Belarus - Raiffeisen Bank International AG

Financial Market Report
Belarus
In cooperation with AUSSENWIRTSCHAFT ÖSTERREICH (AWO) at WKÖ (the Austrian Federal Economic Chamber)

Country Profile: Belarus
Raiffeisen Research. As in August 2011.
Currency: Belarusian ruble (BYR)
Gross Domestic Product and Budget 2009 2010 2011e 2012f
Real GDP growth, % p.a. 0.2 7.6 6.0 4.0
Nominal GDP, €bn 35.3 41.2 31.3 26.0
Per capita GDP, PPP basis, € 3,700 4,400 3,300 2,700
Growth in industrial output, % p.a. –2.0 11.7 9.0 4.0
Consolidated budget surplus (deficit), % of GDP –0.7 –2.6 –4.0 –3.0
Inflation and Employment
Jobless rate, annual average, % 0.9 0.7 2.0 2.0
Average monthly gross wage, € 250 310 250 210
Consumer price inflation, annual average, % p.a. 12.9 7.7 40.0 50.0
Balance of Trade and Current Account
Goods exports, €bn 15.3 19.1 28.4 33.5
Goods imports, €bn 20.3 26.0 32.6 37.0
Current account deficit, €bn –4.6 –6.4 –4.0 –3.4
Current account deficit, % of GDP –13.0 –15.5 –12.7 –13.1
Foreign debt, % of GDP 43.6 51.5 85.2 112.4
Rates of Exchange and Interest Rates
Local currency/US$ (average) 2,793 2,979 5,700 10,000
Local currency/€ (average) 3,894 3,951 8,000 14,000
3-month money market rate (MINIBOR), average, % n.a. n.a. n.a. n.a.
Country Ratings
S&P B+
Moody's B1
Fitch Unrated
n.a.: not available.
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The Belarusian Financial Market
Important:
1. The Economic and Political Situation in Belarus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Company Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Taxation and Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Privatization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6. Subsidies and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7. Risk Mitigation and Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8. Payment and Account Services at Priorbank, JSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9. Priorbank, JSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10. Your International Business Specialists at Priorbank, JSC,
and the Global Raiffeisen Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Despite thorough research and the use of reliable sources, we cannot accept responsibility or liability for the completeness
or accuracy of this brochure’s contents. The purpose of this brochure is to give you initial, general information
to help you develop business relationships in Belarus. The content of this brochure does not constitute
any form of advice or offer or invitation to make an offer.
Prepared in cooperation with AUSSENWIRTSCHAFT ÖSTERREICH (AWO) at WKÖ (the Austrian Federal
Economic Chamber).
Sources:
Raiffeisen Bank International AG
WKO: AWO Belarus Country Report.
Bibliography: Skok B., Gotwald A., Jungreithmeir T. (2008), Förderinstrumente für Südosteuropa (Subsidy and
Support Instruments for Southeastern Europe). Vienna: Linde Verlag Wien.
Copy deadline: September 2011.
3

1. The Economic and Political
Situation in Belarus
National Economy in Crisis
4
In contrast to developments in other CEE countries, the Belarus economy still remains largely in the hands
of the state. About 75% of GDP was generated by state-owned companies, and state banks comprise 70%
of the banking sector. Belarus experienced a strong phase of growth with an average rate of 7.5% p.a. in
the five years leading up to the financial crisis. Both internal factors, such as high investments and climbing
private consumer demand, and external factors such as strong demand for Belarus’s export goods,
contributed significantly to this dynamic. Exports include petrochemical products for the European market
(above all products from two oil refineries) and industrial facilities, trucks, tractors, consumer goods and
food, which are sold in the post-Soviet area (especially in Russia). With foreign trade revenues (the sum of
exports and imports) of over 100% of GDP, the country is a very open national economy.
Politically, Belarus is associated with neighbouring Russia via membership in multiple organisations. In
addition to the Commonwealth of Independent States (CIS), Belarus belongs to a union state with Russia
that was founded in the 1990s (and does not function well), and the Eurasian Economic Area (EurAsEC),
which is a customs union between Russia and Kazakhstan formed in 2010. The customs union currently
has numerous deficiencies that should be addressed by a shared economic space as of 2012. In addition,
Belarus profited, even before the introduction of the customs union, by preferential access to the Russian
market and very favourable conditions for the delivery of oil and gas.
Despite this reliance on Russia, President Alexander Lukashenko, who has been in office since 1994, has
wanted to limit direct foreign political and economic influence on Belarus. The president’s authoritarian style
of leadership, as well as the high percentage of state-owned companies, means that hardly any important
economic decisions are taken without Lukashenko’s blessing.
The Belarus economic model was based on cheap Russian energy in recent years, which increased the
competitiveness of domestic industry and allowed the subsidisation of otherwise unprofitable sectors (such
as agriculture). From 2007 forwards, however, Russia has slowly increased prices to bring them to world
market levels. Belarus offset decreasing energy subsidies on one hand by striving to increase energy
efficiency, and on the other by taking on more loans from abroad.
The state’s strong control of the economy turned out to be a good thing during the financial and economic
crisis of 2008/2009. Despite a massive collapse in exports, domestic investors were forced to avoid terminations,
thereby stabilising private domestic demand. A currency devaluation and support from the
International Monetary Fund (IMF) totalling over $ 3.6 billion successfully prevented a deep recession like
those in the Ukraine or Russia.

