The IT industry is the engine of economic growth in Belarus, and the development of legal regulation of this industry has played an important role in this. The emergence of many IT organizations, and, accordingly, large IT projects on the territory of Belarus, is largely due to the adoption of Decree No. 12 of September 22, 2005 "On the Hi-Tech Park" (hereinafter - HTP), which secured guarantees of the essential benefits provided for in it for HTP residents.
The fact that the HTP project has taken place and is developing further is evidenced by the fact that the number of HTP residents currently numbers more than 1020 companies and is steadily growing.
Among the significant benefits provided by the Belarusian legislator for HTP resident IT companies are the following:
- abolishing the need for mandatory exchange of primary accounting documents (contracts, acts, certificates) between the parties with the presence of the original seal and translation of documents into Russian;
- cancellation of the requirement for mandatory sale of foreign currency on the stock exchange;
- as well as many other benefits that contribute to the mobility of business development in a rapidly changing world.
With the adoption of Decree No. 8 of December 21, 2017 "On the development of the digital economy", many issues of the activities of HTP resident companies and just IT companies in Belarus were resolved in a positive way.
It should be noted that the development of legislation in the field of IT was significantly influenced by the active participation of representatives of the IT community in the development of Decree No. 8, which indicates the fact that the Belarusian state is open to dialogue with business.
Next, we will consider the conditions of entry, advantages and disadvantages of residence in the HTP, taking into account the changes made, as well as an overview of the creation of an IT firm without joining the HTP.
The process of joining the HTP takes at least three months and requires compliance with the following conditions:
A) Creation of a legal entity on the territory of Belarus, regardless of the locality.
B) Compliance of the type of activity conducted by the candidate for entry into the HTP with the approved list (given below).
The company must engage in one or more of the activities listed below (however, it is possible to conduct other high-tech activities in coordination with the HTP Supervisory Board). However, the expansion by the HTP Supervisory Board of the normatively established list is a rare exception, in connection with which applicants for HTP resident status should focus on approved activities:
- analysis, design and software of information systems;
- data processing activities using third-party software or proprietary software;
- fundamental and applied research, experimental developments in the field of natural and technical sciences (performing research, development or experimental technological work related to the activities of the Hi-Tech Park, including in the field of information society development) and the implementation of the results of such research and development;
- development or separate stages of development (research, design (construction), testing, technical testing) of materials, technologies, devices and systems of micro-, opto- and nanoelectronics, microelectromechanics and implementation of the results of such developments, as well as the implementation of materials, technologies, devices and systems of micro-, opto- and nanoelectronics, microelectromechanics and compatible embedded software developed by the resident of the Hi-Tech Park;
- development or separate stages of development (research, design (construction), testing, technical testing) of technologies, devices and systems of mechatronics, embedded systems, software and hardware, software and hardware complexes, components and computer equipment and the implementation of the results of such developments with the provision of services for their development in production or without the provision of these services;
- development (research, design (construction), testing, technical testing) of equipment for data transmission systems, technologies, devices and systems of radar, radio navigation, radio communication, radio control, radio frequency identification and implementation of the results of such developments with the provision of services for their development in production or without the provision of these services;
- development or separate stages of development (research, design (construction), prototyping, testing, technical testing), production of high-tech materials, technologies, high-tech devices and systems, embedded systems, software and hardware, software and hardware complexes and software compatible with them, as well as the sale of manufactured products and (or) development results with the provision of services for their development in production and (or) related services or without the provision of these services;
- activities for technical and (or) cryptographic protection of information, including the use of an electronic digital signature;
- activities related to the design, development, implementation, implementation or execution of individual stages of implementation, support, maintenance, operation of software and (or) hardware and software systems based on and (or) using cloud computing technologies;
- consulting organizations on business and management issues in order to increase their efficiency with the provision of services for the integrated management of the development and implementation of integrated information systems and technologies;
- analysis of information needs of legal entities and individual entrepreneurs (system analysis, business analysis), consulting on the use of information technologies for the purpose of innovation (reengineering) of business processes with the development of technical requirements for information systems and software;
- audit of information systems and software in the process of their development, implementation and operation for compliance with technical requirements and (or) information needs of users;
- provision of services for system maintenance of computer equipment and local area networks of state information systems;
- provision of automated services for the search, selection, processing and sorting of data at the request of third parties, and providing them with information using the global computer network Internet;
