High-Tech Park in Belarus
The Hich-Tech Park is a tax and legal regime in Belarus that contributes to the favourable development of the IT business. This is the Belarusian analogue of Silicon Valley in the United States. The Belarusian HTP operates according to the principle of extraterritoriality. The number of HTP residents is growing steadily. The park was created primarily for software outsourcing companies and was focused on them, but as it developed, the ranks of residents were completed with a large number of hardware companies. 758 companies were registered with the HTP until January 2020, the total number of employees exceeded 58 thousand people. Thanks to the activities of the HTP, the country is holding back the problematic process of the outflow of highly qualified specialists.
What is the High-Tech Park?
HTP is a special tax and legal regime. The mission of the Park is to create optimal conditions for the development of the high-tech industry, as well as to concentrate opportunities to improve the efficiency of the national economy.
The success of the project is rooted in the past. Belarus was the assembly shop of the Soviet Union, driven by highly qualified personnel. This contributed to the development of science and a strong school for training specialists. The high level of Belarusian technical education and cooperation with international educational centers make it possible to create projects that are unique in their complexity. There are about 80 laboratories in Belarusian universities. Courses are held for children, for retraining adults and for deepening the skills of IT specialists.
Over 65 countries of the world are HTP regular customers.
Thus, the country's engineering potential serves as the engine of the economy, and favourable tax and legal conditions contribute to its development.
Location of the High-Tech Park
The park is located in the northeastern part of Minsk and occupies about 55.8 hectares of land. It is planned that one day the Park should become a high-tech city.
It is noteworthy that the legal regime of the Park extends to the entire territory of Belarus, therefore, an IT company can be registered in any region of the country and at the same time fall under the jurisdiction of the HTP.
Park management structure
The activities are managed by the administration of the Park. The administration is a republican legal entity in the form of an governmental institution. It is headed by a director appointed by the President.
The general coordination of the HTP work and management of its activities are entrusted to the Supervisory Board, which employees are approved by the President.
Legal regime of the High-Tech Park
The trend of liberalization and improvement of the investment climate is becoming more and more popular in Belarus. It is implemented, in particular, by the introduction of special legal regimes aimed at the development of certain industries and more effective employment in the country.
For the HTP, such a regime has been established based on the principle of the activity being carried out. The preferences will be valid until January 1, 2049.
The Park Administration can submit draft laws and regulations on HTP activities for the government's consideration. The Supervisory Board can change the criteria for admitting resident candidates, as well as the criteria for evaluating their business plans.
The legal aspects of the activities of the members of the Park are simplified. This applies to keeping records, foreign exchange transactions, opening accounts. In order to attract specialists from abroad, visa exemptions are provided for employees; permits are not needed to hire foreigners.
How to become a resident of the High-Tech Park?
IT companies benefit from being members of the Park. Let's consider what stages the company will have to go through to get into its list.
First of all, an application for registration as a resident is required. The next step is to submit an application with an attached list of required documents to the HTP Administration. At the stage of considering the application, the Administration examines the submitted documents and sends its opinion to the Supervisory Board. When the Supervisory Board makes a positive decision, the stage of registration and receipt of a certificate of registration of a resident begins. Refusal to register can be appealed in a court.
• application (form is established);
• copies of charter documents and certificate of state registration;
• business project (the form is established);
Requirements for residents
The opportunity to become a resident of the Park is provided exclusively for legal entities and individual entrepreneurs located in Belarus. The duration of the activity, the subject, the amount of the funds and other factors do not matter. In addition, the activities carried out must be included in the list established by law.
Types of activities permitted for the residents
The activities carried out by the residents of the Park must be related to the field of information technology. A complete list can be found in Presidential Decree №12. The list is open.
Organizations, as a rule, choose from the HTP list one or several types of activities.
Within a month from the date of filing in an application, a decision on registration is made. The Administration office can refuse if the scientific and technical expertise of the submitted documents gives a negative result, or if the Supervisory Board considers the business project not important for the development of the sphere.
If the decision is positive, the Administration enters information about the organization in the register of residents and issues a certificate of registration to the applicant. In addition, the Administration shall notify the governmental institutions in writing within five days.
The date of registration is considered to be the date of the decision by the Supervisory Board.
