Joining the HTP (consultation with an IT lawyer)
- Instruction plan
- Our legal services
- Related instructions
- Overview of the IT sphere in Belarus
- Conditions for joining the HTP
- Advantages of joining the HTP
- Possible problems with joining the HTP
- The procedure for joining the HTP
- Working conditions of an IT company before joining the HTP or without joining
- List of our clients
1. Overview of the IT sphere in Belarus
The IT industry is the locomotive of the economic industry in Belarus, and the development of legal regulation of this industry has played an important role in this. The emergence of many IT organizations, and, accordingly, large IT projects on the territory of Belarus is largely associated with the adoption of Decree No. 12 of September 22, 2005 "On the High-Tech Park" (hereinafter referred to as the HTP), which secured the guarantees of the validity of the significant benefits for HTP residents.
The fact that the HTP project has taken place and is developing further is evidenced by the fact that the number of HTP residents currently numbers more than 1020 companies and is growing steadily.
Among the significant benefits provided by the Belarusian legislator for IT companies that are HTP residents are the following:
- elimination of the need for mandatory exchange between the parties of primary accounting documents (contracts, acts, certificates) with the presence of the original seal and translation of documents into Russian;
- cancellation of the requirement for the mandatory sale of foreign currency on the stock exchange;
- as well as many other benefits that contribute to the mobility of business development in a rapidly changing world.
With the adoption of Decree No. 8 of December 21, 2017 "On the Development of the Digital Economy", many issues of the activities of HTP resident companies and simply IT companies in Belarus were resolved in a positive manner.
It should be noted that the development of IT legislation was significantly influenced by the active participation of representatives of the IT community in the development of Decree No. 8, which indicates the fact that the Belarusian state is open for dialogue with business.
Next, we will consider the conditions for joining, the advantages and disadvantages of residency in the HTP, taking into account the changes made, as well as an overview of the creation of an IT company without joining the HTP.
2. Conditions for joining the HTP
The process of joining the HTP takes at least three months and requires compliance with the following conditions:
A) Creation of a legal entity on the territory of Belarus, regardless of the locality.
B) Compliance of the type of activity conducted by the candidate for joining the HTP with the approved list (given below).
The company must be engaged in one or more of the activities listed below (however, it is possible to conduct other activities in the field of high technologies in coordination with the HTP Supervisory Board). However, the expansion of the normatively established list by the HTP Supervisory Board is a rare exception, in connection with which applicants for HTP resident status should be guided by the approved types of activities:
- analysis, design and software of information systems;
- data processing activities using third party software or proprietary software;
- fundamental and applied research, experimental development in the field of natural and technical sciences (implementation of research, development or experimental and technological work related to the activities of the Hi-Tech Park, including in the development of the information society) and the implementation of the results of such research and development;
- development or individual stages of development (research, design (construction), testing, technical testing) of materials, technologies, devices and systems of micro-, opto- and nanoelectronics, microelectromechanics and implementation of the results of such developments, as well as the implementation of the developed by the resident of the Park of High Technologies materials, technologies, devices and systems for micro-, opto- and nanoelectronics, microelectromechanics and compatible embedded software;
- development or individual stages of development (research, design (design), testing, technical testing) of technologies, devices and systems of mechatronics, embedded systems, software and hardware, software and hardware systems, components and computer technology and the implementation of the results of such developments with the provision of services for their development in production or without the provision of these services;
- development (research, design (design), testing, technical testing) of equipment for data transmission systems, technologies, devices and systems of radar, radio navigation, radio communication, radio control, radio frequency identification and implementation of the results of such developments with the provision of services for their development in production or without the provision of these services;
- development or individual stages of development (research, design (design), prototyping, testing, technical testing), production of high-tech materials, technologies, high-tech devices and systems, embedded systems, software and hardware, software and hardware systems and compatible software provision, as well as the sale of manufactured products and (or) the results of development with the provision of services for their development in production and (or) services associated with their use or without the provision of these services;
- activity on technical and (or) cryptographic protection of information, including the use of electronic digital signature;
