New partner Alexey Anischenko joins Sorainen Belarus
Sorainen: the first ISO-certified regional law firm in the Baltics and Belarus
Sorainen Belarus moves to new premises
Dear clients and cooperation partners,
In our opening edition of Sorainen Belarus News, we are glad to share with you news of developments at Sorainen Belarus office in addition to legal and business-related news. Our recent achievements demonstrate team growth and continuous advances in professionalism.
In this and in future news issues you will find brief, concise articles on the most topical trends, news, and developments affecting business in Belarus along with commentaries from legal experts whose everyday work directly relates to assisting foreign investors and local businesses towards building success in Belarus.
The Belarus business and investment environment is constantly and rapidly transforming. Improving the taxation system is now a clear priority goal of the Belarusian Government, although some measures have so far gone largely unnoticed or underestimated by the international community: for example, introduction of new simplified taxation systems for small and medium businesses, special regimes for investors in free economic zones, reduction of the number of tax payments. Additionally, the new-born customs union with Russia and Kazakhstan presents both new opportunities in terms of foreign trade expansion as well as grounds for controversy with the major trading partner, Russia.
Investors and experts in and outside Belarus are now questioning the sincerity of the Belarusian Government's intentions to carry out massive privatization in 2008-2010. Although hundreds of government companies have been transformed into joint stock companies whose shares can be offered for sale, no notable transactions have occurred in the past year, except for the USD 280 million acquisition of BPS-Bank by Russian Sberbank. The government repeatedly states that it is not prepared to sell its assets and companies at current prices, in view of the effects of the current economic cycle. On the other hand, it is open for negotiations, and foreign investors remain increasingly interested in privatization opportunities in Belarus. We may see several notable deals – perhaps the sale of another major government-owned bank, transactions in the petrochemical industry, and privatization of industrial enterprises with values ranging from EUR 5 to 50 million.
Yours sincerely,
Maksim Salahub
Office Co-Managing Partner
Sorainen Belarus
SORAINEN NEWS
New partner Alexey Anischenko joins Sorainen Belarus
Alexey Anischenko has joined Sorainen as a partner to lead and develop Sorainen Dispute Resolution and Commercial Contracts practice areas in Belarus. His other fields of expertise are M&A, privatisation, banking and finance, and regulatory advice.
Alexey has been practising law since 1999. In his last position, as a partner with Vlasova Mikhel & Partners, he headed their Dispute Resolution team, while also co-heading their Mergers & Acquisitions team and advising in the commercial contracts and banking and finance fields. Maksim Salahub, office co-managing partner of Sorainen Belarus, comments: “We are very glad that Alexey further strengthens the Sorainen team with his excellent experience in the dispute resolution and commercial contracts fields as well as in major privatisations and M&A transactions.”
Alexey has been recognised as a leading practitioner in Belarus by international legal directories The IFLR 1000 (for General Business Law), Chambers & Partners Europe (for Dispute Resolution) and PLC Which lawyer? (for Corporate and Commercial). Alexey is also a legal advisor to the Economic Court of the CIS and a regional World Trade Organisation expert for Belarus.
Sorainen: the first ISO-certified regional law firm in the Baltics and Belarus
Sorainen Belarus is the first law firm, and among the first companies overall, in Belarus to receive the ISO 9001:2008 quality certificate from Lloyd's Register Quality Assurance. This new milestone now extends the unified quality management of Sorainen from the Baltics to include Belarus.
The ISO 9001:2008 certification means that all working procedures are documented, harmonised, and implemented between different offices. According to Aku Sorainen, the senior partner of law firm Sorainen, excellent quality has always been a top priority for the company. “We are continuously working to further improve our working processes and quality standards with the aim of securing the same level of excellence in service for our clients in all offices. We are very happy that now our newest office in Belarus has also reached this quality standard,” notes Aku Sorainen.
Sorainen Belarus moves to new premises
To meet the needs of the fast growth of the firm, Sorainen Belarus has moved into new office premises as of 25 January 2010. The new, larger premises are located in Business Centre Nemiga City on ul Nemiga 40, the centre of Minsk. After moving, the e-mail addresses, phone and fax numbers remain unchanged.