- activities related to the design, development, maintenance, implementation, operation of software and (or) software and hardware based on or using the register of transaction blocks (blockchain), other distributed decentralized information systems, including those using cryptographic information protection tools;
- development, maintenance, operation and implementation of unmanned vehicle control systems;
- development, maintenance and implementation of hardware and software technologies for the financial sector (contactless technologies for cashless payments, mobile payments, electronic trading, etc.), financial information technologies;
- creation, training of neural networks and other algorithms in specialized sections of artificial intelligence and implementation of the results of this activity;
- development or separate stages of development of medical technologies, biotechnologies and implementation of the results of such developments;
- development or separate stages of development of aviation, space technologies and implementation of the results of such developments;
- activities to provide services to non-residents of the Republic of Belarus using software (hardware and software) developed with the participation of a resident of the Hi-Tech Park for the management (implementation) of auxiliary production, administrative and business processes of organizations (outsourcing of business processes);
- activities for the provision of services for the provision of software and technical capabilities through the global computer network Internet for establishing contacts and making transactions between sellers and buyers (including the provision of a trading platform operating in the global computer network Internet in real time) using software developed with the participation of a resident of the Hi-Tech Park. For the purposes of this type of activity, if the seller and the buyer are residents of the Republic of Belarus, payment acceptance, settlement services and other transactions when making transactions between them on the territory of the Republic of Belarus are carried out in accordance with the legislation of the Republic of Belarus;
- activities for the provision of advertising, intermediary services, with the exception of banking transactions carried out on the global computer network Internet using software developed with the participation of a resident of the High-Tech Park;
- activities related to the development, implementation, implementation of the concept of a computing and communication network of physical objects equipped with built-in technologies for interaction with each other and with the external environment (Internet of Things);
- educational activities in the field of information and communication technologies, including through the global computer network Internet, according to programs approved by the Park administration;
- software publishing activities;
- provision of services related to the creation and placement of digital signs (tokens) using the global computer network Internet, including services for the promotion of digital signs (tokens), consulting and other related services;
- activity of the cryptoplatform operator;
- the activity of the cryptocurrency exchange operator;
- other activities using digital signs (tokens), including those containing signs of professional and exchange-traded securities activities, investment fund activities, securitization, as well as the implementation of operations to create and place their own digital signs (tokens);
- activities for the promotion of software, including computer games, for any platforms, including the provision of marketing, advertising, consulting services using the global computer network Internet;
- data processing center services;
- provision of services based on cloud computing technologies using software and (or) hardware and software (complexes) developed with the participation of a resident of the Hi-Tech Park;
- activities for the creation of audiovisual, musical works using software developed with the participation of a resident of the Hi-Tech Park, the creation of static materials and video materials using computer graphics;
- activities in the field of esports, including the training of esports teams, the organization and conduct of competitions, the organization of their broadcasts, the provision of advertising services in the implementation of such activities;
other activities in the field of new and high technologies by the decision of the Supervisory Board.
Obtaining HTP resident status entails obtaining the right to the following benefits:
- Tax benefits:
- Simplified workflow:
- No need for mandatory sale of foreign currency on the stock exchange and other benefits in the field of currency regulation;
- Simplified procedure for hiring foreign citizens without the need to obtain a special work permit in Belarus.
As a general rule, only citizens of the EAEU member states can work without a special permit obtained from the Ministry of Internal Affairs.
- Stability of HTP legislation (a special legal regime for HTP and HTP residents has been established until January 1, 2049).
- High professional competence of Belarusian personnel in the IT field;
- Elements of English law have been introduced in Belarus, which provide an opportunity for the development of venture investment of startups without withdrawing transactions to foreign jurisdictions.
We are talking primarily about convertible loans, arbitrable shareholder agreements and a significant increase in opportunities for the use of foreign law. The use of smart contracts has also been legalized, without which any ICO is objectively impossible.
A candidate for HTP resident status, as well as a HTP resident, may face the following problematic issues when obtaining residency, as well as the subsequent conduct of their activities:
- Not every company will be able to become a HTP resident, in particular at the initial stage. In case of refusal to join the HTP, the company will be forced to conduct its activities in accordance with the requirements for ordinary Belarusian firms.
As of the end of 2019, there were more than 500 resident companies in the HTP, while the total number of Belarusian companies in the IT sector was at least 1000.
As of the beginning of 2021, the total number of HTP residents is more than 1020 IT companies, the total number of HTP residents' employees is more than 69,800 people. Such indicators show that an increasing number of companies note the advantages of joining the HTP and, after joining, use all the preferences provided.
At the same time, it should be noted that most companies that do not join the HTP have a small number of employees and revenue, that is, in fact, they are representatives of small businesses.