The continuation of expansive policy measures, such as strong growth in wages and credit, became a
burden to Belarus in the final analysis. They led to an expansion of pre-existing foreign trade imbalances.
The country therefore slipped into a major liquidity and currency crisis in early 2011. The securities market
almost completely dried up, and the value of the Belarus ruble fell against the U.S. dollar on the black
market. A steep devaluation of the official exchange rate by an additional 40% followed in May. Efforts
began in autumn of 2011 to revive the securities market. A further increase in devaluationary pressure, high
inflation rates, upheavals in the banking sector and lower growth forecasts will continue to affect the economy
in 2012.
The long-term challenge is to increase the energy efficiency and productivity of the Belarus economy to be
able to continue financing the social-state portion of the Belarus economic model. An opening in terms of
structural reforms oriented towards a market economy, as well as a partial privatisation of industry, seem
indispensable.
5

2. Company Law
Forming a company as a foreigner
6
Foreign legal and natural persons can form companies in Belarus either on their own or together with one
or more Belarusian partners. Freedom of establishment is practically unrestricted, and foreign and
Belarusian investors are treated equally. Neither a Belarusian minority nor a joint venture structure is
required. As a result, companies can be 100 per cent foreign owned. The posts of general manager and
company treasurer, which are important in Belarusian law, can also be held by foreigners (though they must
have a residence in Belarus).
When one is working the Belarusian market, the question often arises what form of business organization
one should use to do so. If one plans to develop a presence of one’s own in Belarus, one must choose
between setting up a representative office and forming one’s own company. The fundamental difference
between these two forms of business organization is that a representative office does not have its own legal
personality and is merely the extended arm of the parent company. In contrast, a company formed in
Belarus has its own legal personality. One must decide the most advantageous form of market presence
in each individual case based on the role of one’s branch in Belarus and the legal implications of that role.
If an Austrian company does not actually want to actively carry on business locally and if its Belarusian
branch is solely designed to assist customers and the parent company, we would normally recommend
setting up a representative office as a first step.
Representative office
The procedure for the opening and closing of representative offices of foreign companies in Belarus is regulated
by the directive of the Council of Ministers of the Republic of Belarus (No. 929 of 22 July 1997).
According to this directive, approval from the Belarusian foreign ministry is required to open a representative
office. Representative offices do not have their own legal personality. The head of the representative
office is appointed by the parent company and acts on the basis of the powers he or she has been granted.
A representative office is a ‘permanent representation’ for the purposes of Belarusian tax legislation. It must
therefore be registered with the tax authorities, submit an annual tax return and keep books in a businesslike
manner. The big advantage of a representative office is—so long as its activities do not make it a permanent
business establishment—that it is only captured by the Belarusian tax system to a very limited
extent. Apart from social security contributions for staff and VAT on goods and services purchased by a
representative office, it does not have to pay any local taxes to speak of. This favoured tax status is lost if
a representative office’s activities make it a permanent business establishment (i.e. if it carries on a commercial,
for-profit activity locally). If that is the case, the representative office will be taxed like a company
formed in Belarus. Under Belarusian foreign exchange legislation, a representative office has non-resident
status.

The general view is that representative offices accredited in Belarus are primarily permitted to inform,
acquire customers, negotiate contracts and present business counterparties with contracts that are ready
for signature. However, an employee of a representative office is not allowed to sign a supply contract for
delivery to a Belarusian counterparty on Belarusian territory. Flexible, market-orientated work that involves
supplying small customers within short delivery periods cannot be done through a representative office.
Furthermore, a representative office is not allowed to import goods into Belarus (unless for its own use).
Opening a representative office in Belarus and getting it accredited involves the following steps:
1. registration with the foreign ministry of the Republic of Belarus;
2. registration with the ministry of labour (work permits for foreign employees);
3. registration with the social insurance office;
4. registration with the statistical office;
5. registration with the Belarusian Republican Unitary Insurance Company Belgosstrakh (health insurance);
6. payment of the state accreditation fee in the amount of 65 ‘basic values” (approx. €570 for three years;
a one-year extension also costs approx. €570);
7. registration with the Belarusian tax authorities to obtain a tax reference number;
8. mandatory opening of a Belarusian bank account to pay the representative office’s running costs (e.g.
office rent);
9. obtaining of permission from the ministry of the interior to have a stamp made.
The following documents must be submitted to get the representative office accredited:
– the application for permission to open a representative office stating the purpose of opening the representative
office and providing information about the company (name, date of formation, domicile/registered
office, activity, persons authorized to act in Belarus);
– copies of the foreign company’s formation documents;
– documents that confirm the proper registration of the foreign company in its country of domicile (excerpt
from the commercial register);
– a power of attorney for the head of the representative office;
– a letter of recommendation from the primary banking provider of the foreign company;
– if necessary, permits from the country of domicile of the foreign company;
– the charter of the representative office stating the purpose for opening it, its address, its organizational
structure, the remits of the head of the representative office and procedures for closing the representative
office;
– a power of attorney for the person authorized to do everything that is needed to open the representative
office;
– proof of payment of the state accreditation fee (in the original).
All Austrian documents must be authenticated with an apostille and submitted with a Russian or Belarusian
translation.
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Forming a company
The forms of business organization provided for by the Belarusian civil code are partnerships (general partnerships,
limited partnerships), joint stock companies (closed joint stock companies [ZAOs] and open joint
stock companies [OAOs]), limited liability companies [OOOs] and additional liability companies (ODOs
[where the members’ liability is increased to several times their required capital contributions]), state-owned
enterprises and manufacturing cooperatives. In practice, nearly all Belarusian companies are joint stock
companies. Foreign companies mainly opt for limited liability companies [OOOs] and, to a smaller extent,
closed joint stock companies [ZAOs] as the form of business organization.
The advantage of having one’s own Belarusian company rather than a representative office is that such a
company can carry on business in its own name as a separate legal entity, for instance operating officially
vis-à-vis the customs authorities as an importer into Belarus. The disadvantage is that it is captured fully
by the Belarusian tax system. This taxable status naturally causes additional expenditure on bookkeeping
and accounting, preparing tax returns and adhering to a variety of Belarusian legislative provisions.
The framework underlying company law consists of the civil code and the law on joint stock companies,
limited liability companies and additional liability companies (No. 2020 of 9 December 1992). Belarusian
company law is generally similar to Austria’s. However, there are differences, for instance when it comes to
company bodies and boards, and minimum capital requirements are much lower in Belarus. For example,
the minimum capital requirement for a Belarusian limited liability company is currently €800, and 50 per
cent of the share capital must be paid up prior to registration. Since 1 January 2005, machinery and plant
provided as contributions in kind have no longer been exempted from Belarusian import charges (import
duty, import VAT).
A new amendment to the law on joint stock companies that contains several changes entered into forced
on 10 July 2006. It regulates different ways of holding shareholders’ meetings. A shareholders’ meeting
now has a quorum if ‘over 50 per cent’ of the voting power is present or represented (previously ‘not less
than 50 per cent’), and the preparation and conduct of shareholders’ meetings are now described in detail.
The registration of companies in Belarus is regulated by Presidential Decree No. 1 of 16 January 2009. This
presidential decree entered into force on 1 February 2009. It has made the registration process much easier
in that the so-called ‘declarative principle’ of business registration now applies. This means that, in contrast
to the previous system (when the ‘approval principle’ applied), a company being newly formed can
register within a few days. In other words, it can get itself registered in the single state register of legal entities
and individual entrepreneurs and without prior state approval.
Now, the authority merely carries out a formal examination of the registration to ensure that all the necessary
documents have been provided.

