Belarus: State Economic Liberalisation Plan 2009 in Action

Raidla Lejins & Norcous launched an update on Belarus: State Economic Liberalisation Plan 2009. On 13 January 2009, the Belarusian Government together with the Administration of the President adopted the Plan on Top Priority Measures to Liberalize Conditions for Conducting Business Activity in 2009. The Belarusian Government has already started to implement the Plan. In particular, legislation was enhanced in the sphere of foreign trade, organisation of construction, wage regulation and fixed asset accounting.

Economic Liberalisation Plan 2009 in Action

On 13 January 2009, the Belarusian Government together with the Administration of the President adopted the Plan on Top Priority Measures to Liberalize Conditions for Conducting Business Activity in 2009. The Belarusian Government has already started to implement the Plan. In particular, legislation was enhanced in the sphere of foreign trade, organisation of construction, wage regulation and fixed asset accounting.

Rules for international trade transactions simplified
As of 1 April 2009, the new rules regulating international trade transactions have come into force. The President’s Ruling No. 104 of 19 February 2009 amended the Ruling No. 178 of 27 March 2008 on the Procedure of Conclusion and Control of International Trade Transactions.

According to the previous rules, every foreign trade transaction with a contract price exceeding EUR 3,000 equivalent was subject to foreign trade control, i.e. had to be certified by the passport of transaction and after settlement reported to the state statistical bodies. The passport of transaction was subject to certification by the agent bank, which competence to check the compliance of the passport (and the foreign trade contract) with legislation were not expressly determined by law. Interpretation of relevant legislation by the bank created the risk of refusal to certify the passport. The new rules of 19 February 2009 replace the requirement to certify an international transaction by the passport with the requirement to register a transaction with an agent bank. The agent bank should register the transaction the same day it receives a document certifying the conclusion of a contract.

New amendments considerably supplemented the list of foreign trade transactions exempt from foreign exchange control with:

* contracts of lease and financial leasing;
* insurance contracts and loan agreements;
* contracts between entities registered in Belarus and representative offices (branches) of non-Belarus entities, diplomatic and consular representatives in Belarus for their internal needs;
* contracts between entities registered in Belarus and foreign citizens who use goods (services) for their personal needs;
* contracts according whereto actual beneficiaries of protected information, services and exclusive rights to objects of intellectual property are Belarusian or foreign citizens.

The new Ruling allows discharging export transactions by concluding a factoring contract between the exporter and a bank (or other banking organization) and using non-pecuniary methods of discharging contracts. Methods of non-pecuniary discharge of contracts are still to be determined by the Government (Council of Ministers). The list of the ways of discharging import transactions was supplemented with non-pecuniary methods.

Construction tenders abolished
According to the rules in force before 13 March 2009, if the cost of construction exceeded 50,000 basic values (approx. EUR 500,000), the developer had to select a design firm, a construction company and a supplier of technologies and equipment through public tender.

Amendments enacted by the Resolution of the Council of Ministers No. 313 of 13 March 2009 abolish the requirement to select a design firm and construction company if the construction is fully financed by a foreign investor.

According to the Resolution No. 313, the developer is free to choose the supplier of technologies and equipment for construction that requires preparation of special technical conditions for developing design documentation.

Wage regulation becoming more liberal
On 23 January, the President adopted the Decree No. 2 and Ruling No. 49, which granted business entities more freedom in wage regulation.

According to the new legislation, the wage comprises the basic salary and all additional payments directly paid by the employer to the employee for the work performed. The basic salary should be calculated according to the tariff system established by the Government as the first grade tariff rate multiplied by the relevant ratio. The ratios for employees of different qualifications are established by the Government. However, the first grade tariff rate may be calculated by private entities themselves. Though, only one first grade tariff rate can be applied to all employees of the entity. The basic salary is deductible for tax purposes in full, while deduction of additional payments is limited.

According to the Decree No. 2 on Incentives of Employees, the amount of additional payments which may be included in expenses deductible for tax purposes is raised up to 80% of the monthly salary fund. The newly established limit replaced the previous three limits, i.e. for the length of experience (20% of the salary fund), 30% for bonuses, and 30% for outstanding achievements at work. The Decree does not cover wage regulation in state budget organisations and companies subsidized by the state.

Ruling No. 49 on Certain Questions of Realisation of Goods and Services in 2009 grants employers the following rights:

* The right to increase the amount of additional payments to all categories of employees. The amount of additional payments is deductible for tax purposes in full. However, the requirements of the tariff system with respect to basic salary are still binding; and all other additional payments (e.g. long-service pay, payments for the length of experience) cannot be paid.
* The right to establish an individual basic salary for heads and employees with higher education (“specialists”) of marketing, logistical and other departments who promote the inflow of foreign currency income. Additional payments for the said employees are also deductible for tax purposes in full.
* The right not to apply the tariff system with respect to wage regulation of CEOs who promote the inflow of the foreign currency income, selling of goods in stocks, etc. Additional payments to CEOs are deductible for tax purposes in full.

Mandatory revaluation of fixed assets and depreciation (amortisation) abolished
The President’s Ruling No. 116 of 27 February 2009 released entities from the obligation to revaluate fixed assets, objects of uncompleted construction and uninstalled equipment that are in the entity’s books as of 1 January 2009. Entities that already revaluated the said objects are entitled to correct revaluation until 27 March 2009.

The President’s Ruling No. 327 of 18 March 2009 abolished the mandatory depreciation (amortisation) of fixed assets until 1 January 2010. However, the life span of such fixed assets should be extended for the period during which depreciation (amortisation) was not calculated.