Regulation of Investment in the Republic of Belarus
1. General conditions for investment
In accordance with the Law on investments, investment is any property and other objects of civil law rights which belong to the investor on the basis of the ownership right, other legal basis allowing him to dispose of such objects, and which the investor invests in the territory of the Republic of Belarus in order to gain profits (income) and/or achieve other specific results or for other purposes not connected with personal, family, home and other similar use, in particular:
- movable and immovable property, including stocks, shares in the share capital, shares in the assets of the commercial organization established in the territory of the Republic of Belarus, monetary funds, including moneys raised, including loans and credits);
- rights to claim with their cost estimate;
- other objects of civil rights with an assessment of their value, except for such types of objects of civil rights, the availability of which is not allowed (objects taken out from circulation).
According to the Law on Investments there are following ways of investing in the Republic of Belarus:
1. creation of a commercial organization;
2. acquisition, creation, including through the construction of real estate, except for the purchase or construction by Belarusian citizens, foreign citizens and persons without citizenship, of houses, accommodation for residence of these citizens of the Republic of Belarus, foreign citizens and persons without citizenship and (or) members of their families;
3. acquisition of rights to intellectual property;
4. acquisition of stocks or shares in the share capital, shares in the property of a commercial organization, including cases of increase of the authorized capital of a commercial organization;
5. on the basis of the concession;
6. otherwise, except for cases prohibited by legislation of the Republic of Belarus.
2. Investors’ rights and obligations
The following rights of the investors are provided for by legislation of the Republic of Belarus:
- the right to exercise property and intangible rights in accordance with legislation of the Republic of Belarus;
- recognition of exclusive rights to intellectual property;
- the right to grant land plots for use, lease, into ownership in accordance with the laws of the Republic of Belarus on land use and protection;
- the right to create a commercial organization in the territory of the Republic of Belarus with any amount of investments, in any legal forms provided for by legislation of the Republic of Belarus;
- the right to make both a monetary contribution in the authorized capital in foreign currency and (or) Belarusian rubles and non-monetary contribution, which has its cost estimate, in accordance with procedure stipulated by legislation of the Republic of Belarus;
- the right to privileges and preferences established in accordance with the laws of the Republic of Belarus and (or) international legal acts binding upon the Republic of Belarus;
- the right to enter into an agreement(-s) with the Republic of Belarus (for more detailed information about this right please see cl. 3.3);
- the right to attract foreign citizens and stateless persons for labour activities in the Republic of Belarus.
Investors are obliged to:
- comply with the Constitution of the Republic of Belarus and legislative acts of the Republic of Belarus adopted in accordance with it;
- not take actions that constitute unfair competition as well as actions (inaction) aimed at prevention, elimination or restriction of competition, causing harm to rights, liberties, legal interests of other persons;
- perform other obligations established by legislation of the Republic of Belarus.
3. The right to conclude agreement (agreements) with the Republic of Belarus
For the purpose of creation of additional conditions for providing investments the investor (-s) has (have) the right to conclude an agreement(-s) with the Republic of Belarus connected with provision of investments according to the order and conditions stipulated by legislation of the Republic of Belarus.
The investment agreement with the Republic of Belarus is concluded on the basis of the decision of the state body or another state organization specified in accordance with legal acts of the Republic of Belarus.
The investment agreement with the Republic of Belarus shall define:
- object, amount, terms and conditions of providing investments;
- rights and obligations of the investor (investors) and the Republic of Belarus;
- liability of the parties to the agreement for non-fulfillment of its provisions;
- other conditions stipulated in accordance with legal acts of the Republic of Belarus.
4. Guarantees of investor’s rights
The Law on Investments guarantees:
- protection from uncompensated nationalization and requisition;
- unrestricted transfer of compensation outside the territory of the Republic of Belarus that was received as a result of nationalization possible only in cases of natural disasters, accidents, epidemics, epizootic diseases and other cases of emergency in the interest of the society at discretion of state bodies;
- the right of the investor, whose property was placed in requisition, to judicially claim the return of his preserved property, if circumstances in connection with which the requisition was performed are not valid anymore.
- unconditioned transfer* outside the territory of the Republic of Belarus of income (profits) and other legally obtained monetary funds connected with investing in the territory of the Republic of Belarus as well as payments made in favour of the foreign investor and connected with making investments, including:
a) monetary funds, received by foreign investors after partial or full termination of investing in the territory of the Republic of Belarus, including monetary funds received by foreign investors in the result of investments alienation as well as property created in the result of performing investments, other objects of civil rights;
b) monetary funds due to payment of wages to foreign citizens and stateless persons performing labour activities under the labour contract;
c) monetary funds due to foreign investors according to the judicial decision.
*after payment of taxes, duties and other obligatory payments established by legislation of the Republic of Belarus.
