DIRECTIVE OF THE PRESIDENT OF THE REPUBLIC OF BELARUS
# 4 as of December 31, 2010

On Development of Entrepreneurial Initiative and Stimulation of Business Activity in the Republic of Belarus

Our country is renowned for its hardworking, educated, and talented people. Through their work, they are not only capable of significantly improving the prosperity and living standards of Belarusian citizens, but also of ensuring economic growth and security of our state.

Creating a favorable environment for entrepreneurial activity is one of the key strategic factors of sustainable social and economic development of the country.

Empowerment of citizens’ business initiative and creative potential promotes formation of a developed competitive environment, introduction of new production and management technologies, development of innovative activity, creation of new jobs, market saturation with goods and services, increase of tax revenues to the state budget, and improvement of prosperity and living standards.

Obviously positive changes have occurred in recent years in the social and economic development of the Republic of Belarus in the area of setting the rules of doing business to improve the business climate and investment appeal of our country.
Consistent actions are being implemented to liberalize the conditions for doing business, eliminate excessive interference of government bodies into the activity of legal entities and individual entrepreneurs, and remove ungrounded administrative barriers for business initiative development. The dialogue between the authorities and businesses to work out solutions in the area of economic development and business activity stimulation is gaining additional value.

At the same time, a lot of efforts in further liberalization of economic activity are to be taken to ensure dynamic development of the Belarusian economy.

The state should implement a set of measures, which could significantly improve the role of entrepreneurship, realistically increase its contribution to economic growth rates, and ensure high efficiency of functioning of the Belarusian economy based on maximized utilization of private initiative.

There is a good reason for human potential, initiative, and entrepreneurship advancement to be one of the priorities of social and economic development of the Republic of Belarus in the coming five years. It involves creation of true private and public sector partnership through improving the business climate for all businesses (state-owned and private, domestic and foreign ones) and, ultimately, through developing a barrier-free business environment.

The leading principle in this area is as follows: competition wherever it is possible and state regulation wherever it is necessary.

To further liberalize the Belarusian economy, improve its competitiveness, and establish favorable conditions for its dynamic and sustainable development:

1. Ensure further development of fair competition between businesses irrespective of their forms of ownership. To this end:

1.1. it is necessary to:

ensure transition to market pricing mechanisms promoting improvement of the quality and competitiveness of goods (work/services);

eliminate interference of state administration bodies into pricing of businesses;

eliminate margin ceilings in wholesale and retail trade, as well as mandatory preparation of economic justification of the level of applicable prices/tariffs for goods (work/services); and

maintain state price regulation only for products of monopolies and for socially important goods (work/services) determining the living standards of the population;

1.2. not to allow for establishing inter-oblast and other regional restrictions in trading goods, performing work/providing services;

1.3. implement open competition and anti-monopoly policies aimed at preventing monopoly behavior and unfair competition, and at ensuring efficient functioning of commodity markets; and

1.4. ensure introduction in the Republic of Belarus of possible electronic state registration of legal entities and individual entrepreneurs, including creation of a web-portal of the Single State Register of Legal Entities and Individual Entrepreneurs of the Republic of Belarus.

2. Take most significant measures to protect and develop private ownership. Create conditions for unhampered entrepreneurial activity, inter alia:

2.1. guarantee to bona fide purchasers of property reservation of right of ownership and use of this property. Particularly:

prevent adoption/issue of regulatory legal acts providing for possible property confiscation in case of administrative offenses unless the offenses are related to illegal turnover of such property;

prohibit confiscation, other types of seizure of property from businesses, which are bona fide purchasers thereof. If there is a dispute over bona fides of the purchaser, this category of cases shall be reviewed in courts as matter of priority;

prohibit actions aimed at deprivation/termination of businesses’ property rights, including compulsory debiting of accounts (excluding cases of collection of taxes, duties/fees, and other payments to the budget, state extrabudgetary funds or payments made under international agreements of the Republic of Belarus) if there is no court award/order, which has become effective in law; and

guarantee irreversibility of privatization of state property if the privatizing entity complies with the law;

2.2. ensure simplification of the procedure of providing land plots to businesses;

2.3. provide to businesses investing into motorway service projects, exemptions from land tax/land rental fee for two years after completion of such project construction, and other exemptions similar to the ones established for organizations performing production activity in rural areas and small towns;

2.4. exempt:

investors from land tax/land rental fee for land plots used for project construction for the period of such construction, as well as design work performance; and

legal entities and individual entrepreneurs from the fee for the right to make a land rental agreement when pledging a permanent structure (building/construction), unfinished laid-up permanent structure located on a rented land plot, for which no fee for the right to make a land rental agreement was charged;

2.5. ensure that––on proposals of local executive and administrative bodies––unutilized for over two years state-owned real estate and unfinished construction projects are sold to investors (when those implement investment projects) for one basis unit;

2.6. grant the right to pre-emptive purchase of state-owned property (excluding land plots) by businesses leasing this property for at least three years, with a five-year payment installment.

