New restrictions on the payment of dividends to investors from unfriendly countries

Resolution of the Council of Ministers of the Republic of Belarus dated April 19, 2024 No. 229 introduces restrictions until December 31, 2025 on the payment of profits and/or dividends to foreign participants of legal entities of the Republic of Belarus from unfriendly foreign states. The list of unfriendly countries includes members of the European Union, Australia, Canada, Liechtenstein, Norway, New Zealand, Albania, Iceland, North Macedonia, Great Britain, the USA, Montenegro and Switzerland.

The resolution comes into force on April 24, 2024.

Restrictions are introduced if the amount of profits or dividends paid during a calendar year exceeds 80.000 basic units (3.2 million rubles or approximately 1 million US dollars) in total for all foreign participants.

It has been established that a Belarusian company will be able to pay profits/dividends to its foreign participants only with the permission of the regional (Minsk city) executive committee. A permit is issued if a number of criteria are met:

• total annual profits/dividends must be no more than 50% of average net foreign direct investment over five years;
• the number of employees in the reporting period must be at least 70% of the level of the same period last year;
• the company should not have a net loss for the previous year and the reporting period of the current year, as well as overdue debt on bank loans, arrears on payments to the Social Security Fund, taxes, fees and other payments to the budget, wages and other payments to employees;
• the level of the nominal accrued average monthly salary for the previous year and the reporting period of the current year must not be lower than 3.5 times the monthly minimum wage. For High Tech Park residents, this requirement is increased to 11.5 times, unless the criterion for total annual profit is met.

If the company is denied permission to pay profits/dividends, these funds are transferred to a special bank account, payment from which are only possible after the expiration of the described restrictions.

Some restrictions do not apply to banks of the Republic of Belarus (separate criteria do not apply, non-paid dividends can be accumulated in their own accounts).

Resident companies are now required to inform the regional (Minsk city) executive committee at the place of registration about the amount of profits/dividends actually paid to foreign participants within 10 calendar days from the date of payment.