Forming a limited liability company in Belarus involves the following steps:
1. registration in the single state register of legal entities and individual entrepreneurs at the registered
address of the company being formed and payment of the registration fee within five days;
In line with the changes made in 2006, the registering authority registers the company with the tax authority
to obtain a tax reference number and registers it with the social insurance office, issues a manager
certificate, registers it with the Belarusian Republican Unitary Insurance Company Belgosstrakh, registers
it with the statistical office and registers its company stamp with the ministry of the interior.
2. if necessary, obtaining approval from the antimonopoly authority (see the chapter on cartel and competition
law);
3. if necessary, registration with the securities committee;
4. the mandatory opening of a BYR bank account and optional opening of a US$ or € bank account to
deposit the share capital of the company being formed.
Since January 2008, it has been necessary to provide the following documents to form a limited liability
company:
– the application in the required form (Annex I of the Resolution of the Ministry of Justice No. 90 of
27 December 2007);
– the formation documents of the company being formed (two copies of the memorandum and articles of
association and the syndicate agreement if a joint venture is being formed) both in hard copy and as a
PC file;
– documents confirming that the share capital has been raised (proof that cash contributions have been
paid, expert valuations of contributions in kind);
– formation documents and proof that any foreign company is registered (or copy of the passport of a foreign
citizen acting as founder, with translation);
– stamp designs in duplicate;
– proof that the registration fee has been paid (5 ‘basic values’, approx. € 55);
– and, if the registration is taking place in the course of a reorganization (merger, acquisition, conversion),
handover documents and transitional balance sheets.
All Austrian documents must be authenticated with an apostille and submitted with a Russian or Belarusian
translation.
Further registration requirements apply when forming a joint stock company (including registering the
shares with the securities committee) and additional documents must be submitted.
It should be pointed out that registering and liquidating companies involves going through time-consuming
and strenuous official channels. Because of the approval principle that applies to company registrations,
officials often demand large numbers of documents to protect themselves against making the
9

10
possible mistake of registering a fraudulent company. When one is opening a representative office, forming
a company, closing a representative office or liquidating a company in Belarus, it is therefore advisable
to engage an experienced local lawyer. Good lawyers can process a company formation or the opening of
a representative office inside of two months. Local lawyers can be expected to charge between roughly
€ 500 and € 1,500 plus any official fees (approx. € 1,000).

3. Taxation and Legislation
VAT
The legal framework for the tax system in Belarus consists of the Tax Code (Law No. 166-Z of 19 December
2002), the Special Part of the Tax Code No. 71-3 of 29 December 2009 and a number of acts that regulate
individual taxes (excise tax act, VAT act, profit and income tax act).
Tax burdens in Belarus total about 50.9 per cent of GDP, but this does not include mandatory contributions
to funds specially set up by Presidential decrees. The tax burden on companies in Belarus varies considerably
from industry to industry (agricultural businesses: about 5 – 6 per cent; manufacturers of alcoholic
beverages: about 72 – 78 per cent) and averages 15 – 25 per cent of revenues. However, these figures do
not include payments to various state funds, so one can assume an average (tax) burden on companies of
about 40 per cent.
VAT is regulated in the Special Part of the Tax Code No. 71-3 of 29 December 2009. Tax is levied on the sale
or importation of goods and services and of intellectual property within or to Belarus. The standard VAT rate
is 20 per cent, and a reduced VAT rate of 10 per cent is applicable to foodstuffs, goods for children and a
number of agricultural products. Exports from Belarus are generally exempted from Belarusian VAT. There
are also VAT exemptions for securities, pharmaceutical products, medical products, medical and cultural
services, insurance and legal advice. It is precisely those exemptions that are regulated by Belarusian governmental
and presidential legal acts.
The country of destination principle has applied to trade between Russia and Belarus since 1 January 2005.
As a result, import VAT is also payable on goods imports from Russia to Belarus. On the other hand, exports
from Russia to Belarus are exempted from Russian VAT and from any excise tax so long as the Russian tax
authorities receive proof of delivery within 90 days of the date of delivery.
The basic principles underlying the Belarusian VAT system are similar to those underlying the system in
Austria and other European countries. VAT paid can be deducted from VAT owed as input tax, reducing
one’s tax liability. The reverse charge principle applies when services are exported from Austria to Belarus.
Excise tax
Excise tax is an additional tax levied on the sale of technical alcohol (with exceptions that include medicines,
veterinary pharmaceuticals, perfumes and cosmetic products), alcoholic beverages, beer, tobacco products,
crude oil, gasoline, diesel, motor oil, jewellery, microbuses and passenger cars.
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Excise tax takes the form of fixed amounts in Belarusian rubles (BYR) charged per unit of goods. For
instance, the excise tax on champagne and sparkling wine (1 litre) is BYR2,740 (€0.73), the tax on wine
(1 litre) is €0.21 and the tax on a cigar is €0.57. When importing goods that attract excise tax, the importer
must apply for and buy the excise tax stamp (proving payment of excise tax) and affix it to the product.
Tax on the sale of car fuels
Belarusian companies must pay this tax when buying car fuels. The tax is levied at a rate of 10 per cent of
the price of the gasoline or diesel. This tax is normally paid by the fuel wholesaler.
Profit tax
A profit tax of 24 per cent is imposed on company profits in Belarus. The profit tax is regulated in the Special
Part of the Tax Code No. 71-3 of 29 December 2009. This tax must be paid by Belarusian legal entities and
foreign legal entities with a permanent establishment in Belarus, but the tax levied on a permanent establishment
of a foreign company in Belarus is limited to the profits recorded by that permanent establishment.
Under the double tax agreement between Austria and Belarus of 23 April 2002, the profits of Austrian companies
operating in Belarus without setting up a permanent establishment are taxed in Austria. However,
the profits that can be attributed to a permanent establishment of an Austrian company in Belarus (e.g. a
subsidiary) are subject to Belarusian profit taxation. The representative office of an Austria company is not
subject to profit taxation in Belarus so long as the Belarusian tax authorities have not deemed it to be a permanent
establishment on the grounds of its activities. The double tax agreement also sets out special rules
allowing the Belarusian taxation at source of the profit distributions of Belarusian companies with Austrian
shareholders/members/partners (5 per cent if stake > 25 per cent: otherwise 15 per cent) as well as of profits
from securities transactions (24 per cent) and transportation services (6 per cent).
When rendering services in Belarus, one must take into account that the Belarusian tax code specifies that,
when a foreign company renders a service in Belarus, the revenues from that service will be taxed at source
at a rate of 24 per cent of the value of the order. The recipient of the service must withhold the tax applying
the reverse charge system. Installation and assembly services may be exempted.