5. Guarantees and privileges for investors that concluded the investment agreement
1. Guarantee of damage compensation to the investor, caused by illegal actions (omissions) of state bodies and authorities of executive committees.
2. Investors have the right to:
- construction of objects, provided for by the investment project, together with development, expertise and approval according to the established order of the required documentation for each stage of the construction with simultaneous engineering of further stages of such construction;
- provision of a land plot without tender on a leasehold basis for construction of objects, provided for by the investment project with preparation of all necessary documents, concerning land plot allotment simultaneously with carrying out construction works;
- build the objects provided for by the investment project with the right to remove objects of flora without making compensation payments of the cost of the removed objects of flora;
- deduct in full of the VAT amounts (except for tax amounts that are not to be deducted according to legislation) paid at acquisition (import into the territory of the Republic of Belarus) of all goods, works, services, the property rights used for designing, construction (reconstruction), equipping of the objects provided for by the investment project, irrespective of the VAT amounts estimated on the basis of goods (works, services), property rights realization;
- select without carrying out tenders the general design organization, general contractor, subcontractors, construction organizations and other subjects for the construction of objects under the investment project as well as for their repairs, reconstruction and restoration.
3. Investors are exempt from:
- payment for the right to conclude a contract for the lease of a land plot;
- payment of the land tax or lease payment for state owned land plots provided for the construction of objects specified by the investment project for the term of designing and construction of such objects till December 31st of the year following the year when the construction of the mentioned objects was completed;
- compensation of losses of agriculture and/or forestry production caused by expropriation of land plots;
- payments into innovative funds for the period of the investment agreement validity;
- payments of import duties (taking into account international obligations of the Republic Belarus) and VAT in case of import into the customs territory of the Republic of Belarus of technological facilities and their spare parts for the objects connected with realization of the investment project;
- payment of state duty for issuing permissions for attracting foreign labour force into the Republic of Belarus, special permits for the right to be involved in labour activities I the Republic of Belarus, and foreign citizens and stateless individuals attracted by the investor and (or) organization created by this investor or with his share according to the established procedure in the Republic of Belarus for implementation of the investment project are exempt from state duty for issuing permissions for temporary residence in the Republic of Belarus;
- VAT and the profit tax, obligation to pay which arises in connection with gratuitous transfer of permanent structures (buildings, constructions), isolated premises, permanent structures under construction and other permanent assets transferred for implementation of the investment project to the ownership of the investor and (or) organization created by this investor or with his share according to the established procedure in the Republic of Belarus.
6. Investments on the basis of concessions
Investment in respect to subsoil, water, forests, land and facilities that are owned only by the state or activity over which there is exclusive right of the state may be carried out on the basis of a concession by means of the concession contract conclusion.
In accordance with the Law on concession the concession contract is a written agreement by virtue of which one party (concessor) undertakes to provide another party (concessionary) with the right to possession and use of the concession object or the right to perform a type of activity on a payment or gratuitous basis for a certain time period.
Concession objects are provided into concession, as a general rule, in four stages:
1. formation, approval, publication in print mass media and publication in global computer network Internet of the lists of concession objects of the Republic of Belarus and concession objects of administrative-territorial units, determining according to them the type of the concession contract and the way of choosing the concessionary;
2. determining the concession authority, development, agreement and approval of concessional offers;
3. organization and conducting a competition (auction), deciding on the concessionary;
4. conclusion of the concession contract.
Concession contract can be concluded for the period up to ninety nine years unless in respect to certain concession objects the shortest term is established by legislative acts.
For providing the concession object into use in accordance with the concession contract the investor pays a single payment:
- to the republican budget — for the concession objects of the Republic of Belarus, for the concession objects, information about which constitute state secrets, and for the concession objects that are strategically important for the Republic of Belarus;
- to the corresponding local budget- for the concession objects of administrative-territorial units.
The amount of the single payment, as a general rule, is determined according to the results of the competition (auction) or in the amount:
- offered by the single participant of the competition, whose offers correspond to the conditions of the competition, in case the competition is recognized as failed;
- initial payment amount, increased by five percent, in case the competition is recognized failed and there is consent of the single participant of the auction to the conclusion of the concession contract with him under the conditions offered to him;
- established by the President of the Republic of Belarus, in case of the concession contract conclusion without holding a competition (auction);
- established by the agreement of the parties, but not less than the initial amount of the single payment, in case of a new concession contract conclusion by the President of the Republic of Belarus after the expiration of the maximum validity term of the concession contract.
7. Disputes resolution between an investor and the Republic of Belarus
According to the Law on investments disputes between an investor and the Republic of Belarus that arise at the time of making investments are subject to pre-court resolution by means of negotiations unless otherwise established by legislative acts of the Republic of Belarus.
