REGISTRATION OF A COMPANY IN A FREE ECONOMIC ZONE (FEZ)
WHAT IS A FREE ECONOMIC ZONE
A free economic zone (FEZ) is a part of the territory of the Republic of Belarus with clearly defined borders and a special legal regime that establishes more favorable conditions for economic activity.
WHERE THE FREE ECONOMIC ZONES ARE LOCATED
In the Republic of Belarus there are 6 such territories, each of which is located on the territory of a separate regional administrative center and in the city of Minsk, namely:
– FEZ «Brest»;
– FEZ «Minsk»;
– FEZ «Gomel-Raton»;
– FEZ «Vitebsk»;
– FEZ «Mogilev»;
– FEZ «Grodnoinvest»;
NUMBER OF FEZ RESIDENTS
According to the data published on the website of the Ministry of Economy of the Republic of Belarus, as of August 2020 more than 420 organizations are FEZ residents. These organizations provide jobs for more than 134,000 people.
WHO CAN BECOME A FEZ RESIDENT: CRITERIA
Any legal entity or sole trader can become a FEZ resident if they are registered in the Republic of Belarus and are located within the borders of a free economic zone. To do this, one must sign a contract with the administration of the relevant FEZ.
DEVELOPMENT OF AN INVESTMENT PROJECT FOR FEZ
An investment project plays a crucial role in registering as a FEZ resident. The project for obtaining the status of a FEZ resident is developed on the basis of the form established by law. Such a project must meet the following criteria:
– volume of investment in fixed assets: at least 1 million euros;
– volume of investment in fixed assets: at least 500 thousand euros provided continuous investment over three years;
– creation and (or) development of production focused on export and (or) import substitution.
Each organization should approach the preparation of a business project individually, taking into account the specifics of its activities.
However, special attention should be paid to calculating the results of financial and economic activities (planned profit, profitability, and so on).
MAIN TAX PREFERENCES FOR FEZ RESIDENTS
– no income tax;
– exemption from real estate tax in cases defined by law;
– exemption from payment of land tax and rent for land plots in cases defined by law;
– exemption from payment of state duty for issuing special permits to foreign citizens and stateless persons, engaged by a FEZ resident to implement an investment project on the territory of the FEZ, for the right to engage in labour activity in the Republic of Belarus;
– financing of expenses for the creation of engineering and transport infrastructure required for the implementation of a FEZ resident’s investment project first of all at the expense of funds provided for in the State investment programme and local budgets, if a FEZ resident implements an investment project with a declared investment volume of more than 10 million euros.
MAIN CUSTOMS PRIVILEGES FOR FEZ RESIDENTS
Customs privileges for export of goods outside the FEZ territory:
– exemption from VAT levied by customs authorities when FEZ residents place goods, manufactured (achieved) using foreign goods placed under the customs procedure “Free Customs Area”, under the customs procedure of release for domestic consumption;
– exemption from payment of import customs duties and taxes (for raw materials placed under the customs procedure “Free Customs Area”) when exporting end product outside the customs territory of the Customs Union.
DOCUMENTS THAN NEED TO BE PROVIDED FOR OBTAINING THE STATUS OF A FEZ RESIDENT
The following documents must be submitted to the FEZ administration for consideration:
– copies of constituent documents alongside originals;
– copy of the certificate of state registration alongside the original document;
– business plan of the investment project in the approved form;
– receipt confirming payment of the state fee for registration as a FEZ resident.
Please note that a state fee of 1350,00 BYN (50 basic units) is charged for registration as a FEZ resident.
Should the administration make a decision to register one as a FEZ resident, the legal entity/sole trader is issued a certificate of registration as a FEZ resident.
GROUNDS FOR REFUSAL TO JOIN A FEZ
– failure to submit the necessary documents to the FEZ administration;
– non-compliance of the investment project with the established requirements;
– location of the organization outside the boundaries of a FEZ;
– failure to conclude an agreement on the terms of operation with the FEZ administration within the established time frame;
– absence of production areas and (or) land within the boundaries of a FEZ in the amount requested for the implementation of the investment project;
– recognition of the applicant as the loser of the contest in accordance with the Regulations of the relevant FEZ.
Should one be refused registration as a FEZ resident, the FEZ administration must provide a written notification indicating the grounds for refusal within 3 business days. The decision of the FEZ Administration may be appealed by the applicant in court.
Our law office has experience in registering companies in various FEZs located on the territory of the Republic of Belarus. Our lawyers will advise you on any issues related to joining a FEZ, as well as help you become a resident of a FEZ as soon as possible.