Introduction to Belarus

Belarus is a small diversified economy, with a low poverty rate (4.8%), a GDP per capita of USD 6,681 in 2019 and a skilled workforce. However, its economic growth is low and volatile as the economy is vulnerable to the external environment and highly reliant on Russia for trade and external financing support. Russia is its largest creditor, investor and trading partner.

The economy is expected to contract in 2020 with the COVID-19 outbreak (vs. 1.2% growth in 2019) and medium-term prospects remain poor due to important structural weaknesses. Potential growth is estimated at only 2%. The government has a significant impact on the economy as it subsidizes weak and inefficient state-owned companies. Meanwhile, its ability to provide fiscal support to sustain economic growth is limited and is expected to deteriorate further as Russia is expected to progressively withdraw its implicit oil subsidies over the period 2019-24. Finally, the aging population and weak population growth weigh on potential economic growth.

Although fiscal metrics seem satisfactory (public debt was contained below 46% of GDP in 2019), the structure of public debt is risky as it is almost fully denominated in foreign currency. FX reserves remain inadequate in relation to foreign exchange debt repayments and imports.

Politically, President Alyaksandar Lukashenka, who has ruled Belarus since 1994, was re-elected in August 2020. However, political tensions since his re-election have been extremely high, with popular and opposition accusations of vote rigging.

Summary

BNP Paribas presence

Please contact your relationship manager for information on BNP Paribas' cash management and trade finance services in Belarus.

Currency

Belarusian ruble (BYN).

Exchange Rates

2016 2017 2018 2019 2020

Exchange rate: 1.99 1.93 2.04 2.09 2.44 BYN per USD

Source: IMF, International Financial Statistics, July 2021. Central Bank

The Belarusian central bank is the National Bank of the Republic of Belarus (NBRB – www.nbrb.by).

Bank accounts

Resident / non-resident status

Resident Belarusian companies are those registered in Belarus, as well as subsidiaries located outside Belarus. Non-resident companies are those registered outside Belarus, as well as any branches located in Belarus.

Bank accounts for resident entities

Within Belarus Outside Belarus

Local Currency Permitted without restriction, fully convertible Permitted, fully convertible.

Foreign Currency Permitted without restriction, fully convertible Permitted.

Bank accounts for non-resident entities

Within Belarus Outside Belarus

Local Currency Permitted without restriction, fully convertible Not available

Foreign Currency Permitted without restriction, fully convertible Not applicable

Lifting fees

BNP Paribas Cash Management Capabilities

Liquidity Management

Physical cash pooling

Notional pooling - Balance compensation Notional pooling - Interest optimisation

Supported by BNP Paribas

Not required / permitted in Belarus or not supported by BNP Paribas

Collections

Cash collections

Cheque collections

Direct debit collections

Domestic incoming transfers

Virtual IBAN

Virtual accounts

International incoming transfers

Card acquiring

Supported by BNP Paribas

Not required / permitted in Belarus or not supported by BNP Paribas

Payments

Cash withdrawals

Cheque payments

Direct debit payments

Domestic outgoing transfers Commercial cards

Virtual cards

International outgoing transfers

SWIFT gpi

Real-time international payments through BNP Paribas' network

Card issuing

Supported by BNP Paribas

Not required / permitted in Belarus or not supported by BNP Paribas

Channels

Local e-Banking

Global e-Banking - Connexis

SWIFT/ host to host

Supported by BNP Paribas

Not required / permitted in Belarus or not supported by BNP Paribas

Payments & Collections

Market overview

Credit transfers are the most widely used payment instrument by companies to pay suppliers. A significant number of companies pay their employees via debit card. Contactless payments via mobile wallets are increasingly popular; Yandex.Money cards in particular are used to make contactless payments in-store. In November 2020, rules governing electronic money transactions were changed in order to encourage the development of an e-money market in Belarus.

Electronic banking services are available from Belarusian banks. There is no domestic electronic banking standard, although multinational companies can access SWIFT for Corporate messaging standards. The Belarusian banking community is implementing ISO 20022 standards, including the adoption of IBAN and BIC codes.

Internet and mobile banking services are provided by most Belarusian banks. Mobile wallet schemes are also available.

Belarus and Russia have agreed to integrate their national payment cards schemes (Belkart and Mir, respectively), such that they will be recognised by each other’s ATM network.

Payment systems

BISS Type • Real-time gross settlement.

Participants • 32 direct, 2 special.

Transaction types processed • All transfers in BYN.