- activities for the design, development, implementation, implementation or implementation of individual stages of implementation, support, maintenance, operation of software and (or) software and hardware, software and hardware systems based on and (or) using cloud computing technologies;
- consulting organizations on business and management issues in order to increase their efficiency with the provision of services for the integrated management of the development and implementation of integrated information systems and technologies;
- analysis of the information needs of legal entities and individual entrepreneurs (system analysis, business analysis), consulting on the use of information technology for the purpose of innovation (reengineering) of business processes with the development of technical requirements for information systems and software;
- audit of information systems and software in the process of their development, implementation and operation for compliance with technical requirements and (or) information needs of users;
- provision of services for system maintenance of computer equipment and local area networks of state information systems;
- provision of automated services for the search, selection, processing and sorting of data at the request of third parties, and providing them with information using the global computer network Internet;
- activities for the design, development, maintenance, implementation, operation of software and (or) software and hardware based on or using the register of transaction blocks (blockchain), other distributed decentralized information systems, including those using cryptographic information protection tools;
- development, maintenance, operation and implementation of unmanned vehicle control systems;
- development, maintenance and implementation of hardware and software technologies for the financial sector (contactless technologies for making settlements in non-cash form, mobile payments, electronic trading and others), financial information technologies;
- creation, training of neural networks and other algorithms in specialized sections of artificial intelligence and the implementation of the results of this activity;
- development or separate stages of development of medical technologies, biotechnologies and implementation of the results of such developments;
- development or separate stages of development of aviation, space technologies and implementation of the results of such developments;
- activities to provide services to non-residents of the Republic of Belarus using software (software and hardware) developed with the participation of a resident of the Park of High Technologies for the management (implementation) of auxiliary production, administrative and business processes of organizations (outsourcing of business processes);
- activities for the provision of services for the provision through the global computer network of the Internet of software and hardware capabilities for establishing contacts and making transactions between sellers and buyers (including the provision of a trading platform operating in the global computer network in real time) using the Park developed with the participation of a resident high technology software. For the purposes of carrying out this type of activity, if the seller and the buyer are residents of the Republic of Belarus, acceptance of payments, settlement services and other operations when making transactions between them on the territory of the Republic of Belarus are carried out in accordance with the legislation of the Republic of Belarus;
- activities for the provision of advertising, intermediary services, with the exception of banking operations carried out in the global computer network Internet using software developed with the participation of a resident of the Park of High Technologies;
- activities related to the development, implementation, implementation of the concept of a computing and communication network of physical objects equipped with built-in technologies for interacting with each other and with the external environment (Internet of Things);
- educational activities in the field of information and communication technologies, including through the global computer network Internet, according to programs approved by the administration of the Park;
- software publishing activities;
- provision of services related to the creation and placement of digital signs (tokens) using the global computer network Internet, including services for the promotion of digital signs (tokens), consulting and other related services;
- activities of the operator of the crypto platform;
- activities of the cryptocurrency exchange operator;
- other activities using digital signs (tokens), including those containing signs of professional and exchange activities in securities, investment fund activities, securitization, as well as the implementation of operations for the creation and placement of their own digital signs (tokens);
- activities to promote software, including computer games, for any platforms, including the provision of marketing, advertising, consulting services using the global computer network Internet;
- data center services;
- provision of services based on cloud computing technologies using software and (or) software and hardware (complexes) developed with the participation of a resident of the Park of High Technologies;
- activities to create audiovisual, musical works using software developed with the participation of a resident of the Park of High Technologies, creating static materials and video materials using computer graphics;
- activities in the field of e-sports, including the training of e-sports teams, the organization and conduct of competitions, the organization of their broadcasts, the provision of advertising services in the implementation of such activities;
other types of activities in the field of new and high technologies by decision of the Supervisory Board.