Profit tax in a number of areas of activity
Profit tax is levied on banks and insurers at a rate of 24 per cent. The tax on profits from securities transactions
levied on other organizations is likewise 24 per cent.
Income tax
The progressive tax system was abolished on 1 January 2009 and the income tax rate has been 12 per cent
since that time. Income tax is assessed on the basis of all monetary and non-monetary income of natural
persons with a permanent residence in Belarus. Foreign citizens are assumed to have a permanent residence
in Belarus if they are in Belarus more than 183 days a year.
Social security contributions
Employers must pay contributions into the social insurance fund in the amount of 35 per cent of all wage
and salary payments (monetary and non-monetary) as well as premiums based on civil law contracts for
the benefit of employees. Social security contributions are legally regulated by Law No. 138-XIII of
29 February 1996 concerning obligatory contributions to the social fund of the ministry of social security of
the Republic of Belarus.
In addition, an insurance premium of up to 0.34 per cent of all wage and salary payments (depending on
the sector or industry) must be paid to the Belarusian Republican Unitary Insurance Company
Belgosstrakh, which is state-owned.
Land tax
Land tax takes the form of a fixed annual amount per cadastral valuation of a hectare (2.47 acres) of land.
The taxable object is land owned, possessed or used by a legal entity or natural person. The tax rate is
0.015 per cent – 12 per cent of the cadastral valuation per hectare and year, and this rate increases by a
factor of 1.6 if the land is not registered in the cadastre. Natural persons must pay land tax in the amount
of about BYR60,000 (approx. US$20) or 0.45 per cent of the cadastral valuation per hectare and year
depending on the cadastral valuation. The legislative basis for this tax is provided by the Special Part of the
Tax Code No. 71-3 of 29 December 2009 concerning land payments.
13

Environment tax
14
An environment tax in the form of a fixed euro payment per metric ton is levied on the use of natural
resources, pollutant emissions, the transportation of mineral oil and petroleum products on Belarusian territory,
the extraction or mining of raw materials and the creation of waste for landfill. The legislative basis
for this tax is provided by the Special Part of the Tax Code No. 71-3 of 29 December 2009.
Immovable property tax
Companies must pay immovable property tax in the amount of 1 per cent of the value of a property owned
or possessed by the company and of immovable properties that are under construction but for which the
completion deadline has passed. Natural persons are charged this tax at a rate of 0.1 per cent of the value
of the immovable properties they own. The legislative basis for this tax is provided by the Special Part of
the Tax Code No. 71-3 of 29 December 2009 concerning immovable property.
Local taxes and duties
Local authorities are allowed to levy taxes and duties. Specifically, the Special Part of the Tax Code No. 71-
3 of 29 December 2009 gave them the right to levy eight taxes and duties at a rate of no more than 5 per
cent.
Charges for financial transactions conducted by
legal entities
Offshore fees
Belarusian legal entities must pay a levy of 15 per cent of certain amounts remitted to offshore zones.
Specifically, this affects payments to non-residents registered in offshore zones in the fulfillment of financial
obligations, payments to accounts when no financial obligations exists and transfers of property rights. The
legislative basis is provided by the Special Part of the Tax Code No. 71-3 of 29 December 2009 on offshore
fees. Offshore zones are defined in Resolution No. 75 of the National Bank of Belarus dated 18 April 2002.

Special tax regimes
Unified tax on agricultural producers
This unified tax is levied at a rate of 2 per cent of agricultural producers’ gross revenues from the sale of
goods, services, and other assets and other activities. This tax replaces all other taxes except excise duty
and VAT. In addition, social security contributions, the extraordinary tax for the employment support fund,
and any customs duties must also be paid. The legislative basis for this tax is provided by the Special Part
of the Tax Code No. 71-3 of 29 December 2009 concerning the introduction of the unified tax on agricultural
producers.
Simplified taxation
Since 1 July 2007, individual entrepreneurs and commercial organization have been entitled (subject to certain
conditions) to apply a special taxation regime that greatly simplifies tax declaration and payment procedures.
The President of the Republic of Belarus signed the relevant decree No. 119 on the simplified
taxation system on 9 March 2007. Now, simplified taxation is regulated in the Special Part of the Tax Code
No. 71-3 of 29 December 2009.
In the simplified system, tax is charged on a gross revenue basis. Payment of this tax replaces the payment
of numerous other taxes, duties (charges) and transfers to budgetary and non-budgetary funds.
However, under the regulations that are generally applicable, the following must still be paid:
– taxes and duties (charges) when importing (exporting) goods into (from) the customs territory of the
Republic of Belarus;
– offshore fees;
– taxes on vehicle purchases;
– compulsory contributions to the fund for social protection of the population.
Whether or not VAT must be paid will depend on the number of employees and the amount of gross revenues.
VAT is not payable if the average number of employees in a month does not exceed 15 and gross
revenues in a year are less than BYR1,090 million.
When the simplified regime is applied, gross revenues are defined as total revenues from the sale of goods
and services and rights to intellectual property and revenues from non-selling operations.
Revenues from the sale of foreign currency and VAT charged to purchasers do not count towards gross
revenues.
The following tax rates have been adopted for the simplified regime:
8 per cent for non-VATable organizations and individual entrepreneurs;
6 per cent for VATable organizations and individual entrepreneurs.
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Unless they are wholesalers, the following tax rates have been adopted for the simplified regime in respect
of commercial organizations and individual entrepreneurs domiciled/resident in agrocities, state settlements
and cities with a population of not more than 50,000 in which unemployment is high, that have a socalled
‘city budget financing’ enterprise or are located in radioactive pollution zones (a list thereof has been
issued by the Council of Ministers of the Republic of Belarus in consultation with the President):
5 per cent for non-VATable organizations and individual entrepreneurs;
3 per cent for VATable organizations and individual entrepreneurs.
Moreover, organization with gross annual revenues of over BYR1,090 million but not more than BYR3,815
million and an average workforce of between 15 and 100 can apply the simplified regime, albeit with certain
restrictions. These will depend on the type of activity and the taxation regime previously applied.