Operating hours • 09:00 – 17:30 EET, Monday to Friday.

• Urgent payments are cleared and settled in real time; non-urgent payments are cleared and settled in Clearing cycle details (e.g. cut-off batches on a same-day basis. times) • Customer payment cut-off time = 16:45 EET. • Interbank payment cut-off time = 17:30 EET.

• BISS is closed at weekends and on all public holidays. • Belarus’s public holidays are: System holidays • 2nd half 2021: 3 July, 7 November, 25 December. • 2022: 1, 7 January, 8 March, 1, 3, 9 May, 3 July, 7 November, 25 December.

Instant Payments Type • Instant payments system. Service (SMP)

Participants • 12.

Transaction types processed • Instant credit transfers.

Operating hours • 24/7/365, except between 16.15 and 16.45 EET daily.

Clearing cycle details (e.g. cut-off • Final settlement takes place via BISS between 16.15

times) and 16.25 EET.

System holidays • SMP is open 365 days a year.

Credit transfers

Credit transfers are the most-used payment instrument in Belarus, in terms of value and volume. Credit transfers can be initiated electronically or via a paper form. Credit transfers are cleared and settled via BISS, the national RTGS system. Instant credit transfers are settled via the instant payments system (IPS) as long as both the sender and the beneficiary hold bank accounts with an IPS participant bank. In 2020, 117.1 thousand payments worth BYN 685.2 million were made via the IPS. Some Belarusian banks participate in SWIFT gpi.

Direct debits

Direct debits are not used in Belarus.

Cheques

The cheque is not a common cashless payment instrument. Cheques are cleared bilaterally between banks.

Card payments

The use of payment cards in Belarus, particularly debit cards, has increased in recent years. Many companies pay salaries via debit card. There were approximately 15.3 million bank payment cards in Belarus in Q1 2021. BelCards, the domestic card scheme, accounted for 2.3 million (15.1%) of the total, Visa 5.6 million (36%) of the total, and BelCard/Maestro cards 1.9 million (12.3%) of the total. Payment cards accounted for 60% of the total value and 91.2% of the total volume of non-cash payments in 2020 (54.9% and 88.8% in 2019). Bank cards are currently issued by 23 banks in Belarus. Twenty-two commercial banks participate in the BelCard system, of which 19 issue payment cards. Payments are cleared through the BelCard card payments processing centre with final net settlement taking place via BISS. Visa, MasterCard and Maestro cards are issued by several commercial banks in Belarus. Visa and MasterCard payments are cleared by their respective clearing systems with final net settlement taking place via BISS. American Express and JCB branded cards are also available.

ATM/POS

There were 4,345 ATMs and 160,265 POS terminals in Belarus at the end of Q1 2021. All ATMs and the overwhelming majority of POS terminals are EMV-enabled; only 195 POS terminals are not EMV-enabled. Payments are settled via BISS.

Electronic wallet

Reloadable, pre-paid payment cards are available. Electronic wallet schemes are available in Belarus, including Apple Pay, Samsung Pay and Garmin Pay. Nine banks are authorised to issue electronic money via various schemes. There are a number of e-wallet schemes in Belarus, including QIWI, iPay and Berliocard. There were 391,657 active e-wallets at the end of 2020. There were 7,422,943 e-money transactions in 2020, a 74% increase on 2019 figures. Mobile banking is available. A1 Belarus is a free mobile app that enables customers of all Belarusian mobile operators to make payments from bank accounts and cards issued by any domestic bank. Channels

Market overview

Liquidity management

Domestic: notional pooling

Domestic notional pooling may be available from local banks.

Domestic: cash concentration

Domestic cash concentration structures may be available from local banks.

Cross-border notional pooling

Cross-border notional cash pools are not available.

Cross-border cash concentration

Cross-border cash concentration structures such as zero balancing are not available.

Short term investments

Market overview

BNP Paribas insights

BNP Paribas Trade Finance Capabilities

Trade payments

Documentary credits

Documentary collections

Supported by BNP Paribas Not required / permitted in Belarus or not supported by BNP Paribas

Guarantees

Bank guarantees

Standby letters of credit

Supported by BNP Paribas

Not required / permitted in Belarus or not supported by BNP Paribas

Supply chain management

Receivables

Payables

Inventory

Supported by BNP Paribas

Not required / permitted in Belarus or not supported by BNP Paribas

Trade channels

Connexis Trade

Connexis Supply Chain

SWIFTNet Trade for Corporates

Connexis Connect Supported by BNP Paribas

Not required / permitted in Belarus or not supported by BNP Paribas

International trade

General trade rules

Belarus is a member of the Euroasian Economic Union (EAEU), with Kazakhstan, Kyrgyzstan and Russia. The EAEU customs code came into effect on 1 January 2018. There are no custom border controls between EAEU member states.

