Free Economic Zones Activity
There are six free economic zones (FEZ) in Belarus, namely, “Brest”, “Vitebsk”, “Gomel-Raton”, “Grodnoinvest”, “Minsk”, “Mogilev”. The first of them were created in 1996. The youngest are FEZ Mogilev and “Grodnoinvest” – they were established in 2002.
As of January 1, 2009, 280 organizations were registered as residents of free economic zones of the Republic. The largest number of the residents is registered in zones of “Brest” (75) and “Minsk” (70). They are followed by FEZ of “Grodnoinvest” (44), “Gomel-Raton” (36), “Vitebsk” (34), and “Mogilev” (20).
Free economic zones offer their residing companies tax preferences, i.e. fewer taxes and tax reductions. In terms of customs dues and tax payments FEZ can be considered a free customs zone.
Belarus has established a unified legal (tax and customs) regime for all free economic zones. Economic entities are held accountable for violations of the terms and conditions of operating in the zones. In addition, this special legal regime is applied to the products of FEZ residing companies deemed for export or if they are on the import-substitution goods list adopted by the President of the Republic of Belarus.
Foreign or Belarus-made goods imported to a free economic zone are exempt from taxes and customs dues except for paperwork fees. Goods imported from a free customs zone to the customs territory of the Republic of Belarus, are subject for taxation depending on the country of the origin.
Goods made by FEZ residing companies exported outside the Republic of Belarus are exempt from taxes, customs payments, excluding customs processing fees, and are not subjects to measures of economic policy. As for goods made outside free economic zones the export taxes and dues are paid in accordance with the tax legislation of the Republic of Belarus.
Both national and foreign currencies are accepted for settlement within free economic zones in accordance with the rules and regulations endorsed by the National Bank of the Republic of Belarus.
Foreign investors operating in FEZ enjoy investment protection guaranteed by the state. The state guarantees foreign investors the right to reimbursement of their share of a company’s property in accordance with its residual value as well as due revenues, including foreign currency revenues, generated from their investments in the Republic of Belarus.
The main activity of FEZ residing companies is manufacturing of industrial products (nearly 90% of the total number of enterprises).
As of January 1, 2008 FEZ residing companies (except for banks) accumulated $288.7 million of foreign investments, of them 20.9% were investments to statutory capital.
2007 saw FEZ residing companies manufacture almost 4% of industrial products over the Republic on the whole, 4.1% of the products were exported, the share of FEZ residents in sales profit amounted to 2.55%.
In 2007 as compared to 2006, the volume of industrial products manufactured by FEZ residing companies grew 20.8%, profits from sales of products, goods and services increased by 16.9%, export of goods – 20.6%, return of duties, charges and others payments to budget and extra-budgetary funds climbed 9.8%.
The number of branches attractive for investors includes precision machinery industry and metal working, electronic engineering and telecommunications, chemical and petrochemical industry, agriproduct processing, production of healthcare products and equipment, modern construction material, new kinds of services.
The most active foreign investors, with their share in total volume of foreign investment accumulated exceeding 82% are as follows:
- Russian Federation (19.3%),
- United Kingdom of Great Britain and Northern Ireland (14.3%),
- Germany (15.8%),
- Poland (8.4%),
- USA (6.7%),
- Austria (6.6%),
- Cyprus (5.7%),
- Latvia (3%),
- Czech Republic (2.4%).
2007 saw 4790 additional jobs created in the free economic zones. Exports of goods from FEZ territories made 998.7 mln. US dollars in 2007.