4. Privatization
Roughly 75 per cent of Belarusian GDP is generated by state-owned enterprises. In other words, private
companies only account for about 25 per cent. This is one of the lowest ratios of any successor state of the
former Soviet Union. In particular, the country’s big industrial enterprises have remained in state hands.
Privatization has mainly affected small and medium-sized enterprises (a total of 4,129 between 1991 and
2007). 47.6 per cent of the working population in Belarus work for private companies. The ‘golden
share’—though not very widespread—was abolished in 2008. The government and, therefore and above
all, public authorities, play an important role in the Belarusian business and industrial life. Just four stateowned
enterprises were transformed into ‘open’ joint stock companies during 2006. The government is trying
out various privatization schemes for agrobusinesses. During 2005, 222 loss-making agrobusinesses
were put back on their feet by merging them with profitable businesses or selling them to legal entities. On
the other hand, the ‘voluntary’ nationalization of businesses that had been privatized earlier began in 2006,
with the government exchanging business debts arising from gas and electricity supplies for a bigger stake
in their share capital. At the same time, to mitigate the adverse effects of the decline in the Belarusian economy,
there are also plans to sell state shares in profitable businesses. At the start of 2007, Belarus began
selling 50 per cent of the stock of gas transportation company Beltransgaz to Russia’s GASPROM in instalments
(in June 2007, Belarus had sold 12.5 per cent of the shares in Beltransgaz for US$625 million).
In July 2008, the Belarusian Council of Ministers approved the plan for the privatization of state-owned
industrial enterprises and other businesses in the years 2008 to 2010. According to a ministerial directive,
519 state-owned enterprises are to be privatized in that period. They include Homselmash, which makes
agricultural equipment, motor vehicle manufacturer Zhodzina, the Minsk tractor factory, the Vitsyaz media
company and oil pipeline operator Druzhba. In an initial stage of the privatization process, the stock of the
transformed companies will be sold to large institutional investors.
17

5. Arbitration
18
Unlike the rulings of state courts, most arbitral awards can be enforced worldwide. For a dispute to be settled
by a court of arbitration, its jurisdiction must previously be agreed in writing. It is therefore advisable to
include an arbitration clause in your contract with a Belarusian counterparty.
The Austrian Federal Economic Chamber offers institutional arbitration as a service through the
International Arbitral Centre of the Austrian Federal Economic Chamber.
The arbitration clause of the International Arbitral Centre of the Austrian Federal Economic Chamber reads
as follows. (It is available in the languages of most importance to Austrian exporters.)
‘All disputes arising out of this contract or related to its violation, termination or nullity shall be finally settled
under the Rules of Arbitration and Conciliation of the International Arbitral Centre of the Austrian Federal
Economic Chamber in Vienna (Vienna Rules) by one or more arbitrators appointed in accordance with
these Rules.’
Useful agreements to supplement this arbitration clause:
• the number of arbitrators shall be .......................... (one or three);
• the applicable law shall be ............................;
• the language used during arbitration proceedings shall be ......................................
Detailed information:
Internationales Schiedsgericht der Wirtschaftskammer Österreich
International Arbitral Centre of the Austrian Federal Economic Chamber
Manfred Heider; Phone: +43-5-90 900-4397; Fax: +43-5-90 900-216.
e-mail: arb@wko.at; Internet: http://wko.at/arbitration
The fact that you, as an Austrian company, are a member of the Economic Chamber, may under some circumstances
bother a strong foreign counterparty. If this is the case, we recommend conferring jurisdiction
on another court of arbitration such as that of the International Chamber of Commerce (ICC). It is based in
Paris. Its representative in Austria is ICC Austria.
The following possibilities result:
• If your company’s starting position for contract negotiations is strong or if your starting position and that
of your counterparty are roughly even, we recommend using the arbitration clause of the Austrian Federal
Economic Chamber to settle disputes.
• If, in contrast, your company’s position is weaker or a counterparty as strong as you does not agree to
the arbitration clause of the Austrian Federal Economic Chamber, we recommend conferring jurisdiction
on another arbitration court such as that of the International Chamber of Commerce.

The arbitration clause of the International Chamber of Commerce (ICC) reads as follows:
‘All disputes arising out of or in connection with the present contract shall be finally settled under the Rules
of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance
with the said Rules.’
This arbitration clause is also available in other languages.
Detailed information:
ICC Austria, International Chamber of Commerce
Maximilian Burger-Scheidlin; Phone: +43-5-90 900-3701; Fax: +43-5-90 900-3703;
e-mail: icc@wko.at; Internet: http://www.icc-austria.org.
Belarus has the
International Arbitration Court of the Belarusian Chamber of Commerce and Industry
Jan Iosifovich Funk; Phone: +375-17-288 2076; Fax: +375-17-288 2067;
http://www.cci.by/ArbitrCourt/AboutCourt_en.aspx.
The texts of arbitration clauses for contractually conferring jurisdiction on an arbitration court in Belarus are
available from the Austrian Foreign Trade Office.
One must bear in mind that decisions of foreign arbitration courts cannot be directly enforced in Belarus.
Instead, confirmation must be obtained within the scope of enforcement proceedings before the Belarusian
commercial court that is competent for the registered office of the defendant. When hearing the case, the
Belarusian commercial court must establish the extent to which grounds exist to confirm or reject a foreign
arbitral award under Article 248 of the Commercial Procedure Code. However, the Belarusian court is not
permitted to decide on the matter itself. Similarly, decisions of a Belarusian arbitration court cannot be
directly enforced either. To be enforced, they must be confirmed by a Belarusian commercial court.
To ensure a level playing field in cross-border commercial litigation, most contracts confer jurisdiction on
arbitration courts within the arbitral systems of the chambers of commerce (Austrian Federal Economic
Chamber, International Chamber of Commerce, ICC Belarus). However, in certain cases and depending on
the business transaction in question and contractual positions, it may be advantageous to confer jurisdiction
on a Belarusian commercial court.
19

