Belarus’s determination to improve its enterprise climate is exemplified by its six Free Economic Zones (FEZs).
These zones were set up to create strong private sector enterprise and investment in Belarus and offer an enviable array of incentives to members, whether they are local entrepreneurs or foreign investors.
Registered businesses wanting to register with a FEZ must make a minimum investment of 1m, but receive the following benefits:
• Tax free profits on all goods and services for five years, then a 50% discount
• 50% discount on VAT on import substitution goods manufactured within an FEZ
• No taxes on real estate owned or leased in the FEZ
• Exempt from payments to National Agriculture Support Fund
• No tax on purchasing vehicles
• No customs duty on raw materials and equipment imported from outside Belarus
• A guarantee that legislation governing firms will not change for seven years
Each FEZ has its own administrative officers to help members and, in all, joining an FEZ confers a 40% reduction in the tax burden compared non-membership. So far almost 270 foreign businesses have taken advantage of the opportunity.
The first FEZ was set up in 1996 in Brest, in the south west of Belarus, near the Polish border, and now six zones are strategically located around the country - in Minsk, Gomel, Vitebsk, Grodno, Brest and Mogilev.
Profiles of each FEZ in Belarus can be viewed in country profile.
British-owned company Print Team Pack demonstrates the value of investing in one of Belarus’ six Free Economic Zones.
In 2004 the company ran a label printing business on the outskirts of Minsk and was looking for ways to expand its operations whilst boosting its competitiveness.
Fours years on Print Team Pack had bought out a local cardboard box manufacturer and consolidated both firms in a new, high-specification factory in the Free Economic Zone.
It is one of a handful in Eastern Europe to combine box manufacturing and labeling under one roof, and by 2008 the firm was turning over US $200 million and employing 370 people.
A lot of Print Team Pack’s success is down to its FEZ membership, and the generous tax allowances and incentives it has received from the local business authorities.
Its goods – mainly packaging for breakfast cereals, chocolate, and alcohol – are exported across Russia and Kazakhstan, but it also needs to import high quality paper from the EU.
FEZ membership means these raw materials are exempt from import duty – saving 15% of their costs – as the finished products are destined for export.