Trade agreements

The EAEU has signed an FTA with Vietnam and an agreement on economic and trade cooperation with China. FTAs with Singapore and Serbia are expected to come into force in 2021. FTA negotiations are ongoing with Iran, Israel, Egypt and India. Belarus has signed the CIS Free Trade Zone Agreement (CISFTA). CISFTA has been ratified in Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Ukraine. Belarus has signed bilateral agreements with Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Moldova, Russia, Serbia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.

Imports / exports

Cars and Packaged Broadcasting Imports Crude petroleum Natural gas vehicle parts medicines equipment

Primary Poland Import Russia (57.0%) China (7.0%) Ukraine (5.0%) (5.0%) sources

Refined Exports Fertilizers Cheese Delivery trucks Crude petroleum petroleum

Export Russia (42.0%) Ukraine (13.0%) UK (7.0%) markets

Import / export volumes

2016 2017 2018 2019 2020 - goods USD m 23,099.8 28,690.2 33,429.8 32,333.0 28,256.9 Exports - services USD m 6,883.9 7,905.2 8,838.0 9,641.9 8,785.0

- goods USD m 25,611.1 31,669.1 35,932.6 36,525.7 30,225.7 Imports - services USD m 4,381.4 4,826.2 5,406.1 5,852.2 4,934.5

Current account as % GDP - 3.4 - 1.7 + 0.04 - 2.1 - 0.5

Sources: IMF, International Financial Statistics, July 2021.

Trade finance - imports

Documentation

The following documentation is usually required in order to import goods into Belarus: customs declaration commercial invoice bill of lading packing list certificate of origin (in certain cases).

Import licences

Licences are required for imports from outside the EAEU of poisons, narcotics, human organs, tissue and blood, and weaponry. Stainless steel pipes, pork, poultry and edible offal from outside the EAEU are subject to quantitative restrictions. The government has a monopoly on importing alcohol, tobacco and canned fish.

Import taxes and tariffs

Most imports from outside the EAEU are subject to customs duties. Certain vegetables are subject to seasonal customs duties, while higher duties are applied to certain consumer and industrial goods. Imports from developing countries with Most Favoured Nation (MFN) status are subject to a 25% tariff reduction. Zero import duty rates apply to imports from least-developed countries. Imports from all countries are subject to indirect taxes (VAT and excise duty).

Financing requirements

Residents must complete their foreign trade operations under export contracts no later than 180 calendar days from date of shipment. Extensions beyond 180 days require NBRB permission. Risk mitigation

None.

Prohibited imports

A negative list (of products that may not be imported) is in operation. It is prohibited to import certain items into Belarus for health, national security, political, economic and moral reasons. Ozone-depleting substances, hazardous waste, printed matter, audio-visual materials and other media aimed at undermining Belarus’s national security, political or economic interests or social order are prohibited.

Trade finance - exports

Documentation

The following documentation is usually required in order to export goods from Belarus: customs declaration commercial invoice bill of lading packing list certificate of origin (in certain cases).

Export licences

Export licences are required for exporting certain minerals, oil, fertilisers, precious stones and metals, certain base metals and scrap metals.

Export taxes and tariffs

Customs duties apply to certain controlled raw materials, timber, crude oil and petroleum products exported to countries outside the EAEU, and to raw hides.

Financing requirements

None.

Risk mitigation

Eximgarant, Belarus’s national export credit agency, provides both state-subsidised export credit and state- supported export credit insurance. Export credit insurance is also available from private insurance companies. Export financing is available privately from commercial banks. Prohibited exports

A negative list (of products that may not be exported) is in operation. Prohibited items include naturally grown medical raw materials, protected fauna and flora, items of historical and/or cultural value, scrap metal for industrial use and ozone-depleting substances.

Regulatory requirements

Reporting regulations

Transactions between residents and non-residents, residents’ transactions in foreign currency, and transactions on residents’ accounts held abroad must be reported to the NBRB. Banks and Belarus resident companies are required to report relevant transactions on a monthly basis.

Exchange controls

Exchange controls are administered by the NBRB, the Council of Ministers, the State Control Committee and the State Customs Committee. In 2018, the majority of controls that applied to the purchase of foreign currency were abolished. All financial loans from residents to non-residents and most financial loans from non-residents to residents require NBRB approval for terms over 180 days.

