Pros and Cons of the Cryptocurrency Valley in Belarus

The “High Technologies Park” is a special legal regime that is aimed at the development of the IT sector in Belarus. The special HTP regime was introduced by Decree No. 12 of the President of the Republic of Belarus and operates throughout the country, that is, the resident company is not necessarily physically located on the territory of the HTP.

The Supervisory Board, which consists of 11 members and is approved by the president, is responsible for the overall coordination of the activities of the HTP.

The administration of the HTP is comprised of four members. To date, the head of the administration is director Yanchevsky Vsevolod Vyacheslavovich, who was also appointed by the president.

Only Belarusian legal entities and individual entrepreneurs who carry out or plan to carry out one or several types of activities provided for in the HTP Regulations may become HTP residents.

To register a company as a resident of the HTP, it is necessary to submit an application, copies of constituent documents, as well as a business project that is proposed to be implemented as a resident of the HTP.

Tax and Other Benefits

HTP residents are exempt from income tax, as well as VAT, in the event of the sale of goods, services, and property rights on the territory of the country.

The income of the HTP resident received in the form of interest, income from the alienation of shares in the statutory funds of organizations and from the sale of securities, as well as dividends from sources outside the Republic, are subject to income tax at a rate of 9%.

The incomes of employees of HTP residents are subject to personal income tax at a rate of 9%. Compulsory social insurance contributions amount to 35%, while they are calculated and paid not on the actual wage of the employee for the month, but on the average monthly wage that precedes the month for which compulsory insurance contributions must be paid. By the way, the average salary for February 2018, was 850.4 Belarusian rubles, or about $420.

HTP residents are also exempt from offshore fees in respect of funds transferred to non-residents registered in offshore zones for intermediary, marketing, and advertising services.

With the adoption of Decree No. 8, when a resident of an HTP acquires licenses, advertising, marketing, consulting services, database services, and some other services demanded by an IT business for foreign companies, the resident is exempted from VAT. A zero tax rate is applied at the source with respect to the income of foreign organizations from the provision of data processing services to the residents of the HTP, web hosting, advertising, intermediary, and some other services, and also in relation to income in the form of interest and royalties.

Conducting inspections by controlling authorities in respect of HTP residents without prior approval of the HTT Administration is not allowed. In addition, there is a general ban on inspections in Belarus for two years from the date of state registration of the company. In spite of the ban, HTP residents are obliged to conduct mandatory annual audits of the annual accounting (financial) reports and submit an audit report on the results of the audit of the reporting to the HTP administration.

Document Management

The changes that were introduced by the adoption of Decree No. 8 also concerned the paperwork, all aimed at simplification. Now, while performing business transactions with non-residents of the Republic of Belarus, HTP residents can individually create a primary accounting document on the basis of which the business transaction is reflected in the accounts of accounting. Residents must identify by a single primary accounting document all homogeneous transactions made in one month. Under certain conditions, they must use a document or information received from a non-resident in a foreign language as a primary accounting document. They must also use a facsimile when creating a primary accounting document.

Agreements with Employees

A resident of the HTP in accordance with Decree No. 8 is given the right to:

 Conclude agreements on non-competition with their employees;

 Conclude agreements with third parties that provide for responsibility for headhunting employees.

Foreign Employees

Foreign citizens who are employed by an HTP resident, or who are founders of HTP residents or employees of their founders, are provided a visa-free regime for entry and exit to Belarus with the right to stay in the country for 180 days per year. Foreign citizens who have entered into an employment contract with an HTP resident are not required to obtain a work permit in Belarus, and for the duration of the agreement, they will be able to obtain a temporary residence permit in the country.

Blockchain Technologies and Cryptocurrencies

Decree No. 8 establishes basic rules for relations related to the use of blockchain technology, and it defines key concepts such as blockchain, tokens, cryptocurrencies, mining, and smart contracts.

Legal entities and individuals can freely own tokens and store them in virtual wallets.

Through HTP residents, legal entities have the right to conduct transactions with tokens, including to acquire and dispose of them, and to conduct ICOs in Belarus and abroad, that is, to create and place their own tokens.

HTP residents can provide crypto exchange and ICO services. They also have the right to carry out mining and other activities using tokens, including the creation and placement of their own tokens.

The activity of individuals on mining, acquisition, and alienation of tokens is not recognized as entrepreneurial, and tokens are not subject to declaration.

Up until 2023, there are a number of tax breaks for operations with tokens. For example, revenues from mining activities, the acquisition, and alienation of tokens are not taxable for individuals and HTP residents. The funds received by legal entities as investments as a result of the creation and placement of their own tokens through the HTP resident will not be taxable revenue.

Banking legislation, currency legislation, securities legislation, and licensing legislation do not apply to the activities of HTP residents using tokens.

Possible Future Clarifications

 It is expected that the Ministry of Finance of the Republic of Belarus will prepare the accounting procedure for tokens and transactions with their use;

 The distinction between the regime of cryptocurrencies and other tokens will be made under a special regulation;

 “Now there is no possibility of direct interaction between foreign organizations and HTP residents from the possibility of such foreign organizations placing their tokens through Belarusian crypto platform operators. Apparently, this issue will be the subject of additional explanations from regulators,” Savelyev supposes.

The Cons

 Variability of legislation and authoritarian regime;

 It is impossible to imagine how existing norms will be applied in practice and, most importantly, how the courts will apply them;

 Periodically, there are “divorces” of Belarus with foreign investors, during which the country’s representatives behave rather incorrectly.

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