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HTP resident: preferences, benefits and special legal instruments

The special legal regime of the High-Tech Park, in addition to a number of other advantages, is characterized by a rather wide list of advantages provided to its residents. For a more structured understanding of this kind of privilege, we divide them into a number of Parts, each of which we will consider separately.

The source of legal regulation in this area is Decree No. 12 of September 22, 2005, with corresponding amendments and additions.

 

Part 1. Tax benefits

Income tax

As a general rule, HTP residents are not required to pay income tax. However, there are a number of exceptions to this rule in which the obligation to pay this type of tax does occur.

This occurs in the following situations:

  • upon alienation of a share (or part) in the authorized capital, share (or part) of an organization;
  • when selling the enterprise as a property complex;
  • upon sale (redemption) of securities;
  • upon receipt of interest from the provision for use of amounts of cash and some other types of income provided for by tax legislation.

The applicable tax rate in the presence of at least one of the above circumstances is 9%. At the same time the generally established income tax rate is 18%.

It should be emphasized that the income tax benefit does not used in situations where an HTP resident acts as a tax agent.

Value Added Tax (VAT):

According to the general rule, residents of the HTP are exempted from paying VAT on the turnover received from the sale of objects within our country.

 But in some cases, the obligation to pay VAT still arises:

  • upon the sale of goods to which the customs export procedure has been applied, as well as exported to the EAEU member states (without obligation to re-import into our country);
  • upon lease of the Park owned by residents on the basis of ownership, economic management or operational management of real estate;
  • in case of voluntary refusal to apply this benefit by filing a notice with the relevant tax authority (it should be borne in mind that the minimum term of refusal is 1 year). 

We draw attention to the fact that the benefits of both income tax and VAT do not apply when it comes to the disposal of used property (including real estate). It should be noted that the very right to sell such property for HTP residents arises only after 12 months from the moment it was acquired.

Offshore

HTP residents are not required to pay an offshore fee in case of settlements for a number of services - advertising, marketing or intermediary services. The same situation occurs when paying or transferring dividends to founders / participants of the HTP resident.

Land tax

The land tax relief in the form of full exemption from its payment takes place during the construction of capital structures, buildings, structures within the HTP for the purposes of the activities of its residents. The maximum release period is 3 years.

Property tax

There is no need to pay this tax when the relevant object is located within the HTP and the taxpayer is its resident. The exception is cases of the lease of such property.

Income tax

The rate is 9% (with the general rate being 13%) and it applies to:

  • income of persons who were received within 1 year while working under an employment contract / contract (the exception is employees engaged in the maintenance and protection of buildings, premises and land plots);
  • income of individual residents who are required to pay this type of tax;
  • income received in the form of dividends from an HTP resident.

Foreign Income Tax

For certain types of income of non-residents, the rate of 0% is subject to application. Among them are income from the provision of intermediary services, advertising services, the implementation of data processing and posting information, from debt obligations, royalties and other income listed in paragraph 33 of the Regulations on HTP (the list is closed).

In cases where a HTP resident pays dividends to his foreign participant, the rate of 5% is applicable (the rate for non-residents under the same circumstances is 12%). In this case, other rates may be established by international contracts.

 

Part 2. Contributions to the National Social Security Fund

This benefit works as follows: compulsory insurance contributions are accrued only on that part of the employee’s income, which is one time the average wage in the country for the previous month. For the rest part of the income, contributions are not paid.

 

 

Part 3. Import duties and import VAT

For HTP residents, an advantage has been granted in the form of exemption from payment of import customs duties and VAT. We are talking about the import of technological equipment, as well as components or spare parts, the list of which is approved at the level of the Decree of the President of the Republic of Belarus. The main condition is the use of such property only within the Republic of Belarus when carrying out activities declared upon registration as a resident of the HTP or other type of activity, approved after the development of a new business project. In order to take advantage of the privilege, the conclusion of the HTP administration should be submitted, which will contain an indication of the appointment of the relevant equipment or its parts (for the purpose of exemption from payment, both import customs duties and “import” VAT). The algorithm for obtaining an opinion is set out in the Regulation approved by Decree of the President of the Republic of Belarus No. 392 dated August 30, 2012.

 

Part 4. Rent

When renting state-owned facilities (including those with a state share of more than 50%), a reduction factor of 0.5 is applicable to the base rate. It is necessary that the leased objects are located on the territory of the Park.

 

Part 5. Foreign economic activity

With the participation of HTP residents in foreign trade operations, the legislation of the Republic of Belarus in this area does not apply to them. The receipt of funds and the completion of foreign trade operations are carried out in accordance with the terms of the contract. In this case, in case of write-off or receipt of the amounts of money to the account, HTP residents should provide relevant information to the bank serving them (NCFD).

Foreign currency received by HTP residents can either be sold or not sold. The purchase of foreign currency in the domestic foreign exchange market can be carried out freely, regardless of the purpose of its use.

There are some peculiarities regarding the simple written form of the transaction: it will be respected and in the absence of a proposal to conclude a contract of signature of the party. The main condition is the availability of an objective opportunity to determine that the offer comes from the subject we need.

 

Part 6. Registration of primary accounting documents

When conducting business operations with non-residents, there is no need to comply with the requirements established by the legislation of the Republic of Belarus regarding the form, content and execution of the primary accounting documents.

In addition, residents are granted a number of additional rights:

  • draw up the primary accounting documentsin a single order (the requisite details are contained in paragraph 20 of the Regulations on HTP);
  • one primary accounting documents single-handedly execute 2 or more business transactions that are uniform in nature and completed within 1 month. The deadline is no later than the 20th day of the month following the month of business transactions. Mandatory should indicate the date of such operations.

 

Part 7. Residence of foreign citizens and stateless persons

In situations when an HTP resident enters into an employment contract (agreement) with a foreign citizen or a stateless person, the employer does not need to obtain a special permit for such an employee. There is also no need to obtain permission to attract foreign citizens to the Republic of Belarus (it is required if more than 10 foreign citizens are hired). This preference significantly saves the time of the employer and allows the employee to start working in the shortest possible time. The main thing is to remember to notify the relevant citizenship and migration department within 3 working days from the date of the mentioned persons being hired.

In addition, foreign citizens attracted to work in resident companies, as well as founders / participants of HTP residents or their employees, may stay in Belarus 180 days a year without a temporary residence permit.

 

Part 8. Specific Legal Instruments

In this case, we are talking about special legal institutions, elements of English law that are not known to Belarusian law:

  • convertible loan;
  • option to conclude a contract and option contract;
  • smart contract;
  • agreement on compensation for property losses;
  • Non-Solicitation Agreement;
  • Non-Compete Agreement;
  • an agreement providing for an unlimited amount of penalty;
  • irrevocable power of attorney.

With all available benefits and preferences, one should not forget about the performance of duties of HTP residents:

  • deduct 1% of its revenue (income) to the administration of the OEM;
  • present at the request of the administration of the HTP the necessary documents (copies of tax returns, statistical reports);
  • conduct a mandatory audit every year and submit an appropriate opinion to the administration of the HTP;
  • perform other duties established by law.