Registration of an IT company in Belarus
IT business in Belarus
Belarus is a country where a favorable environment for the development of IT business has been created. This is due not only to the benefits provided to HTP residents, but also to the availability of a sufficient number of skilled workers in this field. Every year the legislation is improved and becomes more and more convenient for the development of new technologies.
Taxation systems for IT companies: SIMPLIFIED and GENERAL
For any business form of a company there is an open choice between a general and simplified taxation system. The simplified system can be split into two subtypes: with VAT or without VAT.
There are also special taxation systems for companies that meet certain requirements (for example, HTP residents).
As for IT companies, they often opt for a simplified taxation system, but in order to switch to such a system several criteria must be met:
- The average number of employees is no more than 100;
- For the switch from January 1, 2021, the amount of revenue for 9 months, cumulative from the beginning of 2020, has been set at no more than 1,538,843 Belarusian rubles for organizations and 330,750 Belarusian rubles for sole traders.
This simplified system can only be used if it was originally used to create the company or at the beginning of a new year.
As a rule, the general taxation system provides for the payment of the following taxes:
- 20% VAT.
- 18% income tax.
- Other taxes in accordance with the law (land, real estate, environmental, etc.)
When choosing a taxation system for your company, it is necessary to find out whether such a company falls under the criteria for the simplified system and which system will be more profitable, taking into account the peculiarities of the organization’s activities.
The most popular forms of IT business organization in Belarus
The process of registering an IT business is not different from registering a business in other fields. The most important thing is to determine the form of business for your future company.
Reasonably popular forms of business in this area are limited liability companies (LLC) and closed joint-stock companies (CJSC).
The most popular among IT companies is an LLC. Its peculiarity and advantage over a closed joint-stock company is the ability to exit the society at any time (except for bankruptcy). In CJSCs there is no such possibility. The only option to get rid of shares is to sell them.
Another important factor when choosing the form of business is the size of the minimum authorized capital of the organization. For LLCs, it is not established by law, but if you want to create a closed joint-stock company, the minimum authorized capital will be 100 basic units.
Each situation must be considered individually and the business form must be chosen based on the specifics of a particular business. However, as a general rule, a CJSC is more suitable for large or medium-sized businesses, while an LLC can be an excellent form of business for both large and small companies.
Authorized capital of IT companies
An authorized capital of IT companies is directly related to the business form under which such a company was created.
As a rule, the minimum size of the authorized capital is not established by law, but for a CJSC the minimum limit will be 100 basic units, and 500 basic units for an OJSC (open joint-stock company) .
For most business forms, an organization is given 12 months to form the authorized capital.
A special feature of IT companies is that if they want to join the HTP, the administration of the park may set separate requirements for the size of the authorized capital.
HTP regime for IT companies: taxation and other advantages
The main reasons for the ardent desire of IT companies to join the HTP are tax incentives. By law HTP residents are required to pay the following taxes:
- Dividend profits in the amount of 12% for legal entities or income tax on dividends in the amount of 13% for individuals;
- Income tax at the rate of 9%;
- Contributions to the Social Protection Fund (SPF) are paid based on the average salary in the country rather than on a specific one;
- Tax on income of foreign organizations – 5%.
There is no tax on real estate located on the territory of the HTP, as well as no VAT and income tax.
In addition to tax incentives, HTP residents are granted advantages in the fields of migration, customs, foreign economics and others.
For example, HTP residents do not need to obtain special permits and permits to attract foreign labour for implementation of labour activities of foreigners in their company.
Another example of the residents’ advantages is the option not to sell earned foreign currency.
The fee for the incentives that residents receive becomes a quarterly revenue deduction of 1%.
Employment relationships in IT companies
It is not uncommon for IT companies to formalize employment relationships in the form of a service contract with individuals.
This is convenient because such an individual is obliged to pay taxes themselves, and if any of the terms of such a contract are violated, the company has the right to terminate the contract unilaterally and demand compensation for its losses and other compensation.
However, working with an individual under such a contract carries certain risks, as the individual determines the ways and methods that will be used to perform this or that work. The IT company in this case cannot set the rules for its implementation and can only accept the completed work.
Sometimes companies pay taxes for individuals themselves.
In some cases, a civil contract is applied if you wish to hire an employee for a short period of time. Under such a contract, the company will be paying taxes as it would be if the employee was part of the full-time staff.
This king of agreement is not popular in IT companies, but it does exist.
It should be remembered that employment relationships include not only the competent registration of employees, but also a whole set of measures for their comfortable stay and work in the relevant organization.
Non-competition agreements in IT companies
The non-competition agreement is stipulated by the legislation of the Republic of Belarus for HTP residents and their employees.
An IT company that is part of the HTP may enter into such an agreement with its employee. Its essence is that the employee undertakes not to enter into any contracts with other companies that are competitors for such an IT firm, as well as not to conduct competitive activities in relation to such a company.
The agreement provides compensation for the employee’s acceptance of such obligations, as well as sets the term of its validity.
Non-poaching agreements in IT
Another specific agreement available to HTP residents is the non-poaching agreement. It is signed to prohibit organizations from poaching employees from each other.
The conclusion of such an agreement between an HTP resident and any third-party organization means that for the commission of actions that will cause an employee leaving a competitor’s company and transferring to their company, the damages or penalties stipulated in such an agreement will have to be paid.
These agreements are designed to limit unfair competition and protect employees from leaving for competitors.