Belarus Free Economic Zones (FEZ)

The Law of the Republic of Belarus of December 7, 1998 “On Free Economic Zones” sets forth legal and organizational basis for creation, activity and liquidation of free economic zones on the territory of the Republic of Belarus. The status of foreign investors on the territory of FEZ is also regulated by the Investment Code of the Republic of Belarus, some edicts of the President of the Republic of Belarus and decisions of the Council of Ministers concerning the creation and regulation of relations for every FEZ. The free economic zone is a part of the territory of the Republic of Belarus with strictly defined boundaries and a special legal regime establishing more favorable conditions for carrying out entrepreneurial or other economic activity. Industrial, scientific and technological, export, trade, tourist and recreational, insurance, bank and other kinds of activity may be developed in the FEZ (article 1 of the Law of the Republic of Belarus “On Free Economic Zones”).

A FEZ resident is a legal or natural person as an entrepreneur without forming a legal person registered by the FEZ administration and those within the reach of the legal regime of the FEZ.

There is a privileged procedure of taxation established for FEZ. FEZ residents pay lesser number of taxes, and their rates are reduced. For example, the profit received by the residents of Gomel-Raton FEZ for the sale of goods (works, services) of their own production is exempt from the taxation for the period of 5 years from the moment of its declaration including the first profitable year. Kinds of the taxes that are in effect on the FEZ territory, taxes rates and peculiarities of privileged taxation are established by the President of the Republic of Belarus or by the Council of Ministers of the Republic of Belarus under his instruction.

 FEZ territory is a part of the customs territory of the Republic of Belarus. In relation to levying of the customs duties, taxes and application of measures of economic policy FEZ may be considered to be in the customs regime of free customs zone.

When importing of foreign and domestic goods to the territory of the free customs zone, the taxes and customs payments except for the dues for the customs processing are not collected and the measures of economic policy are not applied. When importing the goods from the territory of free customs zone to the rest of the customs territory of the Republic of Belarus the taxes and customs payments are taken and measures of economic policy are applied depending of the goods origin. When exporting the goods originating form the FEZ territory outside the Republic of Belarus the taxes and customs payments except for the dues for the customs processing are not collected and measures of economic policy are not applied. In relation to the goods not originating from the FEZ territory, the collection of taxes and customs payments and application of measures of economic policy, when they are exported from the FEZ outside the Republic of Belarus, are carried out in accordance with legislation of the Republic of Belarus.

All personal rights and freedoms provided by legislation of the Republic of Belarus are guaranteed of the territory of FEZ; no discrimination and other illegal limitation of rights of economic entities are allowed; forced nationalization, requisitioning or similar measures are prohibited, except for the temporal termination of export of invested property from the FEZ territory till the investor pays out his obligations.

National currency of the Republic of Belarus and hard foreign currency may be used for settlements in the FEZ in accordance with the procedure determined by the National Bank of the Republic of Belarus.

The Edict of the President of the Republic of Belarus of June 10, 2005 No. 262 “On Some Matters of Activity of Free Economic Zones on the Territory of the Republic of Belarus” establishes a single legal regimes (customs and taxation) of activity for a long period for all FEZ, as well as liability of economic entities for violating the conditions of their work in the mentioned zones. Reorganization of free economic zones on the basis of their territory in order to exclude inapplicable or unusable parts and the possibility to include into FEZ the lands that have engineering infrastructure and the area of at least 50 hectares.

Development of the parts of free economic zones with the area of less than 50 hectares is suspended and the FEZ regime on the territories is limited to 5 years. This term may be prolonged by the decision of the President of the Republic of Belarus, if necessary.

FEZ administrations have the status of a republican legal person in the form of establishment that exercises its powers within its statute approved by the Government.

There is a closed list of tax payments to be made by the residents of all FEZ at the single rates.

Besides, it is established that the special legal regime covers only the production produced by the FEZ residents themselves subject to its export, as well as the import substituting goods according to the list agreed with the President of the Republic of Belarus.

 Attracting foreign engineering and technical and management staff by the FEZ residents is not limited.

FEZ foreign investors are included into the system of state guarantees of protection of the investments stipulated by the legislation of the Republic of Belarus on foreign investments. The state guarantees to foreign investors of the FEZ the right to return their share in enterprise’s property on its depreciated value, as well as transfer of the income due to them including the income in foreign currency obtained from the investments made into the zone, outside the FEZ and outside the Republic of Belarus. Today there are the following free economic zones in the Republic of Belarus:

-          “Brest” – created by the Edict of the President of the Republic of Belarus of March 20, 1996 No. 114 (http://www.fez.brest.by/en/);

-          “Vitebsk” - created by the Edict of the President of the Republic of Belarus of August 4, 1999 No. 458 (http://www.fez-vitebsk.com/en/);

-          “Grodnoinvest” – created by the Edict of the President of the Republic of Belarus of April 16, 2002 No. 208 (http://www.grodnoinvest.com/eng/);

-          “Gomel-Raton” – created by the Edict of the President of the Republic of Belarus of March 2, 1998 No. 93 (http://www.gomelraton.com/index_en.php);

-          “Minsk” – created by the Edict of the President of the Republic of Belarus of March 2, 1998 No. 93 (http://www.fezminsk.by/eng/);

-          “Mogilev” – created by the Edict of the President of the Republic of Belarus of January 31, 2002 No. 66 (http://www.fezmogilev.com/eng/).