The value of a leased state-owned object (excluding land plots), when it is sold to a tenant, must be reduced by the amount of the tenant’s expenses on improving the status and consumer qualities thereof if the aforementioned improvements have been taken into account while setting the estimated value and if the tenant has not received a compensation for these expenses;

2.7. fix in the legislation that if a tenant makes permanent improvements to leased state-owned property, it shall not be a ground for raising the rental fee for this tenant; and

2.8. create during 2011 a unified database on unutilized state-owned property meant for sale and rent, and ensure unimpeded and free-of-charge access thereto for all Internet users.

3. Eliminate excessive administrative barriers in interaction between government bodies and legal entities and citizens. To this end:

3.1. radically reduce the number of administrative procedures performed in relation to businesses, inter alia through ensuring implementation of the “one stop shop” principle;

3.2. not to allow for establishing and performing in relation to legal entities and individual entrepreneurs such administrative procedures, which are not provided for by laws and international treaties of the Republic of Belarus, decisions of the Head of the State and Government of the Republic of Belarus;

3.3. maximize expansion of the area of application of electronic document flow:

in the area of administrative procedures performed in relation to legal entities and individual entrepreneurs on a free-of-charge basis;

in the system of paying taxes, fees/duties, and other mandatory payments to the budget and state extrabudgetary funds by minimizing payers’ costs while taking into account the fact that the National Bank of the Republic of Belarus is creating and developing a state system for public electronic signature verification key management; and

in performing economic court procedures;

3.4. create a single Internet resource of administrative procedures performed in relation to legal entities and individual entrepreneurs while providing for possible free-of-charge acquisition of blank documents required for performing such procedures;

3.5. move towards predominant declaration of goods conformity with mandatory safety and quality standards directly by producers, importers, and sellers delegating thereto full responsibility for goods safety and quality; and

3.6. recognize in the Republic of Belarus certificates of conformity and other documents to confirm product conformity to mandatory standards when those documents are issued in Customs Union member states and countries, with which relevant international treaties have been made.

4. Finalize harmonization of the tax system of the Republic of Belarus with those used in European countries. Add to the tax legislation such a touch, which would stimulate bona fide execution of tax liabilities and business initiative. Expand application of international accounting standards in the Republic of Belarus, and drastically reduce financial reporting. To this end:

4.1. ensure regular efforts to reduce the tax burden, including redistribution of pension insurance burden between employers and employees;

4.2. ensure introduction into the tax system of such mechanisms, which allow payers having losses––including those at the start of activity––to minimize those using future profits;

4.3. create innovation funds exclusively with contributions of organizations subordinated to (being part of/with a share of the state in their authorized funds) government bodies and state organizations subordinated to the Government of the Republic of Belarus;

4.4. take measures to streamline application of the simplified taxation system providing for its application in 2011 in cases when gross sales proceeds are under BYR 12 billion cumulative during a calendar year. Regularly revise sales proceeds ceilings in subsequent years;

4.5. grant to micro businesses, which apply the simplified taxation system and pay the value added tax, the right to maintain simplified accounting for this tax payment without mandatory accounting according to the generally established procedure;

4.6. ensure significant reduction of the list of mandatory primary accounting documents and the number of details therein;

4.7. raise the ceiling for proceeds from sales of goods (work/services) for businesses subject to mandatory audit under the criterion of sales proceeds amount;

4.8. ensure wide application in the Republic of Belarus of international financial reporting standards in accounting; and

4.9. abolish the requirement set for businesses concerning mandatory delivery of cash proceeds to a bank, approval of limits of cash balances held in cash offices, and for small businesses – also concerning targeted use of cash proceeds.

5. Make control/supervision activity preventive in its nature, switch to prevalent use of proactive measures to prevent offences in business activity. To this end:

5.1. ensure protection of business managers’ right to business risk;

5.2. establish that:

5.2.1. inspections must not interfere into production and economic activity of inspected businesses. Any activity suspension can be:

established only in cases provided for by legislative acts by a specifically authorized control/supervision body or court exclusively for the purposes of ensuring national security, protection of life and health of citizens, and environmental protection; and

extended exclusively on court decision;

5.2.2. scheduled inspections in relation to businesses executing their liabilities to the budget in good faith and having not violated the law must be held no more than once in five years;

5.3. control/supervision bodies performing in relation to businesses monitoring and other similar activities not classified as inspections are prohibited to utilize the powers delegated to these bodies for holding inspections;

5.4. not to apply such a measure of restraint as taking into custody to persons accused of committing less serious crimes against the procedure of performing economic activity (excluding production, storage, or issuing counterfeited money or securities, smuggling and legalizing (“laundering”) material values obtained in an illegal way) on condition that these persons do not hide from preliminary investigation agencies and/or court;