Taxation

Resident / non-resident

A corporation is resident if it is registered as a legal entity in Belarus.

Tax authority

Ministry of Taxes and Duties

Tax year/filing

The Belarusian tax year corresponds to the calendar year, even if the taxpayer has operated for less than 12 months in the calendar year. A monthly tax return generally must be submitted by the 20th day of the following month. Quarterly tax returns must be submitted by the 20th day of the month following the reporting quarter. For profits tax, a tax return for the reporting year must be submitted by 20 March of the year following the reporting year. Consolidated returns are not permitted; each company must file its own return.

Financial instruments

Interest on most bonds is exempt from profits tax. Interest and financing costs

See thin capitalisation and capital gains tax sections.

Foreign exchange

Foreign exchange differences are treated as intrinsic to, and embedded in, the primary or underlying transaction. Exchange differences are treated as non-operating income or losses, unless foreign exchange transactions are part of the company’s trade (e.g. banks).

Advance tax ruling availability

Tax rulings are not available in Belarus; only non-binding clarifications of the legislation are possible.

Capital gains tax

No separate capital gains tax is imposed. Gains derived from the sale of property and the sale of shares in Belarus companies are taxable under the general profits tax rules. Foreign companies not operating through a permanent establishment are subject to withholding tax on gains derived from the sale of shares, bonds, and other securities; income from the sale of real estate situated in Belarus; and certain other transactions.

Withholding tax (subject to tax treaties)

Payments to: Interest Dividends Royalties Other income

Resident entities None 0% 0% 0%

Non-resident entities 10% 12%/9*% 15% 15%

Interest paid to a non-resident company is subject to a 10% withholding tax, unless the rate is reduced under a tax treaty. No interest withholding tax is imposed on resident companies. Dividends paid to non-resident company from Belarus sources is subject to a 12% withholding tax unless the rate is reduced under a tax treaty. Royalties paid to a non-resident company are subject to a 15% withholding tax unless the rate is reduced under a tax treaty. No royalties withholding tax is imposed on resident companies. Certain types of service fees paid to a non-resident company are subject to a 15% withholding tax unless reduced or exempt under a tax treaty. No withholding tax is imposed on service fees paid to resident companies.

Tax treaties / tax information exchange agreements (TIEAs)

Belarus has concluded tax treaties with 70 countries. Belarus has not signed the OECD multilateral instrument. Thin capitalisation

The thin capitalisation rules typically apply with respect to controlled debt under loan agreements, but the rules also apply to expenses arising and paid for engineering, marketing, consulting, information, management intermediary and recruitment services, and fees paid for the transfer (assignment of property rights in respect of industrial property. The debt-to-equity ratio in respect of all of the above expenses is 3:1. Interest/expenses exceeding the maximum amount of interest/expenses calculated under that threshold are not deductible for profits tax purposes.

Transfer pricing

The following transactions may be subject to transfer pricing control by the tax authorities: Real estate transactions that involve a related party or a counterparty, whether domestic or foreign, that benefits from a special tax regime. Cross-border transactions: Transactions with residents of offshore zones if the value of the transactions with a single offshore resident within a single calendar year exceeds BYN 400,000; Transactions with related parties if the value of the transactions within a single calendar year exceeds BYN 400,000; Transactions of large taxpayers with related parties if the value of the transactions within a single calendar year with a single party exceeds BYN 2 million; and Transactions involving strategic goods included in a list issued by the Belarus government if the value of the transactions within a single calendar year with a single party exceeds BYN 2 million. Domestic transactions: Transactions of large taxpayers with related parties that are exempt from profits tax if the value of the transactions within a single calendar year exceeds BYN 2 million; and Transactions of all other taxpayers with related parties that are exempt from profits tax if the value of the transactions within a single calendar year exceeds BYN 400,000.

Stamp duty

There is no stamp duty in Belarus.

Cash pooling

Belarus has no specific tax rules for cash pooling arrangements.

Financial transactions / banking services tax

Wire transfers or non-cash settlements with companies registered in offshore zones or having bank accounts in offshore zones are subject to an offshore duty at a rate of 15%. Banks are prohibited from making money transfers to non-residents unless the offshore duty has been paid.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (www.deloitte.com).

This content can be accessed by registered users only. Please register or log in to BNP Paribas Atlas.

Market data updated as of 01-10- 20