Financial Market Report

Belarus

In cooperation with AUSSENWIRTSCHAFT AUSTRIA.

A U S S E N W I R T S C H A F T A U S T R I A

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Country Profile: BelarusRaiffeisen Research. As of March 2017.

Belarus as a financial centre

Currency: Belarusian ruble (BYR) Gross Domestic Product and Budget 2015 2016 2017e 2018fReal GDP growth, % p.a. -3.8 -2.6 -0.5 1.5Nominal GDP, €bn 49.1 42.9 49.8 47.4Per capita GDP, € n.v. n.v. n.v. n.v.Growth in industrial output, % p.a. -6.6 -0.4 0.5 2.0Consolidated budget surplus (deficit), % of GDP 1.8 1.5 0.0 0.0 Inflation and Employment Jobless rate, annual average, % 1.0 0.8 2.0 2.0Average monthly gross wage, € 379.5 328.1 378.9 340.1Consumer price inflation, annual average, % p.a. 13.5 12.0 12.0 11.0 Balance of Trade and Current Account Goods exports, €bn 23.6 20.8 23.8 25.2Goods imports, €bn 25.5 23.1 25.8 27.1Current account deficit, €bn -1.9 -1.5 -1.8 -1.7Current account deficit, % of GDP -3.8 -3.6 -3.7 -3.6Foreign debt, % of GDP 70.2 79.2 73.1 74.8 Rates of Exchange and Interest Rates Local currency/US$ (average) 1.60 1.99 2.05 2.38Local currency/€ (average) 1.77 2.20 2.11 2.503-month money market rate (MINIBOR), average, % n.v. n.v. n.v. n.v. Country Ratings S&P B- Moody‘s Caa1 Fitch B-

n.a.: not available. U: unrated.

1. The Economic and Political Situation in Belarus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2. Company Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

3. Taxation and Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

5. Subsidies and Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

6. Risk Hedging and Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

7. Payment and Account Services at Priorbank, JSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

8. Priorbank, JSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

9. Your International Business Specialists at Priorbank, JSC,

and the Global Raiffeisen Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Important:

Despite thorough research and the use of reliable sources, we cannot accept responsibility or liability for the completeness or accuracy of this brochure’s contents. The purpose of this brochure is to give you initial, general information to help you develop business relationships in Belarus. The content of this brochure does not consti-tute any form of advice or offer or invitation to make an offer.

Prepared in cooperation with AUSSENWIRTSCHAFT AUSTRIA at WKÖ (the Austrian FederalEconomic Chamber).

Sources:Raiffeisen Bank International AGWKO: Belarus Country Report of the AUSSENWIRTSCHAFT AUSTRIABibliography: Skok B., Gotwald A., Jungreithmeir T. (2008), Förderinstrumente für Südosteuropa (Subsidy and Support Instruments for Southeastern Europe). Vienna: Linde Verlag Wien.

Copy deadline: May 2017.

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Belarus has a GDP per capita equivalent to EUR 4,500, which is approximately 14% of the GDP per capita in the Eurozone. Nominal GDP per capita in EUR has fallen markedly in the last few years due to recession and currency devaluation. 2016 was the second year that Belarus has been in recession. GDP fell by -2.6% compared to 2015. The country is highly dependent on the economic situation in, as well as financial support from, Russia. Conflict relating to subsidies and the recession in Russia had a negative effect in 2015/2016. Furthermore, the Belarussian economic model, in which state ownership and control feature strongly, has showed increasing signs of weakness in recent years. Therefore, we expect to see the economy shrink slightly in 2017, followed by only moderate rates of growth of 1-2% in 2018. Average inflation for 2016 was 12.0% compared to the previous year, which is low for Belarus. This is considerably below the long-term trend, which is characterised by phases of strong currency devaluation and inflation.

We expect the inflation rate to be similarly high in 2017. The official unemployment rate in 2016 was 0.8%. However, it must be assumed that there is considerable underemployment in the eco-nomy, which is not recorded. Therefore, the officially low rate of unemployment is not conclusive. The government budgets showed a surplus of 1.5% of GDP in 2016. However, if you include the numerous state enterprises which are running at a loss, there would be a considerable “fictional” budget deficit, which in turn would cause the budget situation to deteriorate significantly. National debt remained comparatively moderate in 2016, at 39.0% of GDP. Belarus’s current account exhibi-ted a significant deficit of -5.1% of GDP in 2016. We also expect current account deficits in the next few years. Foreign debt was high, at 79.1% of GDP (2016) and has therefore increased considerably in the last few years. Current account deficits and rising levels of foreign debt are the “Achilles heels” of the Belorussian economy.

We expect the foreign debt ratio to stabilise at a high level in the next few years. The local currency devalued against the euro in 2016. We expect this nominal devaluation trend to continue in the coming years. Belarus has been under the authoritarian rule of President Aleksander Lukashenko since 1994. The President was re-elected in 2015 with 83% of the vote. Lukashenko managed to negotiate an agreement on energy subsidies with Russia at the start of April 2017, which was again favourable for Belarus. This slightly reduced the economic risks for the coming years.

