The document signed by the Belarusian president came into force in March 2018. The decree “On Development of the Digital Economy”, which experts called ‘revolutionary’, is meant to give Belarus a serious boost in building the economy of the 21st century and turning into an IT country. This will be done by attracting global IT companies and creating a unique business climate in the IT sector. Another objective of the document is to harness the technological advances to improve the living conditions of people.
The document, informally called the Decree on HTP 2.0, became a groundbreaking document for the Belarusian Hi-Tech Park, which is viewed as one of the drivers of the country’s economic growth thanks to extensive state support. The special legal regime in the park will be running till 2049.
The new decree stimulated an increased interest in the HTP: more than 100 new resident companies joined the park in H1 2018, which was record high. A visa waiver for foreign workers and founders of HTP resident companies also contributed to that.
According to experts, the new decree opens up new opportunities for innovations in the most advanced areas, from artificial intelligence to virtual reality.
More areas of activity for HTP
The new document significantly expands the list of business activities for HTP resident companies who can develop software and high-tech products with a high added value. The updated list includes biotechnology, healthcare, aerospace technology, unmanned transportation systems, cyber sports, cryptocurrency exchanges and many more. There are no restrictions on the amount of revenue from additional types of activities.
Special HTP regime valid until 2049
The decree extended the special tax and legal regime for the HTP through 1 January 2049. Among its main advantages are a reduced income tax (down to 9%), exemption from revenue tax and VAT. In addition, visas and work permits were waived for HTP resident founders and workers.
Note! The Law No. 72-З “On Amendments to the Tax Code of the Republic of Belarus” as of 29 December 2020 came into force on 1 January 2021. The law contains some substantial amendments to taxation regulations.
In line with the document, the personal income tax of employees of the Hi-Tech Park, the China-Belarus Industrial Park Great Stone and (or) the Great Stone Development Company was increased from 9% to 13%. The increased rates will be valid until 1 January 2023. According to the Tax and Duties Ministry, this move is aimed at consolidating budget revenues to combat COVID-19. At the same time, the main package of investment benefits for resident companies of the HTP and the Great Stone park remains unchanged.
A reminder, the income tax base rate for individuals amounts to 13% in the Republic of Belarus.
Legalization of cryptocurrencies, ICO, and smart contracts
With the adoption of the decree, Belarus became the world's first jurisdiction to offer a comprehensive legal treatment for businesses based on blockchain technology and the world's first country to legalize smart contracts. Cryptocurrency exchanges and exchange offices can operate in the Hi-Tech Park. Individuals and legal entities are allowed to mine, buy, give away, and exchange cryptocurrencies. Until 2023, mining, purchasing, and selling tokens will be tax free for individuals and resident companies of the Hi-Tech Park.
Simplified Operation of IT Companies
Decree No.8 has significantly cut down on red tape in IT business. The document allows making international transactions in the digital form using the internet. It also removes a number of limitations for conducting operations with digital currencies by the Hi-Tech Park resident companies. The requirement to obtain a permission to open a deposit in foreign banks was also waived.
Introduction of Some English Law Components
Belarus rolled out some legal novelties with respect to activities of the Hi-Tech Park resident companies. The decree provides for introduction of several English law components: convertible loans, stock options, option contracts, non-competition and non-solicitation agreements, and indemnification of material losses.
IT Education Support and IT Specialists Training
Belarus has set out to develop the IT industry and to promote digital transformation of the economy. This is why training of specialists is a priority. Decree No.8 formalized the right of the Hi-Tech Park resident companies to provide training and education in the field of ICT.