- Every calendar year it is necessary to undergo an audit on all business operations of the HTP resident;
- It is necessary to participate in the development of the social sphere in cooperation with the HTP Supervisory Board, for example, to conduct educational courses in coordination with educational institutions;
- It is possible to exclude a resident from the HTP if a business project is not completed, there is no profit and other violations of the HTP Regulations, with the loss of benefits and preferences of the HTP resident and the need to pay unpaid taxes and penalties due to the application of benefits for the calendar year in which the decision was made to exclude the resident from the HTP.
It is worth noting that there were no cases of unmotivated exclusion from HTP. This tool is more of a preventive nature.
*current as of March 23, 2021
A) Registration of a legal entity in HTP
B) Preparation of a business project;
It is advisable to entrust the development of a business project to specialists who have experience in the development and protection of more than one business project.
At the moment, the strict requirements for a business project are as follows:
- The content should take no more than 18 pages (taking into account the title person, content, passport). This requirement has been introduced because there is a large flow of candidates to join the HTP;
- The business project should reflect the following points: summary of the project; characteristics of the legal entity and its development strategy; description of goods (works, services, property rights) planned for release within the framework of the project; analysis of the sales market, current and planned results of financial and economic activities, investment plan, investment objects, corporate social responsibility, passport of the legal entity.
C) Taking up the queue for entry by sending a business project to the HTP email. At the moment, due to the urgency of joining the HTP, applications for joining the HTP are considered within 3-4 months.
D) Three months after sending the letter, the candidate for admission receives a reply letter with a business project, which will contain comments and recommendations from the HTP, as well as an invitation to officially submit documents to the HTP.
D) For the official submission of documents, it is necessary to certify the constituent documents of the legal entity (the charter (the constituent agreement - for a commercial organization operating only on the basis of the constituent agreement), the certificate of state registration of the legal entity) and the final version of the business project with the comments from the HTP taken into account (or partially taken into account);
D) The verification of each business project of a candidate for HTP membership takes place in two stages: the Expert Council and the Supervisory Board. The Expert Council evaluates the level of technologies and software in accordance with the directions of HTP activities for attributing them to new and high technologies, conducts scientific and technical expertise, in particular, evaluates the advantages, competitiveness, importance and significance for the development of the IT sphere, export potential and import substitution potential. The Supervisory Board directly decides on the registration of the IT company or on the refusal to register as a resident of the HTP;
F) Obtain a certificate of obtaining HTP resident status and notify the servicing bank, the tax service and the FSZN about it.
If you are planning to join the HTP and meet all of the above recommendations, you can contact us for legal services to join the HTP. At the moment, we support the entry into HTP of 5 companies, in three of which (non-residents) we act as a management organization with full assumption of administrative, legal and accounting functions, as well as assist in the search and selection of personnel consisting of highly qualified specialists.
An IT company that is not a member of the LDPE may face the following nuances when conducting its business:
- Any activity of legal entities related to cryptocurrencies and tokens, mining is impossible without joining the HTP;
- If the company's revenue is up to 525,000.00 US dollars per year, you can pay 5% revenue tax (with a staff of no more than 50 employees) without VAT. With a revenue of up to 950.000,00 US dollars and the number of no more than 100 employees, but with the application of VAT, 3% revenue tax is paid (which is advantageous with a zero VAT rate for exports);
- Imperfection of legislation in some issues that are regulated under the HTP, but do not apply to other Belarusian companies;
- There are special tax regimes, for example, when registering and operating a company in small and medium-sized cities, science and technology parks, science and technology associations, etc.
- Taking into account the existence of international agreements on the avoidance of double taxation (for example, with Cyprus), the income tax rate on dividends of a non-resident founder can be reduced to 5%, as in HTP.
Thus, even without the HTP resident status, it is very profitable to operate in Belarus for both Belarusian IT companies and IT companies where at least one of the founders is a non-resident from states in whose jurisdictions there is no regulation of instruments based on blockchain technology at all.
So, in most CIS countries, activities related to tokens, in particular cryptocurrencies, are illegal. This situation leads to the fact that the subjects of activity in the field of IT have to either resort to illegal schemes, or withdraw business to expensive jurisdictions.
At the moment, they will have the opportunity to register a company in Belarus without fear of sanctions from national structures.
Thus, the acquisition of HTP resident status is extremely expedient, since the benefits provided to HTP residents are quite attractive, and tax benefits in the field of mining and tokens are unprecedented in world practice, having no analogues in other jurisdictions.