Benefits for business in medium sized cities, towns and rural areas: major changes

Belarus: New legislation adjusts benefits for companies in medium sized cities, towns and rural areas and enables free trade zone residents to take advantage of the same benefits.

As before, businesses involved in middle sized cities, towns and rural areas may enjoy tax, customs and other benefits. For example, within seven years from the date of State registration, such organizations are exempt from income and other taxes, compulsory sale of foreign currency, etc. In addition, under certain conditions, exemption from customs duties applies. These benefits and privileges are established in Decree no 6 “Promotion of business in medium sized cities, towns and rural areas” (Decree no 6). The Decree now includes some changes.

Under a new draft of Decree no 6, residents of free-trade zones may use these benefits in medium sized cities, towns and rural areas. This means that residents of free-trade zones may obtain benefits for businesses in medium sized cities, towns and rural areas. For example, if a resident of a free-trade zone creates a branch in a medium sized city, town or rural area, benefits for the branch will accrue under Decree no 6. At this moment Belarus has six free-trade zones. Legislation provides certain benefits for them.

The benefits of the Decree also apply to branches or other separate units of legal entities which are agriculturally oriented. The condition for obtaining benefits in that case is non-use of a single tax rate for agricultural producers in respect of branch activity (and its separate units).

Under the amendments to Decree no 6, some organizations are not entitled to these benefits:
– legal entities restructured after 1 August 2016 in the following restructuring forms: corporate spin-off, separation of legal entity, mergers and acquisitions;
– a branch located in medium sized cities, towns and rural areas where the legal entity is located which was acquired by the legal entity that created that branch;
– a branch located in medium sized cities, towns and rural areas where the legal entity is located which was restructured in the form of corporate spin-off, separation of legal entity, merger and as a result of this restructuring another legal entity was established that created the branch.

The conditions for exemption from customs duties have also changed. Companies are exempt from customs duties only if they import goods to form their statutory funds. The exemption does not apply to companies that import goods to increase their statutory funds, as was the case before.

The changes also concern property tax. Legal entities have to pay the higher rate of property tax for buildings included in the list of unused (inefficiently used) buildings. As before, other buildings reported on the balance sheet of a legal entity are exempt from property tax for seven years.

The changes enter into force on 30 September 2016.

The lawyers at bnt attorneys-at law will be glad to advise you on benefits for your business and other legal matters.

Source: National legal Internet portal of the Republic of Belarus (NLIP) 29.06.2016, 1/16491

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