpose to receive the certificate

Documents to be submitted:

application according to the prescribed form; act of examination; document confirming payment by the applicant for the services on issuance

of the certificate. The term for the conduction of the examination does not exceed 20 days; if the

additional documents are to be required it can be extended but not more than on 15 days. Term for the issuance of the certificate – 10 days from the time of the documents

receipt.

7.4. Obtaining the country of origin of goods certificate Confirmation of the country of origin and acknowledgement of the country of origin

of goods certificates is performed by the Belarusian Chamber of Commerce and Industry in cases when the execution of the certificate is provided for by:

conditions of the contract; national rules of the country of import of goods;


international agreements of the Republic of Belarus. Residents of the Industrial Park need the country of origin of goods certificate, also

for the purpose of using the customs procedure of the free economic zone that entitles to import foreign goods into the territory of the Industrial Park, their further processing and moving onto or out of the countries of the Eurasian Economic Union without payment of customs duties.

The procedure for recognition of goods originating from the Republic of Belarus is similar to the procedure for obtaining a certificate of own production, and in general it looks in the following way:

1) submission of an application with all necessary documents attached to the Belarusian Chamber of Commerce and Industry;

2) conduct of the examination to determine the country of origin of goods with the preparation of the act of examination;

3) issuance of the certificate of goods origin prepared in the prescribed form. The certificate may be issued in the below listed forms in the following cases:

1. Certificate СТ-1 Form is executed for the purposes of providing a free trade regime for the export of goods in the states- parties to the Agreement on the establishment of a free trade zone as of 15.04.1994, the Free Trade Zone Agreement as of 18.10.2011 in accordance with the Rules of establishing a country of origin of goods operating under the above mentioned documents, as well as for the export of goods to Georgia in accordance with the agreements reached.

2. Certificate СТ-2 Form is executed for the purposes of providing a free trade regime in accordance with the Agreement between the Government of the Republic of Belarus and the Government of the Republic of Serbia on free trade between the Republic of Belarus and the Republic of Serbia as of 31.03.2009.

3. Certificate А Form is executed for the purposes of providing the product with tariff preferences if it is exported to the states that provide tariff preferences to the Republic of Belarus under the Generalized System of Preferences (GSP).

4. Certificate General Form is executed in the following cases: • for the purpose of providing the customs authorities of the importing country

with which the Republic of Belarus has no international treaties (agreements) establishing requirements for the product origin and the form of the certificate or which does not grant preferences within the GSP, if necessary, with the confirmation of the product’s country of origin under the terms of the contract (agreement) or the national rules of the country;

• for the purpose of confirmation of origin of goods from the Republic of Belarus when providing to the customs authorities of the importing country with which the Republic of Belarus has an international contract (agreement), which establishes the provision of tariff preferences or free trade regime to the goods, or of the importing country that provides the Republic of Belarus with tariff preferences under the GSP, when the need to support goods with a


certificate is a condition of the contract (agreement) and not caused by the receipt of the said tariff preferences or the provision of a free trade regime;

• for the purpose of confirming the country of origin of goods in case of issuance of a certificate to replace a certificate certifying the origin of the goods from a country other than one of the member states of the Agreement

5. Certificate of other prescribed forms May be executed when national rules of the importing country establish a form of the certificate of goods origin that is submitted to the competent bodies of this country.

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