Belarus’ decree on digital economy development: 5 ways it helps businesses
Back in December, Belarus made a strategic move with its “Decree on Digital Economy Development.” The legislation detailed in this decree went into effect on March 28th.
The main goal is to attract more international companies to Belarus, which has become one of the fastest growing hubs for the technology industry thanks to its Hi-Tech Park (HTP) economic development zone.
As part of the decree, Belarus will become one of the most crypto-friendly countries in the world and the first to have legal blockchain regulation, ICO & bitcoin registration, and smart contracts legislation.
For all the startup companies that are developing blockchain solutions, this is very exciting and promising news. But what are the real tangible benefits of this legislation? Here are 5 distinct ways the Decree on Digital Economy Development can help companies that specialize in blockchain, bitcoin, cryptocurrency, and other types of solutions.
1. The decree provides for liberal regulation of cryptocurrency and blockchain technologies
As part of the decree, cryptocurrency mining and other related operations are not considered entrepreneurial activities, which means that anyone is free to take part in transactions and exchanges.
Companies and individuals can create, own and store cryptocurrency tokens in Belarus. Transactions are performed through CCPOs (cryptocurrency platform operators) or CCEOs (cryptocurrency exchange operators) residing in Hi-Tech Park.
By eliminating traditional legal requirements for crypto exchange regulations, including mining, buying, and selling cryptocurrencies, Belarus establishes itself as the place where companies developing these types of technologies can truly flourish.
2. The decree offers numerous tax benefits and incentives for companies who choose to operate in Belarus
When a company becomes a member of Hi-Tech Park, there are several instant tax benefits. According to Deloitte, these benefits include:
- Profits tax exemption;
- VAT exemption on the turnover of the sale of goods (work, services, property rights) within the territory of Belarus;
- Real estate tax exemption;
- Customs duty and VAT exemption for technological equipment imported by HTP residents;
- Reduced withholding tax (WHT) for dividends, interest, and royalties of 5%, unless a more preferential regime is provided by Double Tax Treaties (DTT);
- Reduced personal income tax (PIT) of 9%;
- No obligatory sale of currency in the amount of 20% from the amount of foreign currency income received from the sale of eligible goods/work/services;
- Offshore duty exemption.
With the new decree, any income earned from cryptocurrency related businesses remains tax exempt until 2023. This means that both corporate and personal income taxes are exempt from cryptocurrency transactions.
3. The decree provides immunity from foreign trade control regulations & currency control exemptions
Although Belarus is not one of the countries with English law, the decree provides for the signing of agreements with third-providers using English law principles, such as non-compete and non-solicitation agreements, transferable loans and loss reimbursement. This is a way of enticing foreign investors to do businesses in Belarus by enabling them to apply internationally standardized legal principles.
Another major financial benefit is that with a National Bank of the Republic of Belarus permit, it is permissible to open foreign bank accounts and make transfers, bypassing usual international regulations and headaches.
4. The decree legalizes Initial Coin Offerings (ICOs)
For companies wanting to know where to incorporate an ICO, this decree makes Belarus stand out as the logical choice. It provides legal ICO regulation and it allows exchange for traditional currencies on Belarusian exchanges.
Startups and companies operating as residents of Hi-Tech Park will now be able to obtain financing and seed funding through initial coin offerings (ICOs). ICOs help startups bypass costly regulatory compliance rules and fees from traditional venture capitalist and banks.
5. The decree helps Belarus attract the best talent to the region while retaining and supporting its homegrown talent as well
Another goal that was set forth in the Decree on Digital Economy Development was to attract, nurture and retain Belarusian residents who are interested in working at Hi-Tech Park.
HTP features an educational and training facility whose graduates go on to populate the workforce of several resident IT companies. Free continuing education classes are offered to students and faculty year-round and the students get hands-on training as well.
The benefit for companies that choose to be a part of HTP is that they get access to the highest quality and best-trained developers in the region. Also, HTP residents do not have to get work permits for foreign IT workers. Visa-free entry is offered up to 180 days each year.
iTechArt is actually a proud member of Hi-Tech Park. We were #5 out of 237 resident-companies in the following three Top 10 categories for HTP in 2017:
- Resident Companies by Sales;
- Software and IT Services Exports;
- HTP Residents by Number of Employees.
In conclusion, this new Decree on Digital Economy Development cements Belarus’ status as a “crypto-country” and opens up an entire world of possibilities for IT companies specializing in blockchain and crypto-based products and solutions. By making it so much easier to do business, Belarus and Hi-Tech Park are telling the world that they are, indeed, “open for business.”
Let iTechArt help you take advantage of all the benefits of this new economic policy and enhanced development processes. Contact us today!