C) In practice, in order to join the HTP, the period of work of the founder of an IT company abroad or of a created Belarusian IT company must be at least 1 year, while the indicators of profit and growth in the number of employees must be stable, the company and its founders must have a “net »Accounting and an unblemished reputation.
3. Advantages of joining the HTP
Obtaining the HTP resident status implies obtaining the right to the following benefits:
- Tax incentives:
- 5% offshore tax on dividends of founders regardless of their country of residence;
- 1% tax on proceeds in favor of the HTP administration instead of income tax;
- no VAT;
- no taxation on transactions with tokens, mining until January 1, 2023;
- income tax on employee salaries is 13%, fixed contributions to the social security fund are 34% of the average salary of employees of the Republic of Belarus,
- absence of many other types of taxation (on real estate, land, etc.) and customs duties.
- Simplified document flow:
- the ability to single-handedly draw up primary accounting documents (contracts, acts, invoices) for transactions with non-residents;
- no need to exchange originals of the above documents with signatures and seals of counterparties.
- No need for mandatory sale of foreign currency on the stock exchange and other benefits in the field of currency regulation;
- Simplified procedure for hiring foreign citizens without the need to obtain a special permit to work in Belarus.
As a general rule, only citizens of the EAEU member states can work without a special permit obtained from the Ministry of Internal Affairs..
- Stability of the HTP legislation (a special legal regime for HTP and HTP residents was established until January 1, 2049).
- High professional competence of Belarusian personnel in the IT field;
- Elements of English law have been introduced in Belarus, which provide an opportunity for the development of venture investment in startups without transferring transactions to foreign jurisdictions.
This is primarily about convertible loans, arbitrable shareholder agreements and a significant increase in the possibilities for the use of foreign law. The use of smart contracts is also legalized, without which any ICO is objectively impossible.
4. Possible problems with joining the HTP
A candidate for obtaining the status of a resident of the HTP, as well as a resident of the HTP, may face the following problematic issues when obtaining residency, as well as the subsequent conduct of their activities:
- Not every company will be able to become an HTP resident, in particular at the initial stage. In the event of a refusal to join the HTP, the company will be forced to conduct its activities in accordance with the requirements for ordinary Belarusian companies.
As of the end of 2019, the HTP had over 500 resident companies, while the total number of Belarusian IT companies was at least 1000.
As of the beginning of 2021, the total number of HTP residents is more than 1020 IT companies, the total number of employees of HTP residents is more than 69800 people. Such indicators show that an increasing number of companies note the merits of joining the HTP and, after joining, enjoy all the preferences provided.
At the same time, it should be noted that the majority of companies that do not join the HTP have an insignificant number of employees and revenue, that is, in fact, they are representatives of small businesses.
- Every calendar year it is necessary to undergo an audit on all business operations of the HTP resident;
- It is necessary to participate in the development of the social sphere in cooperation with the HTP Supervisory Board, for example, to conduct educational courses in coordination with educational institutions;
- It is possible to exclude a resident from the HTP if the business project is not completed, there is no profit and other violations of the Regulations on the HTP, with the loss of benefits and preferences of the HTP resident and the need to pay unpaid taxes and penalties due to the application of benefits for the calendar year in which the decision was made to exclude resident from the HTP.
It should be noted that there were no cases of unmotivated exclusion from the HTP. This tool is more of a preventive nature.
5. The procedure for joining the HTP
* actual as of March 23, 2021
A) Registration of a legal entity (the procedure for registering a legal entity by non-residents of the Republic of Belarus can be found here);
B) Drawing up a business project;
It is advisable to entrust the development of a business project to specialists who have experience in the development and protection of more than one business project.
