Hi-tech parks play a key role in developing the digital economy, providing conditions for the development of innovations in the field of high technology. In this context, the Hi-Tech Park of Belarus and the Hi-Tech Park of Kyrgyzstan have common features and some differences. The Belarusian HTP has become a model for successfully integrating high technologies into the country’s economy, attracting the attention of international investors and talents. Meanwhile, Kyrgyzstan, striving for digitalization and economic development, also creates conditions for developing technologies by studying the experience of more mature ecosystems. In this article, we will compare Belarus HTP and Kyrgyz HTP and consider their features, including those relevant to HTP residents and staff.
Creation of the Belarus HTP and Kyrgyz HTP
The Hi-Tech Park of Belarus was established in 2005, and the Hi-Tech Park of Kyrgyzstan in 2011. Experts from the Belarusian HTP participated in the development of the Kyrgyz Law “On the High Technology Park of the Kyrgyz Republic.” Therefore, at the time of creation, the HTP model of Kyrgyzstan coincided with the model of the Belarusian HTP.
If the Belarusian HTP is considered one of the largest HTPs in Eastern Europe, then Kyrgyzstan’s HTP will seek to bridge the West and the East.
What are the HTPs of Belarus and Kyrgyzstan
Let’s consider the main features of HTP in Belarus and Kyrgyzstan.
Belarus HTP
The Belarus HTP is a special legal regime. Companies and individual entrepreneurs who have become HTP residents are located throughout Belarus but have the same benefits associated with residence in the HTP. Tax benefits, customs payments, and other preferences are always valid if the company and the individual entrepreneur are residents of the HTP.
Kyrgyz HTP
The HTP of Kyrgyzstan presents itself as a virtual tax regime aimed at exporting high-tech services and contributes to creating favourable conditions for IT companies. According to the HTP Law, tax exemptions and benefits on insurance premiums for HTP residents are valid for 15 years from the creation of the HTP. That is, they end in 2026. Currently, Kyrgyz legislators are deciding to extend the preferential tax regime for the entire period of HTP existence.
Main Differences
There are more than 1,000 companies in the Belarusian HTP and about 400 in the Kyrgyz one.
The activities of residents of the Kyrgyz HTP are mainly export-oriented. Residents are required to ensure the export of their products. The Belarusian HTP does not impose such requirements on residents. They can work with Belarusian residents, including government agencies and organizations, as well as with non-residents. The HTP of Belarus focuses its residents on attracting investments to Belarus and developing the IT industry.
Management of the Belarus HTP and Kyrgyz HTP
The Belarusian HTP is operationally managed by the Secretariat of the Supervisory Board of the Hi-Tech Park, a government agency. The secretariat implements the decisions of the HTP Supervisory Board and is accountable to the Belarusian government. The Supervisory Board is not limited to any period of work.
The Directorate, a government agency, manages Kyrgyzstan’s HTP. It is the HTP executive body. The Directorate is accountable to the Supervisory Board, which is elected every three years.
There are no differences in the interaction of HTP residents with HTP management in the Belarusian and Kyrgyz HTP. Agreements are concluded between the HTP management and residents, under which residents, in particular, deduct quarterly contributions of 1% of revenue.
Who Can Become an HTP Resident
There are some differences in the composition of HTP residents of Belarus and Kyrgyzstan.
Belarus HTP
Companies and individual entrepreneurs registered in Belarus and engaged in activities allowed HTP residents to become residents of the Belarusian HTP. HTP residents should not engage in other activities.
Kyrgyz HTP
Companies and individuals whose incomes consist of 90% or more of income from activities permitted for HTP residents can become residents of the Kyrgyz HTP. Not only national but also foreign companies and individuals can become HTP residents, provided that they operate in the territory of Kyrgyzstan.
Primary registration is provided for HTP residents in Kyrgyzstan for 6 months. It can be compared to a probation period, after which the HTP directorate evaluates the compliance of a new resident with the requirements that an HTP resident must meet. If a resident meets all the requirements, he is entered into the register of residents indefinitely. It is the so-called final registration. If a resident does not meet the criteria, the primary registration is cancelled, and taxes are recalculated.
Main Differences
The Kyrgyz HTP residents’ duties include exporting 80% of services. Accordingly, residents must ensure that at least 80% of their income comes from exporting goods and services. Residents of the BelarusHTP have no obligation to ensure the export of their products and services in a certain volume.
Types of HTP Residents’ Activities
There are some peculiarities and differences in the activities of residents of the Belarusian and Kyrgyz HTP.
