July and August are usually a quiet time and a vacation period in Belarus ‒ but not in 2020. From one standpoint, we observe a gradual decrease of the COVID-19 pandemic, but from another we are seeing the final stage of the presidential elections due to take place on 9th August. These two circumstances will to a large extent determine how business will be doing in 2020 and several subsequent years.
Belarus did not take rigorous measures to counter the COVID-19 pandemic, did not impose quarantine, and did not cancel public events. The measures undertaken were limited and largely of an advisory character. Nevertheless, the country’s economy is experiencing difficulties caused by the widespread closure of borders and voluntary precautions taken by society and business. So far, the negative effect on the economy seems insignificant, but many experts remain restrained in their forecasts due to the possibility of a second wave of the epidemic, the low safety margin of the Belarusian economy, and limited support measures suggested by the government. For example, according to the World Bank estimate, the Belarusian economy is anticipated to contract by at least 4 percent in 2020, and growth is expected to remain weak in the medium-term (1% of GDP in 2021 and 1.4% of GDP in 2022).
Against the background of the pandemic, issues previously discussed ‒ concerning supplies of Russian oil and gas as well as the integration of Belarus and Russia ‒ have been left aside and now attract less attention. However, based on several statements by Belarusian and Russian officials, these issues are not forgotten, and discussion on them will resume in September-October, after the presidential election in Belarus.
COVID-19 pandemic: measures to support business in Belarus
The main act aimed at supporting business in the epidemiological situation caused by COVID-19 is the Edict of the President of the Republic of Belarus No. 143 “ On Supporting the Economy”.
In accordance with Edict No. 143, most support measures are for persons providing household services or performing one of the activities most exposed to the adverse effects of the epidemiological situation (the list is approved by Edict No. 143).
More details on all measures may be found by clicking on the link (in Russian).
The advisory nature of some support measures and the ambiguity of some provisions of Edict No. 143 have attracted criticism from the business community as well as widespread discussions about the effectiveness of state support. Moreover, according to reports by representatives of the Ministry of Economy, close to six thousand requests for support measures were received by local executive bodies and almost half of them were satisfied.
New requirements on foreign gratuitous aid
Decree of the President of the Republic of Belarus No. 3 dated 25.05.2020 “On Foreign Gratuitous Aid” introduced significant changes to the regulation of foreign gratuitous aid. Among other things, Decree No. 3 provides for:
- an updated list of purposes for which foreign gratuitous aid can be directed;
- the possibility to receive foreign gratuitous aid for the purpose of paying general business expenses, though with a need for paid registration of foreign gratuitous aid and without exempting funds received from taxes, fees (duties);
- establishment of a registration fee of 0.5% of the amount of foreign gratuitous aid, with the exception of cases when foreign gratuitous aid is exempt from taxes, fees (duties);
- a requirement for recipients both direct and indirect, to account for assistance received as non-operating income.
More details about new regulation of foreign gratuitous aid can be found here (in Russian). For additional information, contact Viktoryia Mikhnevich and Alexey Fidek, Senior Assoсiate with Sorainen Belarus.
The list of administrative procedures available in electronic form has been expanded
One more step was taken in the development of electronic services in Belarus. The Government decided to expand the list of administrative procedures that can be completed electronically through the unified electronic services portal.
The list was approved by Resolution of the Council of Ministers of the Republic of Belarus dated 05.06.2020 No. 271 and, among other things, includes the following procedures:
- registration of a foreign citizen or stateless person temporarily residing in Belarus;
- registration with the tax authorities with issue of a notice of assignment of a payer account number of foreign organisations that provide or intend to provide services in electronic form;
- entry in the register of microfinance organisations with issue of a certificate of registration.
The full list can be found here (in Russian).
HTP continuous intensive growth
In April and July, the Supervisory Board of the High-Tech Park decided to register a total of 153 companies as HTP residents.
The new HTP residents are companies with competencies in the field of medicine, logistics, consulting, the gaming industry, fintech, electronic commerce, and software development for agriculture. Most new residents were established in 2019-2020.
For additional information on registering as an HTP resident, contact Kirill Laptev, Head of the Technology, Media & Telecommunications sector with Sorainen Belarus.
Visa facilitation and readmission agreements between Belarus and the EU now in force
After five years in preparation, visa facilitation and readmission agreements were signed by Belarus and the European Union in January 2020, entering into force on 1st July.
The agreement on visa facilitation cuts the cost of visas for Belarusians to EUR 35. In addition, the list of grounds for issuing free visas for non-commercial purposes was expanded. The length of stay of foreigners in Belarus doubled: from 90 to 180 days per year.
For additional information, contact Tatsiana Zubarava, lawyer of the Migration & Relocation Practice with Sorainen Belarus.
Public discussion on draft new Edict “On the Establishment and Activities of Holdings”
The draft Edict aims to improve the status of holding management companies and ease interaction between members of the holding compared to the currently existing Edict No. 660 dated 28.12.2009. For example, the draft Edict:
- allows a management company or a subsidiary selected by it to represent other members of the holding in courts, carry out security activities in relation to the facilities of other members of the holding, and jointly participate in procurement procedures;
- confirms the right of holding subsidiaries to transfer property for free use to the management company;
- eliminates the requirement for compensation in the case of transfer of the right to use intellectual property within the holding;
- abolishes excessive regulation (the requirement to prepare organisational and economic justification for the creation of holdings with the participation of the state, as well as to promote a development strategy for such holdings)