Business project to join the HTP
In accordance with clause 4 of the Regulations on the Park of High Technologies, approved by the Decree of the President of September 22, 2005 No. 12, for registration as a resident of the Park of High Technologies, a legal entity or individual entrepreneur submits to the administration of the Park a business project, which is proposed to be implemented as a resident High technology park. To draw up a business plan, it is important to familiarize yourself with this regulatory act and methodological recommendations developed by the HTP administration. In principle, everything has been done so that the applicant for the HTP residence could independently or by the efforts of his employees. The business project must be numbered, including all attachments to it. Other additional attachments (reviews, certificates, etc.) to a business project should have a separate numbering. The volume of a business project should be no more than 18 pages. When developing a business project, the following requirements must be met:
• all types of activities of the company are indicated, it is important that the types of activities are indicated in strict accordance with the wording of paragraph 3 of the Regulations on the HTP;
• the types and volumes of goods (works, services) intended for sale, property rights to intellectual property objects are indicated;
• justification of the need to sell goods and services;
• the planned results of financial and economic activity are indicated. The period for calculating all indicators is 1 year, all calculations must be made in Belarusian rubles. A business project should be written as specific as possible for those activities, processes and methods of interaction in the company that are already established and used. In the plan, one should not speculate and philosophize hypothetically, figures and facts are important here.
The text of a business project must be concise and meaningful. The structure of the business plan: title page, content, summary, characteristics of the legal entity and its development strategy (no more than 6 pages), characteristics of production and economic activities, its features (2 pages). Here it is worth reflecting the business model of the company (custom, product, mixed, development center), industry specialization, geography of development, sales markets (specifically with which countries you work), whether you carry out licensed activities, information about available (or planned to receive) special permits (licenses) for certain types of activities.
Do you have an exclusive right to the intellectual property objects developed by the applicant? Provide information on the availability and (or) use of patents (national, foreign and international), registration (deposit) of computer programs. Indicate the amount of proceeds from sales per month, the availability and amount of recent investments in your company, the amount of investments by the founders themselves. Describe the method of development monetization. Next, it is important to indicate which taxation system your company uses (Simplified taxation system, with or without Value Added Tax, general taxation system). Also here you provide a description of the sales, marketing, promotion, production, quality assurance, technical support and user support, research and development processes built in.
The indicators of the financial and economic activities of the legal entity ‒ the applicant are given according to the accounting data of the current financial year, for the period from the beginning of the year to the month preceding the submission of documents for registration of the company as a resident. It is important to characterize the availability of the applicant with the means of production necessary to carry out activities as a resident of the Park of High Technologies. There are fixed assets without a detailed description of the technical characteristics (computer equipment, workstations, servers, and so on) and intangible assets.
Benefits of HTP membership
The park offers favourable conditions for the development of business and human potential. The HTP demonstrates how tax cuts lead to higher wages and an increase in the tax base. The extraterritorial principle of registration, according to which the location of a resident does not have to be within the territory of the HTP, allows regional companies to join the high-tech race. Also, membership in the HTP opens wide educational opportunities. Company employees undergo training and certification in training centers of international IT giants.
That is interesting that five of the ten largest world corporations are customers of the Park, and applications developed at the HTP are used by over a billion users.
Tax benefits for residents of the High-Tech Park
- VAT benefits;
- income tax benefits;
- benefit for the Federal Social Welfare Fund;
- tax relief on real estate;
- land tax relief;
- benefit on offshore tax;
- benefits for local taxes and fees (for the city of Minsk).
Customs benefits for residents of the High-Tech Park
Membership in the HTP exempts from import customs duties and VAT when importing equipment for the implementation of investment projects within the framework of activities from the HTP list. There is a list of such equipment. In order to be exempted from duties, you need to obtain an opinion from the Park Administration on the purpose of the imported property.
The organization will be able to use such property for other purposes and even transfer it to others. But for this you have to pay all customs fees.
Other preferences for residents of the High-Tech Park
Other benefits are also provided. In particular, a simplified procedure for maintaining primary accounting documentation is provided for members. In order to open accounts in foreign banks, the permission of the National Bank is not required, currency transactions can be carried out in a notification manner, and in addition, an exemption from the sale of currency is provided. Foreign economic transactions are allowed to be executed in non-documentary form. Foreign trade operations are not a subject to the legislation on the procedure for conducting and controlling the WTO.