6. Subsidies and Support
EU subsidies and support allocated
through ENPI
20
The European Neighbourhood and Partnership Instrument (ENPI) has been the financial instrument of
European neighbourhood policy since 1 July 2007, replacing the MEDA Regional Programme for the
Mediterranean Region and most of the TACIS Programme for the CIS. This instrument aims to support
prosperity, security and stability in the regions neighbouring the enlarged European Union so as to promote
cooperation and the ongoing process of economic integration between the EU and neighbouring states
and thus to strengthen and deepen relationships between them on a sustainable basis.
Beneficiary countries
ENPI targets the countries of the south Mediterranean (Morocco, Algeria, Tunisia, Libya, Egypt, Palestinian
territories, Jordan, Israel, Lebanon, Syria) and the countries of the Confederation of Independent States
– CIS (Armenia, Azerbaidzhan, Belarus, Georgia, Moldova, the Ukraine and the Russian Federation). By
setting up the ENPI programme, the European Commission has for the first time created a unified framework
of support for all of the EU’s neighbouring states that have no prospect of accession at present.
Budget
This instrument has a budget of €11.2 billion for 2007 – 2013. At least 95 per cent of the total is allocated
to country and multi-country programmes, and the remainder to cross-border cooperation. The biggest
beneficiary among the Mediterranean countries in the period 2007 – 2010 is Morocco, which has been allocated
€654 million. The biggest beneficiary in the CIS region is the Ukraine, which has been allocated
€494 million (Source: European Commission). Belarus is receiving €20 million.
Examples of types of assistance
Because of the differing circumstances and needs of the beneficiary countries, the spectrum of measures
that can be supported is very broad.
Examples of ENPI goals
• cooperation in the modernization of administrative authorities, institution-building;
• supporting sustainable economic development;
• promoting political dialogue and political reform; harmonizing legal and administrative regulations in
every field;
• promoting environmental protection; combating poverty; social development, non-discrimination;
• promoting health, education and training;
• promoting the market economy, energy supplies, telecommunication systems and transport networks;
• improving food safety;
• cooperation in the field of justice and home affairs and in university education;
• participation in Community research and innovation projects;
• supporting cross-border cooperation and regional development.

Who can apply?
All natural persons and legal entities who are citizens of or resident or domiciled in an EU Member State,
an ENPI beneficiary country or a member of the European Economic Area and are contributing to the attainment
to one of the goals named above can participate in procedures for the granting of orders or funds.
Participation in Community programmes takes place in accordance with the terms of the associated calls
for proposals.
Application procedure
ENPI funds are allocated on the basis of the multi-year and annual programmes prepared by the European
Commission for each country in consultation with the authorities in that country. These programmes contain
details of fund allocations broken down according to components, countries, multi-country programmes
and thematic programmes. In general, applications can only be made following a call for
proposals.
Calls for proposals take place continuously. Calls for proposals and information about making applications
are published on the EuropeAid website (see link), and they are also published on the websites of the delegations
of the European Union to the beneficiary countries.
Further information about submitting proposals and about the European Neighbourhood Policy
Link to EuropeAid
https://webgate.ec.europa.eu/europeaid/onlineservices/index.cfm?ADSSChck=1264761231660&do=
publi.welcome
Delegation of the European Union to Belarus: http://www.delblr.ec.europa.eu/home.html
European Commission: http://ec.europa.eu/world/enp/index_de.htm
National subsidies and support
Belarus does not currently have a unified national system of subsidies and support. Information about local
subsidies and support should be obtained directly from local administrative authorities.
There are various tax and customs concessions on all products and services in six ‘free economic zones’
(Minsk, Gomel, Vitebsk, Grodno, Brest and Mogilev).
The official Belarus website: http://www.belarus.by/en/invest
21

22
Further information
Contact at the Raiffeisen Network Bank: International Desk
Ministry for the Economy
Phone: +375-17-222 6048
Fax: +375-17-200 3777
e-mail: minec@economy.gov.by
Internet: www.economy.gov.by
National Investment Agency
Phone: +375-17-267 9184
e-mail: agency@invest.belarus.by
Internet: www.invest.belarus.by
State Customs Committee of
the Republic of Belarus
Phone : +375-17-218 9000
Fax: +375-17-218 9197
Internet: www.customs.gov.by
Belarusian Chamber of
Commerce and Industry
Phone: +375-17-290 7249
Fax: +375-17-290 7248
e-mail: mbox@cci.by
Internet: www.cci.by
Free Economic Zones
FEZ Brest Administration
Phone: +375-162-238 094
+375-162-204 631
Fax: +375-162-200 883
e-mail: info@fez.brest.by
Internet: www.fez.brest.by
FEZ Gomel-Raton Administration
Phone: +375-232-682 790
Fax: +375-232-682 721
e-mail: info@gomelraton.com
Internet: www.gomelraton.com
FEZ Grodnoinvest Administration
Phone: +375-152-771 176
Fax: +375-152-770 739
e-mail: info@grodnoinvest.com
Internet: www.grodnoinvest.com
FEZ Minsk Administration
Phone: +375-172-274 696
e-mail: info@fezminsk.by
Internet: www.fezminsk.by
FEZ Mogilev Administration
Phone: +375-222-225 389
Fax: +375-222-311 581
e-mail: info@fezmogilev.by
Internet: www.fezmogilev.com
FEZ Vitebsk Administration
Phone: +375-212-260 802
e-mail: fez@vitebsk.by
Internet: www.fez-vitebsk.com
High-Tech Park
Phone: +375-17-268 6911
Fax: +375-17-268 6922
e-mail: info@park.by
Internet: www.park.by

