Fresh international research shall reflect the many progressive changes to national legislation. For example, the recent Doing Business report (covering reform from June 2008 to May 2009) was published before the signing of Presidential Decree #10 ‘On the Creation of Additional Conditions for Investment Activity in the Republic of Belarus’. According to experts, this document is a significant step towards improving the business environment. A leading analyst from the Uniter investment company, Oleg Andreev, tells us, “In fact, the decree brings the complete formalisation of relations between investors and the Belarusian state. It’s very important. Procedures of co-ordination previously took several months; they’ve now been considerably simplified. Crucially, the preferences which the document envisages are general; previously, a separate Presidential decree was needed to receive them. Now, everything is transparent and all investors are presented with ‘a basic package’.”
Valery Fadeev, an IFC Legal Advisor, notes, “I’m convinced that the progressive nature of the decree will be taken into consideration in Doing Business research. Investors can now lease a land lot without entering an auction or tender, significantly facilitating the investment process. Until recently, it took a long time to arrange land lease; according to my estimations, at least nine months. Additionally, investors no longer need to pay customs fees on imported equipment; this is of great significance. Of course, it’s also worth mentioning that sites can be simultaneously designed and constructed. Previously, many investors had to waste time waiting for projects to be approved.”
Another document aiming to improve the business climate is the Presidential Decree ‘On Improving Control (Supervision) Activity in the Republic of Belarus’, which came in force on January 1st, 2010. The number of controlling bodies is limited while their duties and responsibilities are fully outlined — eliminating the opportunity for misuse of powers.
Additionally, inspections of newly set-up companies are prohibited for the first two years after registration (except where established facts of violation are known). The decree requires state officials to justify their inspections, slim lining the process and freeing entrepreneurs from unnecessary administrative responsibilities. They no longer need concern themselves with closure in cases of ‘minor violations’. The Government and the State Control Committee are convinced that the decree creates a flexible system of supervision and control for business, without unnecessary burden, while ensuring economic, public and environmental safety.
Business circles have their own attitude towards these changes. The Chairman of the Belarusian Union of Entrepreneurs, Alexander Kalinin, tells us, “The document is, of course, progressive. It aims to emancipate business, which is especially vital considering the crisis. We need to think laterally while being ready to take on risk.”
The recent changes to tax legislation — as stipulated by the Special Part of the Tax Code — have also been welcomed by Belarusian business associations and are likely to be taken into account by international experts. This year, four payments were abolished: fees to the National Fund for the Support of Agricultural Producers; retail sales tax; tax on purchasing cars; and local car parking fees. This should benefit companies financially while significantly simplifying the work of accounting services.
According to the Ministry for Taxes and Levies, only five basic areas of tax now exist: VAT; profit tax; property tax; land tax; and ecological taxes. All other fees are one-off payments in particular circumstances.
Until recently, Belarus was ranked almost last in the Doing Business report’s ‘tax payment’ category, which impeded the general assessment of the country’s business climate. However, the Government expects Belarus to have now improved this ranking, since the number of payments has been cut, as has their frequency. From 2010, those with an annual turnover of Br3.8bn (about $1.32m) or less can submit VAT declarations quarterly, alongside profit tax payments (the latter applies regardless of turnover). “We’ll continue making advances. In the near future, we’ll probably make some payments annual,” notes the Deputy Minister for Taxes and Levies, Larisa Kondratova. According to experts, this could shift Belarus into the list of global leaders for ‘simplicity of tax payments’.
According to the Deputy Economy Minister, Andrei Tur, this year, progressive changes are expected in the field of licensing (in particular, the abolishment of licenses for retail trade) and pricing (state regulations to be significantly cut). Grand liberalisation of the labour market and of property relations is also expected. “Work on simplifying and improving conditions of economic activity began in 2007 and is continuing,” Mr. Tur notes. “We are gradually, step by step, conducting liberalisation and hope our foreign partners appreciate the positive results of these changes. This is very important, since this is not an easy year. Some of the global markets we work with are yet to overcome the crisis but we can compensate for export sales losses by encouraging investment activity — primarily from abroad.”
By Vitaly Volyanyuk