There are also preferences in the employment in order to attract foreign specialists.
Payroll taxes for HTP residents
A feature of Belarusian legislation is that HTP residents pay 35% to the Social Security Fund not on the actual salaries of their employees, but on the average salary in the country, which is significantly lower than the real salaries of representatives of this high-tech business sector. This is a real highlight, attracting hundreds of entrepreneurs from all over the world. Income tax - until 2021, a preferential rate of 9% was in effect, but today the rate has become equal to the average tax rate in the country and has taken on a value of 13%. It should be noted that in case of positive dynamics of the economic situation in the country, the government promised to return the preferential rate for HTP residents, since Belarus, according to the vector of the elite's policy, is a country of «high technologies».
Income tax for HTP residents
Income tax for HTP residents is 0%. This is a serious relaxation, as in the whole country it is 1%, and in other neighboring countries, for example, in Russia – 18%, in Ukraine ‒ 9-19%, in neighboring Latvia ‒ 15%. Thus, the government of Belarus stimulates the attraction of foreign capital and the development of the country's investment attractiveness.
Reporting for HTP residents
The report is filled out on the basis of accounting data and personnel records of a legal entity ‒ a resident of the HTP and is submitted in Excel format to the HTP Administration through the interdepartmental document management system. A resident is not exempt from the obligation to submit a report even in the absence of performance indicators. The deadline for submitting the report is the 30th day of the month following the reporting period (quarter). There are three sections in the form:
• «Key performance indicators»;
• «Number of employees and wages»;
• «Information on the understatement (overstatement) of the amounts of deductions from the HTP administration to be paid (returned) according to the report, in which incomplete information or errors were found».
The report reflects data on a legal entity as a whole, including data on the subdivisions included in its structure, including those with a separate balance sheet, regardless of their location (except for structural subdivisions located outside Belarus that have a separate balance sheet).
Payment of 1% of revenue for HTP residents
This is perhaps the only additional deduction from HTP residents, which is not paid by all other taxpayer organizations registered in Belarus. Payment of deductions to the administration is one of the legally established mandatory conditions for carrying out activities as a resident of the HTP. These deductions are prescribed to be included in the costs taken into account in taxation. In connection with the massive accession of organizations to the HTP, the Ministry of Taxes and Duties explained how to calculate VAT and income tax on proceeds from the sale of work, if such work was started or fully carried out before the organization acquired the status of an HTP resident, and the documents on them were signed after. On this score, the position of the Ministry is as follows. If the primary documents for the work performed were drawn up during the period when the organization already had the status of an HTP resident, and the moment of their actual implementation and reflection in accounting also falls on this period, then the proceeds from the implementation of these works are exempted from both VAT and income tax. If an HTP resident gives gifts to his employees or provides sponsorship in the form of goods to other organizations, then the taxation will be as follows. When transferring new things from VAT and income tax, the HTP resident is exempt. If before that they were in use, the named taxes will have to be calculated.
Crypto exchangers as HTP residents
After March 28, 2018, activities with tokens (cryptocurrency), for example, a crypto platform operator, an exchange office operator, other activities using digital signs (tokens), including those containing signs of professional and exchange activities in securities, investment fund activities, securitization, as well as the implementation of operations for the creation and placement of their own digital signs (tokens) can not be carried out by both legal entities and individuals who are not residents of the HTP. For firms wishing to work with cryptocurrency, a Regulation has been developed that regulates both the rules for opening and running such a business, and the requirements for the personality of the main officials of the organization. For example, when submitting an application, your firm must have three years of positive experience in fulfilling obligations in the field of cryptocurrency transactions; the statutory fund of such an organization must be at least 2 million Belarusian rubles, the organization must receive an external audit opinion. For officials of such organizations, special requirements for experience and business reputation have been developed. This applies to the chief accountant, manager, persons who ensure the functioning of the crypto exchanger.
Legislative regulation of the High-Tech Park
The main document of the IT industry - Decree №12 was signed by the President in 2005. The resolutions of the Council of Ministers and other legal acts were made as well. As the sphere develops, the decree is amended.
Photo: park.by, usiminsk.by