The new Sorainen Belarus office and postal address is:
Sorainen
ul Nemiga 40
220004 Minsk
Belarus
Sorainen Belarus also keeps a mail box at the previous office, so that we will receive all correspondence mailed to the old office address after 25 January. We are very glad to welcome all our friends, old and new, to visit us in the new and more comfortable office.
BELARUS NEWS
Tax changes
On 1 January 2010, the Special Part of the Tax Code of Belarus came into force. This new legal act establishes procedures for applying all state and local taxes, as well as special tax regimes.
The most significant tax amendments are the following:
- abolition of turnover tax (fee paid to the National Fund for Support of Agricultural Producers), tax on acquisition of motor vehicles, local taxes on retail sales and parking;
- VAT increases from 18% to 20%;
- corporate income tax applied to profits received in the form of dividends, as well as profits from sale of shares in the authorized capital of Belarusian companies, decreases from 24% to 12%;
- certain types of expenses (e.g. costs of advertising and marketing services), which were previously deducted for profit tax purposes only within established limits, are now fully deductible;
- taxpayers may choose the reporting period with regard to payment of corporate income tax (quarterly or monthly); and
- personal income tax levied on dividends decreases from 15% to 12%.
Customs changes
On 1 January 2010, unified customs tariffs (UCT) regulations became effective within the Customs Union (Belarus, Kazakhstan, and Russia). The UCT provide for uniform customs duties imposed on goods imported to Belarus, Kazakhstan, and Russia from third countries.
As to Belarus, the introduction of UCT resulted in the following: 75% of customs duties remain at the same level, 18% of customs duties are reduced, and around 7% of customs duties are increased compared to previously existing rates.
At present, the authority in charge of formation of the UCT is the Customs Union Commission (a supranational body). The UCT is expected to ensure equal conditions, fair competition, and maximum benefit for all businesses within the Customs Union.
Estonia – Belarus Investment Promotion and Protection Agreement
In October 2009, Estonia entered into a bilateral Investment Promotion and Protection Agreement with Belarus. Upon entry into force, the Agreement will provide Estonian investors with enhanced certainty in case of possible contingencies. This means that Estonian companies have at least a theoretical possibility to claim compensation from Belarus in order to protect their investments if investors’ interests have been damaged due to economic conditions resulting from government action.
Estonia attaches high importance to development of relations with Belarus, as is illustrated by the fact that in October 2009 an Estonian Embassy was opened in Minsk.
The political situation in Belarus has often been criticized. It is certainly riskier to invest in Belarus than in many other European countries. However, Belarus today is not the same as it was five or ten years ago. There is political risk. However, the political risk is not comparable to that of Ukraine or Russia, for example. A German investment banker operating in Belarus commented wisely “One cannot assess the political risk in Belarus. The investor either accepts it or not.” And those investors who accept the risk may quite quickly become leaders of this developing market.
According to a recently published study conducted by the World Bank, Belarus now features among the five biggest reformers in the world. To compare, last year Belarus featured among the top 20 reformers. Step-by-step, prices in the country are becoming more flexible, too. For bigger investments (exceeding EUR 5 million), investors may enter into an investment agreement with the State of Belarus, allowing the trader to obtain various benefits, such as tax exemptions, or a simplified procedure for recruiting external workforce, in exchange for investment. Urged by the International Monetary Fund and the European Union, the major privatization process in Belarus will hopefully soon evolve from the level of declarations into concrete actions.
Belarus Introduces New Regulations on Holdings
On 28 December 2009, the President of Belarus signed Edict No 660 on Certain Issues of Establishment and Activity of Holdings in the Republic of Belarus.
This legal act sets a legal framework for organizing and operating holdings. The Edict, inter alia:
- introduces the concept of a holding as an association of commercial companies whereby one of the members (holding management company) or the owner are entitled to influence decisions made by other members (holding affiliated companies);
- establishes requirements related to the composition of holding members, preconditions for formation of a holding management company, holding general registration procedures, as well as procedures for commercial companies' accession to and expulsion from a holding;
- prohibits establishing and operating holdings for the purpose of monopolising manufacture and sale of goods, restricting or eliminating competition, or infringing legitimate interests of consumers.
The Edict aims to stimulate operation of financially transparent structures that consolidate and distribute income for implementation of commercial, production, and social programmes.
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