7. Risk Mitigation and Finance
Guarding against investment and
export risks abroad
aws (Austria Wirtschafts Service GmbH = the federal government’s promotion agency)
aws provides guarantees to protect Austrian companies against financial risks arising from their equity
investments abroad within the scope of Ost-West-Fonds (East-West Fund) guarantees.
Two kinds of protection are available, the direct guarantee and the finance guarantee (with or without risk
sharing).
The Direct Guarantee
An aws direct guarantee provides protection against the possible failure (insolvency or similar circumstances)
of an equity investment project. aws undertakes to provide a specific capital sum up to the maximum
guaranteed amount.
Investment of €100
Austrian Company
➤
Investment Target
➤
Direct Guarantee of €50
Direct guarantee
to cover project risk
Chart 1: Direct Guarantee Process
Austria
Abroad
aws guarantees up to 50 per cent of the amount invested should a project in another country fail. The guarantee
will cost SMEs 0.5 per cent of the guaranteed outstanding loan amount per half year.
In the case of large enterprises, the maximum guarantee is one third of the value of the project. The guarantee
fee will be set in line with the market.
23

24
Finance Guarantee
An aws finance guarantee safeguards the bank by providing protection against the investor’s financial risk
(loan loss caused by the Austrian company’s insolvency). A finance guarantee covers up to 80 per cent of
the loan
Investment of €100
Austrian Company
➤
➤
Investment Target
Loan of €70
Chart 2: Finance Guarantee Process
Austria
Abroad
In the case of large enterprises, aws guarantees up to one third of a project’s value. The guarantee will cost
SMEs from 0.3 per cent of the guaranteed outstanding loan amount per half year. In the case of large enterprises,
the guarantee fee will be set in line with the market.
Finance Guarantee with Risk Sharing or Combination of Direct Guarantee and Finance
Guarantee
It is possible to supplement a finance guarantee with protection against the financial risk associated with an
equity investment project in another country (finance guarantee with risk sharing). If the equity investment
project fails, aws takes on the role of financier, offering the investor a cheaper form of finance (soft loan).
Alternatively, it may offer the investor a settlement on a present value basis to allow early repayment of the
loan. It is important to note that aws will only agree to risk sharing if it is ensured that the Austrian parent
company is not in a position to deliberately make the equity investment fail (e.g. by charging excessively
high internal prices).
➤
BANK
Finance Guarantee
for
80% of Loan,
i.e. €56
Finance guarantee
to provide cover against credit risk

Investment of €100
Austrian Company
➤
➤
➤
Investment Target
Risk Sharing
Loan of €70
➤
Finance Guarantee
for 80%
of Loan
Finance Guarantee with Risk Sharing
to cover the credit risk and project risk
Chart 3: Finance Guarantee with Risk Sharing Process
Austria
Abroad
The guarantee will cost SMEs 0.3 per cent of the guaranteed outstanding loan amount per half year plus
another 0.2 per cent per half year for risk sharing. In the case of large enterprises, the guarantee fee will be
set in line with the market.
Link: www.awsg.at
Low-interest finance, credit for internationalization projects:
OeKB (Oesterreichische Kontrollbank AG)
BANK
Good risk management and attractive sources of funds are essential if companies are to achieve sustainable
success as exporters and when investing abroad. OeKB offers federal export guarantees and OeKB
funding through a company’s primary banking provider, in this way providing instruments that strengthen
Austrian companies and their partners in the global competitive environment.
By issuing and processing export guarantees, OeKB thus acts as the Republic of Austria’s export credit
agency (ECA).
Export guarantees protect companies against default risks (whether caused by economic or political
events) when exporting abroad, and export guarantees provide protection against political risks when
investing abroad.
In addition, federal export guarantees provide attractive access to funds to pay for export and investment
transactions.
Export guarantees are available to any large, medium-sized or small enterprise if the guaranteed transactions
help improve Austria’s current account or are in Austria’s interest.
25

26
OeKB-Exportservice (www.exportservice.at) or your primary banking provider can tell you which form of
guarantee is best for you.
OeKB’s export financing scheme offers access to funds to pay for exports and equity investments abroad.
This export financing scheme is available to Austrian and foreign commercial banks acting as the source
of funds and is offered to companies via those banks within the scope of their export transactions and
investments abroad.
The prerequisites for this form of financing are:
• a federal guarantee under the Ausfuhrfördergesetz (AFFG: Export Financing Promotion Act); or
• the assumption of liability by a credit insurer within the meaning of AFFG; and
•an aws (Austria Wirtschaftsservice GmbH) guarantee; or
• the assumption of liability by an international organization within the meaning of AFFG; and
that funding the underlying supplies/services will directly or indirectly help improve Austria’s current account
or is in Austria’s interest.
The KfW Banking Group (Kreditanstalt für Wiederaufbau, Frankfurt, Germany)
KfW-Bank offers subsidized, fixed-rate loans to pay for investments carried out abroad in connection with
internationalization projects of German companies or their subsidiaries or joint ventures with German partners
(German stake > 25%). They can be obtained through partner banks (e.g. RZB). The following programmes
come into question in connection with internationalization projects: Corporate Loans, the KfW
Environmental Programme, KfW Capital for Jobs and Investment (all three programmes can be combined).
Essentially, any investment can be financed (e.g. corporate acquisitions, investments in plant, machinery,
land and buildings).
Link: www.kfw-foerderbank.de/