Disputes between an investor and the Republic of Belarus that haven’t been regulated in a pre-court procedure by means of negotiations during three months from the date of receipt of a written offer on their resolution are to be settled in a judicial proceeding according to legislation of the Republic of Belarus.
If disputes not relating to the exclusive jurisdiction of courts in the Republic of Belarus arisen between a foreign investor and the Republic of Belarus have not been resolved in a pre-court procedure by means of negotiations during three months from the date of receipt of a written offer on their resolution in a pre-court procedure, then such disputes regarding the choice of the investor may be also resolved:
- in arbitration court established for resolution of each specific dispute according to the Rules of Arbitration of the United Nations Commission on International Trade Law (UNCITRAL), unless parties to the dispute agree on otherwise;
- in the International Centre for Settlement of Investment Disputes (ICSID) in case this foreign investor is a citizen or a legal entity of the state-party to the Convention on Settlement of Investment Disputes between states and individuals ad legal entities of other states as of March 18, 1965.
In case the international treaty of the Republic of Belarus and (or) the contract concluded between an investor and the Republic of Belarus stipulate otherwise regarding settlement of disputes between the investor and the Republic of Belarus that arise at the time of making investments, then the provisions of this international treaty of the Republic of Belarus and (or) the contract concluded between an investor and the Republic of Belarus.
8. Investment agent
Investment agent status appeared in legislation of the Republic of Belarus in 2009.
Investment agent — a person authorized to represent interests of the Republic of Belarus on issues of bringing investments into the Republic of Belarus. Creation of the investment agent status is aimed at improvement of work on attracting investments into national economy of the Republic of Belarus.
Residents of the Republic of Belarus, both legal entities and individuals, as well as nonresidents, including foreign citizens that are not individual entrepreneurs may become investment agents.
Authorities of the investment agent are performed for the purpose of development of administrative-territorial units and branches of economy of the Republic of Belarus as well as for realization of investment projects.
Legal entities and citizens claiming the receipt of authorities of the investment agent shall submit to the state body (in case of attracting investments into development of the corresponding branch) or to the executive committee (in case of attracting investments into development of administrative-territorial unit) the following documents:
- copy of the certificate of state registration;
- information about the applicant;
- contract for delegation of authorities.
In case the state body or executive committee approve of the applicant, the contract for representation of interests of the Republic of Belarus on issues of attracting investments is concluded with the applicant.
Within the scope of representation of interests of the Republic of Belarus, the investment agent can perform such actions as to hold negotiations with potential investors, develop a mechanism for implementation of the investment project, draft documents supporting agreements with potential investors. In order to implement these actions the investment agent may provide future investors with consulting, legal and other services.
9. External guarantees of investments in Belarus
Multilateral Investment Guarantee Agency
In order to create conditions corresponding to international standards for insurance against risks of foreign investors in the territory of our country, attraction of foreign financial resources without providing guarantees of the Government of the Republic of Belarus to foreign investors and, correspondingly, without increase of the state external debt amount of the Republic, the Government took some measures aimed at inclusion of the Republic of Belarus into members of Multilateral Investment Guarantee Agency (hereinafter — MIGA).
At present all the procedures required for affiliation of the Republic to MIGA which is the establishment of the Group of organizations of the World Bank and therefore allows investors to insure the ongoing projects against political and non-commercial risks. Corrections to the Convention on the establishment of MIGA have been validated. The Agreements on legal protection of the guaranteed foreign investments and on use of local currency are concluded between the Government of the Republic of Belarus and MIGA.
At present both Agreements are validated.
Thus, the Republic of Belarus has fulfilled all necessary procedures in order to ensure its international obligations and membership in MIGA.
Agreements on assistance in realization (encouragement) and protection of investments
In order to create favourable conditions for investments made by investors of a state in the territory of the other state, acknowledging that mutual assistance in realization and protection of such investments facilitates development of business initiative and prosperity growth of both states, the Republic of Belarus has signed about 60 agreements on assistance in realization (encouragement) and mutual protection of investments.
In particular, the Agreements provide for the following guarantees:
- National treatment (each party treats investors of the other party’s state in a not less favourable way than the one that the party grants in similar situations to investors of its own state, etc.);
- most favoured treatment (each party treats investors of the other party’s state in a not less favourable way than the one that the party grants in similar situations to investors of any third state, etc.);
- minimum standards (each party treats investments of investors from the other party’s state according to the international law, including fair and equal treatment, protection and safety, etc.);
- expropriation and compensation (neither Party may expropriate or nationalize investments both directly and indirectly by means of measures similar to expropriation or nationalization, for other purposes than: for the public benefit; on nondiscriminatory basis; according to the appropriate legal procedure; and on conditions of compensation payment, etc.);
- other guarantees.