5.5. revise the current system of administrative and criminal liability for offences in the area of business activity ensuring commensurability of liability with the nature of offence and degree of inflicted damages, inter alia through:

reducing the minimum and maximum fines for administrative offences in the area of business activity;

revising and making more specific lists of circumstance alleviating and aggravating responsibility. The legislation should provide for fine reduction by half in case of administrative offences given alleviating circumstances, including cases of voluntary compensation or elimination of damages inflicted as a result of committed offence or other harmful consequences of such an offence or performance of responsibility imposed on the relevant person (even thereafter), commitment of an administrative offence by a citizen as a result of concurrence of difficult personal, family, or other circumstances;

expanding the area of application for such a type of administrative liability as caution for offences of formal nature not resulting in non-payment/incomplete payment of taxes, duties/fees, and other payments to the budget, state extrabudgetary funds or infliction of other pecuniary damages;

deleting from articles of Chapter 12 of the Administrative Code of the Republic of Belarus those provisions, which provide for confiscation of property not owned by the person, who has committed an administrative offence; and

eliminating administrative liability of legal entities and individual entrepreneurs for administrative offences not related to their obtaining any gains;

5.6. ensure suspension of imposition of administrative sanctions provided for in Article 23.17 of the Administrative Code of the Republic of Belarus for breaching the procedure of preparing/formalizing invoices, shipping documents, payment instructions, and other primary accounting documents until the Law on making relevant amendments to the Administrative Code of the Republic of Belarus and the Code of Administrative Execution Procedure of the Republic of Belarus becomes effective; and

5.7. the Council of Ministers of the Republic of Belarus, Supreme Court, Supreme Economic Court, State Control Committee, General Prosecutor’s Office, National Bank, Department of Presidential Affairs of the Republic of Belarus, National Statistical Committee, local executive and administrative bodies shall arrange for systemic constructive interaction of control/supervision bodies and associations/unions/alliances of entrepreneurs on issues related to the practice of application and improvement of the legislation regulating  imposition of administrative sanctions.

6. Improve the infrastructure and system of financing small businesses to revitalize business activity and ensure effective (legal, organizational, and financial) support of entrepreneurship, especially at the stages of starting up and establishing own businesses. Establish economic incentives for private businesses, public associations, including unions/alliances of entrepreneurs, to participate in developing the business environment.

7. Eliminate excessive labor market regulation. To this end:

7.1. expand the rights of employers to set flexible wage conditions for employees accounting to the maximum possible extent for delivery of each employee and financial capacity of businesses;

7.2. make application of the unified wage rate scale for employees of the Republic of Belarus advisory;

7.3. expand application of flexible forms of employment of the population;

7.4. incorporate into skill development curricula for managers and experts of government bodies the issues of stimulating entrepreneurial and other self-motivating activity of citizens in all spheres of the country’s economy; and

7.5. create an efficient national system of business education. Grant the right to non-profit organizations, including business associations/unions/alliances, and centers of entrepreneurship support, to deliver––following the established procedure––training in the area of management and business activity while independently setting the timing of such training and issuing certificates of own form.

8. Establish a legislative framework stimulating development of public-private partnership mechanisms in the Republic of Belarus.

9. Ensure unambiguous legal regulation and stability of legislation; improve the quality of drafting regulatory legal acts regulating entrepreneurial activity. To this end:

9.1. establish that if provisions of legislative acts are ambiguous or unclear, courts, other government bodies and other state organizations, and officials shall take decisions in favor of businesses and citizens;

9.2. when regulatory legal acts fixing and/or changing the environment for doing business are adopted (relevant drafts are prepared), the date for such regulatory legal acts to become effective must be fixed based on reasonable periods of time needed for businesses to prepare for performing their activity in line with the requirements established by these regulatory legal acts, but typically no less than three months after their official publication (excluding cases when such regulatory legal acts aim at ensuring economic security of the country and/or implementation of international treaties of the Republic of Belarus, as well as at improving the legal status of businesses);

9.3. eliminate the practice of making regulatory legal acts regulating business, economic activity retroactive, except for those acts alleviating or eliminating liability for offences committed while performing business and other activity or in another way improving the environment for such activity; and

9.4. introduce into the practice of republican state administration bodies and other state organizations subordinated to the Government of the Republic of Belarus, oblast and Minsk city executive committees mandatory public discussion of draft legislative acts, which may have a significant impact on the terms of performing business activity, inter alia through creating at these government bodies/state organizations public advisory and/or expert advisory boards including representatives of businesses, their associations/unions/alliances, as well as through placing these draft documents on official Internet websites of government bodies and other organizations and/or publishing them in mass media.

10. The Council of Ministers of the Republic of Belarus jointly with the National Bank, and oblast and Minsk city executive committees shall––within a three-month period––develop and approve action plans to implement provisions of the present Directive specifying responsible parties and deadlines.

Government bodies and other organizations shall ensure compliance with provisions of the present Directive, inter alia when drafting regulatory legal acts.

11. The Prime Minister of the Republic of Belarus, Board Chairman of the National Bank, and Chairmen of oblast and Minsk city executive committees shall bear personal liability for implementing the present Directive.

12. The State Control Committee shall be entrusted with control over implementation of the present Directive.

Taking into account the importance of the role played by entrepreneurship in the country’s social and economic development, I appeal:

to all state administration bodies, control bodies, local Councils of Deputies at all levels, public associations, and citizens to render active support in implementing provisions of the present Directive.

Only concerted efforts, initiative, and commitment to one’s work will ensure sustainable economic growth of Belarus and improvement of citizens’ prosperity.
 

President of the Republic of Belarus                                                                             A. Lukashenko