8. Payment and Account Services at
Priorbank, JSC
9.1. Cash management products
Account Services
Local Currency Foreign Currency
(LCY) Current Acc. LCY Deposit (FCY) Current Acc. FCY Deposit
Resident ✓ ✓ ✓ ✓
Non-resident ✓ ✓ ✓ ✓
Credit Interest ✓ ✓
Overdraft Facility ✓ ✓
Cash Management local Products & Services
Payments, Deposits
• Domestic payments LCY
• Domestic payments FCY
• Foreign payments LCY
• Foreign payments FCY
• Domestic Direct Debts (LCY, FCY)
• Check collection
• Cash payments / withdrawals LCY*
• Cash payments / withdrawals FCY*
• Purchase & Sale of FCY
• Bank cards
• Corporate debit cards in LCY
• Corporate debit cards in FCY
• Credit cards
• Debit cards
• Salary Cards project
• Western Union
Cash Management: Group Products and Services
• Cash Management International (CMI)
• International Account Reporting
• Local Cash Management
• Margin Pooling
Electronic Banking
• Local electronic
banking
• Internet banking
solutions
(just FX regulation, account report)
• SWIFT MT 940
• Internet-banking
(only for retail customers)
• SMS banking
(send, only for retail customers)
* however, restrictions due to local regulations
Liquidity Management
• Overdraft facilities*
• Cash supply
27

9.2. Legal & Foreign Exchange Regulations
28
Current Accounts
• Corporate customers may open more than one current account in local currency and in any foreign
currency.
Domestic Payments
• Any payment in local currency from one bank to another bank is processed by Belarusian Interbank
Settlement Center. All domestic payments must contain the payment title (purpose of payment). All payments
are performed to the day.
• Domestic payments no more than 50 mln. BYR (LCY) execute by STP (straight-through-process).
Foreign Payments
• Any payment in a foreign currency is treated as a cross-border payment and is sent through correspondent
banks because there is no clearing center for foreign currency in Belarus. All incoming and outgoing
cross-border payments must have a payment title (purpose of payment) and correspond to
foreign exchange regulations. Foreign payment terms are regulated according to the decree 178
(27.03.2008) of the President of the Republic of Belarus.
Cash Payments / Withdrawals
• Cash payments between corporates (entrepreneurs) are restricted to definite purpose and amount.

9.3. Clearing Mechanisms
Settlement
• Description: Automated System of Interbank Settlements (ASIS):a real-time gross settlement
– Belarus Interbank Settlement System (BISS). All payments in local
currency are settled through the BISS.
• Transaction value: Same day
• Settlement cycle: BISS works with payments from 8:30 till 16:30
Clearing Membership of the Bank
Mandatory for all banks.
29

9. Priorbank, JSC
30
Assets, €m 1,510
Branches 96
Staff 2,223
Priorbank JSC was founded in 1989 as commercial bank and was acquired by Raiffeisen in 2003. At the
end of 2010, Raiffeisen Bank International’s holding in the bank amounted to about 88 per cent. The
remaining shares were in free float. Measured in terms of balance sheet total, it ranked fifth in the local
banking market and offered all services of a modern universal bank.
In 2010, Raiffeisen had a countrywide distribution network of 96 business outlets and 2,204 employees
serving 833,000 customers. The loan portfolio amounted to EUR 1,1 million, with a balance sheet total of
EUR 1.5 billion. Set against the loan portfolio were customer deposits of EUR 854 million.
SOOO Raiffeisen Leasing, co-operating closely with Priorbank's branch network, maintained its market
position in 2010 as the country’s third-largest leasing company.
Priorbank, JSC
31-A, V. Khoruzhey Str., Minsk, 220002
Phone: +375-17-289 9087
Fax : +375-17-289 9191
www.priorbank.by
Shareholder structure:
Raiffeisen Bank International 87,74 %
Other 12,26 %

10. Your International Business
Specialists at Priorbank, JSC
and the Global Raiffeisen Network
Your specialist at Priorbank, JSC
Dmitry Naydenov
Phone: +375-17-289 9209
e-mail: dmitry.naydenov@priorbank.by
Your international business specialists
Raiffeisen Bank International AG
Herwig Haidn
herwig.haidn@rbinternational.com
Phone: +43 / 1 / 717 07 – 1574
Raiffeisen Bank International AG
Rudolf Lercher
rudolf.lercher@rbinternational.com
Phone: +43 / 1 / 717 07 – 3537
Raiffeisenlandesbank NÖ-Wien AG
Alfred Götsch
alfred.goetsch@raiffeisenbank.at
Phone: +43 / 5 / 1700 – 92359
Irene Kammerhofer
irene.kammerhofer@raiffeisenbank.at
Phone: +43 / 5 / 1700 – 92157
Andreas Hopf
andreas.hopf@raiffeisenbank.at
Phone: +43 / 5 / 1700 – 93304
Eszter Ruzsa
eszter.ruzsa@raiffeisenbank.at
Phone: +43 / 5 / 1700 – 93307
31

32
Raiffeisen-Landesbank Steiermark AG
Franz Rogi
franz.rogi@rlb-stmk.raiffeisen.at
Phone: +43 / 316 / 4002 – 7110
Günther Geieregger
guenther.geieregger@rlb-stmk.raiffeisen.at
Phone: +43 / 316 / 4002 – 7170
Raiffeisenlandesbank Oberösterreich AG
Helmut Zeindlinger
zeindlinger@rlbooe.at
Phone: +43 / 732 / 6596 – 3113
Artem Snegirev
snegirev@rlbooe.at
Phone: +43 / 732 / 6596 – 3161
Raiffeisenverband Salzburg
Friedrich Buchmüller
friedrich.buchmueller@rvs.at
Phone: +43 / 662 / 8886 – 3860
Raiffeisen-Landesbank Tirol AG
Andrea Zankl
andrea.zankl@rlb-tirol.at
Phone: +43 / 512 / 5305 – 2230
Raiffeisenlandesbank Vorarlberg
Marc Möhwald
marc.moehwald@raiba.at
Phone: +43 / 5574 / 405 – 524
Raiffeisenlandesbank Burgenland
Wilhelm Schedl
wilhelm.schedl@raiffeisen-burgenland.at
Phone: +43 / 2682 / 691 – 605
Raiffeisenlandesbank Kärnten
Michael Stegmüller
michael.stegmueller@rbgk.raiffeisen.at
Phone: +43 / 463 / 99300 – 2280
Herbert Schöffmann
herbert.schoeffmann@rbgk.raiffeisen.at
Phone: +43 / 463 / 99300 – 2269

Notes
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Notes
34

Notes
35

Received from: