Lukashenka Imposes More Restrictions On Cusiness From ‘Unfriendly’ Countries

Details.

Belarus introduces another tightening for companies from ‘unfriendly’ countries that operate on the Belarusian market. They have restrictions on the payment of profits and dividends. They will be valid until the end of 2025. Until now, investors from ‘unfriendly’ countries had no restrictions on the withdrawal of these funds.

The restriction begins to work if the investment profit from an ‘unfriendly’ country exceeds 80,000 basic values (today it is 3.2 million rubles). At the same time, this limit is for one calendar year, and for all those among whom the company will divide this funds.

However, foreign investors can bypass this restriction by getting permission from the Belarusian authorities to pay profits or dividends over this amount. Such approval will be issued by the regional executive committees and the Minsk City Executive Committee.

But in order to obtain such a permit, several conditions must be met. For example, among them there is the following: so that the profits and dividends that a company from an ‘unfriendly’ country wants to distribute do not exceed 50% of the average direct investment on a net basis for five years.

Another condition is that the number of employees must be at least 70% by the same period last year. It seems that officials want to insure employees of such companies against dismissals. Also, a foreign investor should not have debt on loans issued by the Development Bank of Belarus.

There are also other conditions that an investor from “unfriendly” countries needs to fulfill in order to be allowed to circumvent the limit on the amount of profit and dividends that he wants to distribute.

Recall that in November 2022, Belarus significantly restricted the rights of foreign owners of companies included in the list of legal entities, foreign participants of which are prohibited from disposing of shares without the permission of the authorities. Such companies cannot be reorganized, they cannot be withdrawn from, and the authorities are prohibited from registering relevant changes or new legal entities after the reorganization.

Since July 31, 2023, Belarus has updated the list of reasons why it will impose sanctions against ‘unfriendly’ countries, as well as organizations and individuals from these states. This is provided for by a special law signed by Aliaksandr Lukashenka.

Also, from April 1 this year and until the end of 2026, the Belarusian authorities introduced a dividend tax rate of 25% for foreign organizations that do not operate in Belarus through a permanent representative office, and their offices are located in ‘unfriendly’ countries. Before the current changes, this rate was often at the level of 15% (but in some cases lower).