Belarus HTP
There are 43 types of activities provided for HTP residents in Belarus. Each type of activity is described in detail, including activities in cryptocurrencies. Therefore, it is not difficult for companies to navigate this diversity. By the decision of the Supervisory Board of the Belarusian HTP, companies that are engaged in other types of activities can become HTP residents.
Kyrgyz HTP
The Law of Kyrgyzstan on HTP also lists the types of activities that HTP residents can engage in. There are not many of them:
- Creating software, including: research, design and coding of information systems, including those ready for implementation.
- Analysis of information needs and problems of users.
- Design, development, delivery and documentation of individual and standard software solutions that meet the needs of specific customers.
- Modification of programs at the user’s request.
Also, the types of activities allowed for residents of the Kyrgyz HTP include activities related to the IT sphere:
- Export of technologies in the field of information technology and software.
- The activities of call centres.
- Activities in the field of cryptocurrencies are not registered as possible for residents of the Kyrgyz HTP.
Tax Benefits in the Belarusian and Kyrgyz HTP
The names of some taxes in Belarus and Kyrgyzstan differ, but you will be able to understand the specifics.
Tax Benefits for HTP Residents of Belarus
- HTP residents are exempt from paying income tax, and the tax rate has been lowered to 9% for some incomes. For non-HTP companies, the standard income tax rate is 20%.
- Transactions in Belarus and some transactions with non-residents are exempt from value-added tax (VAT). The standard VAT rate is 20%.
- Income of foreign investors from HTP activities is taxed at the rate of 0% or 5%.
- Some types of transactions within HTP are not subject to offshore levy.
- The income of individual founders of HTP resident companies, including foreign citizens, is subject to income tax at 9%. Tax rates of 6% or 0% are also provided, depending on the periods of profit distribution between the founders.
- Real estate on the territory of the HTP that residents do not rent out is exempt from real estate tax.
- HTP residents who import equipment from abroad to work in high technology do not pay customs import duties.
Tax Benefits for HTP Residents of Kyrgyzstan
HTP residents are provided with the following:
- Exemption from sales tax. The generally established sales tax rates range from 1 to 5%, depending on the types of activity.
- Exemption from income tax. The generally established income tax rate is 10%.
- Exemption from value-added tax. The generally established VAT rate is 12%.
- Income tax on the income of employees of HTP resident companies at a rate of 5%. The generally established income tax rate in Kyrgyzstan is 10% of revenue.
- Insurance contributions for employees of HTP resident companies are paid 12% of the average monthly salary in Kyrgyzstan. It should be noted that the monthly average wage in Kyrgyzstan, according to data for July 2024, is 35,000 soms (the som is the official currency of Kyrgyzstan). 35,000 soms is about 1,335 Belarusian rubles or 376 euros). Accordingly, the social contribution for an HTP resident employee is approximately 50 euros.
On average, salaries in the high-tech sector of Kyrgyzstan range from 21550 soms for novice specialists to 78200 soms for experienced specialists (this is approximately from 230 euros to 840 euros or from 822 to 2980 Belarusian rubles). The generally established rate of social contributions is 12% of wages, 2% for compulsory medical insurance, and some other social contributions from employees’ income.
To date, there are no income tax benefits for employees of HTP residents of Belarus (in 2024, it is considered at the rate of 13%). Also, Belarusian HTP residents do not have benefits for insurance contributions to the Social Protection Fund, which are calculated in a generally established manner: the contribution is 35% of income, with 34% being withheld from the payroll and 1% from employees’ pay. Although residents of the Belarusian HTP can voluntarily apply a benefit for mandatory social insurance contributions in part deducted from the employee’s income, do not charge contributions to the part of the employee’s income that exceeds the average earnings of employees in Belarus for the previous month.
Residents of the Kyrgyz HTP pay only local taxes: property tax and land tax, respectively, at the rates of 0.8% and 1%. Belarusian HTP residents do not pay such taxes if certain property disposal conditions are met.
In conclusion, we note that the main differences between the Belarus HTP and Kyrgyz HTP are as follows:
- The orientation of the Kyrgyz HTP to export products and services and the corresponding requirements for residents’ activities.
- Benefits for “salary taxes” in the HTP of Kyrgyzstan.
- There are also differences regarding HTP residents: residents of the HTP of Kyrgyzstan can be non-residents of the country, and residents of the Belarusian HTP must be registered in Belarus.
How to contact us
For more information or advice on issues related to the Belarus HTP and Kyrgyz HTP, do not hesitate to contact us. We are here to help and support you.
Phone and email communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