At the moment, the strict requirements for a business project are as follows:
- The content should be no more than 18 pages (including the title person, content, passport). This requirement was introduced because there is a large flow of candidates for joining the HTP;
- The business project should reflect the following points: project summary; characteristics of the legal entity and its development strategy; description of goods (works, services, property rights) planned for release within the framework of the project; sales market analysis, current and planned results of financial and economic activities, investment plan, investment objects, corporate social responsibility, legal entity passport.
C) Occupation of the entry queue by sending a business project to the HTP e-mail. At the moment, due to the relevance of joining the HTP, applications for joining the HTP are considered within 3-4 months.
D) Three months after the letter was sent, the candidate for membership receives a response letter with a business project, which will contain comments and recommendations from the HTP, as well as an invitation to officially submit documents to the HTP.
D) For the official submission of documents, it is necessary to certify the constituent documents of a legal entity (charter (constituent agreement - for a commercial organization acting only on the basis of a constituent agreement), a certificate of state registration of a legal entity) and the final version of a business project with accounted for (or partially accounted for) comments from the HTP;
E) Verification of each business project of a candidate for joining the HTP goes through two stages: the Expert Council and the Supervisory Council. The Expert Council assesses the level of technologies and software in accordance with the directions of the HTP activity in terms of classifying them as new and high technologies, conducts scientific and technical expertise, in particular, evaluates the advantages, competitiveness, importance and significance for the development of the IT sector, export potential and potential import substitution. The Supervisory Board directly decides on registration or refusal to register as an HTP resident;
F) Obtain a certificate of acquiring the HTP resident status and notify the servicing bank, the tax and the Federal Social Welfare Fund about it.
If you plan to join the HTP and meet all of the above recommendations, you can contact us for legal services on joining the HTP. At the moment, we accompany the entry into the HTP of 5 companies, in three of which (non-residents) we act as a managing organization with full takeover of administrative, legal and accounting functions, and also provide assistance in the search and selection of personnel, consisting of highly qualified specialists.
6. Working conditions of an IT company before joining the HTP or without joining
An IT company that is not a LDPE member may face the following nuances when conducting its business:
- Any activity of legal entities related to cryptocurrencies and tokens, mining is impossible without joining the HTP;
- With the company's revenue up to 525.000,00 US dollars per year, you can pay 5% tax on the proceeds (with a staff of no more than 50 employees) excluding VAT. With revenue up to 950.000,00 US dollars and the number of no more than 100 employees, but with the use of VAT, a 3% tax on the proceeds is paid (which is beneficial with a zero VAT rate for export);
- Imperfect legislation in some issues that are regulated within the HTP, but do not apply to other Belarusian companies;
- There are special tax regimes, for example, when registering and operating a company in small and medium-sized cities, science and technology parks, science and technology associations, etc.
- Taking into account the existence of international treaties for the avoidance of double taxation (for example, with Cyprus), the income tax rate on dividends of the non-resident founder can be reduced to 5%, as in the HTP.
Thus, even without the status of an HTP resident, operating in Belarus is very beneficial for both Belarusian IT companies and IT companies, where at least one of the founders is a non-resident from states in whose jurisdictions there is no regulation of instruments based on blockchain technology.
So, in most of the CIS countries, activities related to tokens, in particular with cryptocurrencies, are illegal. This situation leads to the fact that the subjects of activity in the field of IT have to either resort to illegal schemes, or take the business to expensive jurisdictions.
At the moment, they will have the opportunity to register a company in Belarus without fear of sanctions from national structures.
Thus, acquiring the status of an HTP resident is extremely expedient, since the benefits provided to HTP residents are quite attractive, and tax benefits in the field of mining and tokens are unprecedented in world practice, unparalleled in other jurisdictions.
7. The list of our clients can be seen on our new legal services website.
Accompanying joining the HTP from 1500 EUR or 3200 BYN
- Registration of the company in case of its absence at the time of the request;
- Consulting on the company's joining the HTP;
- Accompanying at all stages of joining the HTP;
- Drawing up a Business Plan.
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