Encouraging of business activities in Belarus

Summary of Directive No. 4 enforced by the President of Belarus

Over years, the Republic of Belarus has pursued a firm and consistent policy to liberalize
economy, foster a beneficial business environment, raise the investment profile of the country.
A qualitatively new aspect was given to the dialogue between the authorities and business
community in shaping joint decisions in the economic development and encouraging business
activities.
The practical results achieved therein allowed the government to set an ambitious goal:
make Belarus one of 30 top countries in terms of doing business.
An essential step to leverage the decision was Directive No. 4 “On the Development of
Entrepreneurial Initiative and Encouraging Business Activity in the Republic of Belarus”
signed by Belarus President Alexander Lukashenko on 31 December 2010.
In essence, that is a programme of measures aimed to liberalize entrepreneurial initiative,
create conditions for a robust and vibrant growth of the Belarusian state. The profound and
systemic steps provided by the Directive make it the most important legal act streamlining
economic liberalization among those adopted in the country in the past years.
The Directive includes nine sections, each of them comprising a set of concrete measures
to boost economic competitiveness, lift groundless barriers still rife in the business environment.
The sections are entitled as conceptual systemic requirements for all bodies of state
governance, public associations and citizens of Belarus:
1. Ensure the continued development of fair competition between businesses, regardless
of ownership.
2. Create conditions for unimpeded entrepreneurship.
3. Eliminate excessive administrative barriers as the governmental bodies and legal
entities and citizens interact.
4. Complete the harmonization of the Belarus taxation system with those operating in the
European countries. Make the tax legislation encourage the bona fide exercise of tax obligations
and entrepreneurial initiative.
5. Make the controls (supervisory activities) precautionary dominated by preventive
measures employed to prevent crimes in the business activities.
6. Improve infrastructure and funding of small businesses to enhance entrepreneurship
and ensure efficient support of business (legal, logistical and financial).
7. Eliminate excessive regulations in the labour market.
8. Create a legal base encouraging the development of public-private partnerships in the
Republic of Belarus.
9. Ensure unambiguous legal regulations and stable legislation regulating
entrepreneurship.

A significant number of steps due to make part of the reform are of immediate interest
for foreign partners of Belarus.
Thus, to foster entrepreneurship without hindrance, the Directive stipulates secure
safeguards for the private property. They provide, in the first place, that an entrepreneur’s
property cannot be impounded by any means. It is also guaranteed that the privatization of state
property cannot be reversed.
Belarus will make legal arrangements for fostering private-public partnerships. This
mechanism provides genuine opportunities to private businesses to participate in the exercise of
meaningful governmental programmes.
Excessive governmental regulations are abolished in the labour market. Salary caps
and employment restrictions are to be lifted.
A drastic innovation is an express distinction in the responsibilities of employers and
employees for the pension provision and hence implies lower fees to the Social Security Fund.
The system of administrative and criminal responsibility will be reviewed in respect
of the entrepreneurial crimes to make the nature of crime and scale of damage commensurate to
the responsibility. Fines are expected to go down, a list of mitigating and aggravating factors will

be made more specific and concrete.
A number of aspects, as reflected in the Directive, regard free pricing and
antimonopoly policy. For these purposes, it provides to preserve governmental price regulation
only for monopolies’ products and socially important goods (works, services), that define the
standard of living.
The Directive makes provisions for transition to a predominant use of declaration of
products’ conformity to the safety and quality requirements. Full responsibility for the quality of
goods and services will be borne by the manufacturer, importer and retailer.
One of the requirements of the document is to ban any local administrative barriers.
There are provisions for the electronic governmental registration of legal entities and individual
entrepreneurs, the creation of the Unified State Register Web portal.
As the tax burden on businesses continues to be lowered, the mechanisms will be
introduced to allow taxpayers who have suffered losses to minimize them against the future
profits; to significantly reduce the quantity of required source documents and the number of
details therein.
A simplified tax system will be extended in 2011 to include businesses with the gross
accumulated annual revenue of up to 12 billion Belarusian rubles (at present the simplified
system applies only to organizations and entrepreneurs with gross revenues of not more than 3.1
billion Belarusian rubles).
Investors will be exempt from land tax (rent) for the land occupied for the
construction for the period of construction including the time required for design and
documentation work.
The essence and the key principle of the changes in entrepreneurial activities and
relationships on the “government – business” axis are stipulated in the Directive with extreme
clarity: “Competition wherever possible, governmental regulations where necessary.”
The Directive was prepared with broad participation of various non-governmental
organizations representing entrepreneurs, their unions and associations. The business community
has very positively appreciated the timely adoption, content and thrust of the Directive.