1. The Economic and Political

Situation in Belarus

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2. Company Law

Like many other countries, Belarus has a wide range of legal structures for operating a company. The following are available as options: individual entrepreneurs (sole traders), limited liability companies, joint-stock companies, limited partnerships, companies under civil law, general partnerships, consortiums, companies with additional liability, and unitary enterprises. Joint-stock companies can be founded either as ‘closed’ or ‘open’ joint-stock companies. Since 1 February 2009, minimum capital stock has only needed to be provided for joint-stock companies; nevertheless, all legal entities must specify, substantiate and obtain capital stock. However, Belarusian law stipulates that companies require at least two shareholders. Furthermore, a maximum of 50 shareholders may invest in a limited liability company or a closed joint-stock company; otherwise a change in legal structure is required. With the exception of sole traders, all legal structures are considered to be legal entities in Belarus; corporation tax is incurred in each instance. From a fiscal viewpoint, there is no reason to favour one particular legal structure in this respect.

Private Unitary EnterprisesThe private unitary enterprise (“tchastnoje Unitarnoje Predprijatije,” TschUP) is a special Belarusian com-pany structure. There is no equivalent in Western Europe. A TschUP is a commercial organisation that does not have title to assets that it has been allocated by the owner. The unitary enterprise’s assets are indivisible and can neither be distributed to their co-owners in accordance with their investments (shares) nor amongst the employees of the company. The private unitary enterprise’s assets are private property of the natural person(s) (joint property of married couples) or the legal entity and belong to such a company in accordance with the right to commercial use. The unitary enterprise may only dispose of the assets with the authorisation of the owner.

PartnershipsIn Belarus, partnerships can be founded as general partnership and as limited partnerships. To a large extent, their structure is identical to the equivalent types in Austria and Germany, apart from the fact that partnerships are considered to be legal entities which only come into existence upon registration.Please note: partnerships are practically unused since there are no tax advantages for these companies and there has been no tradition of this kind of company structure throughout the past few decades.

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CorporationsCorporations in Belarus are limited liability companies, companies with additional liability, and open and closed joint-stock companies. Partnerships

Joint-Stock CompaniesJoint-stock companies in Belarus can be one of two sub-structures: open and closed joint-stock compa-nies. Open and closed joint-stock companies differ in that the shareholder groups in open companies are not subject to any restrictions, whereas for closed companies, transferring shares to third parties is limited (agreement from the other shareholders is required or the group of purchasers is restricted).

Since 1 February 2009, minimum capital stock of at least 100 basic units (a basic unit is currently the equivalent of approx. €9,2) must be declared in order to found a closed joint-stock company. For open joint-stock companies, a minimum of 400 basic units in the respective equivalent of Belarusian rubles must be declared. In contrast to other legal structures, the company must have this minimum amount of basic capital at its disposal when registering.

Limited Liability CompaniesIn addition to joint-stock companies, there are also limited liability companies, and as an extension, compa-nies with additional liability. A limited liability company is managed by the director or a board of directors. However, due to loopholes in legislation, it is strongly advised that an individual director is appointed. A board of directors is always optional for a limited liability company.

In addition, there is the option of companies with additional liability. They are the same as limited liability companies in almost all aspects, with the exception of the shareholders’ additional personal liability. This additional liability can be limited according to amount; the minimum amount is 50 basic units (since 1 February 2009). In practice, limited liability companies and the two forms of joint-stock company represent the most commonly used legal structures.

Intellectual Property LawBelarus has ratified and implemented the most important international conventions for the protection of intellectual property. In this respect, there are suitable titles of protection available for all protected objects. In addition, Belarus also protects know-how and business secrets as a specific protected object. However, in practice it is difficult to delimit and implement this right.

The National Centre for Intellectual Property receives applications for the protection of intellectual property rights, checks them, registers them and issues documentation for proof of registration for patent, brand and design rights. In addition, the centre keeps a register of the protected patents, designs and brands and has an Appeal Board to review complaints made against the centre’s decisions, e.g. with regard to refusing brand registration. There is a specific Patent Court for disputes relating to patent issues, a procedure for out-of-court settlements, and patent agents who are specialised in this type of issue.

In terms of the problems associated with intellectual property law, in current practice in Belarus cases of piracy with foreign trade marks, and bootleg copies of music CDs, DVDs and computer software – which can be found almost everywhere – are particularly rife. Brand rights, but also patent and design rights, should be registered in Belarus as quickly as possible in order to pre-empt a possible registration by a Belarusian company. Past experience has shown that legal steps against a company that has already regi-stered are not very promising. It may even be necessary to “pay a ransom” for your own brand.

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The legal framework of the tax system in Belarus consists of the Tax Code (Law No. 166-Z of 19 December 2002), and a number of acts that regulate individual taxes (excise tax act, VAT act, profit and income tax act).

On 1 January 2010, the Special Part of the Tax Code in Belarus came into force as part of the Law of the Republic of Belarus of 29 December 2009, no. 72-3. This law also changed the General Part of the Tax Code, significantly reforming Belarusian tax legislation. The Tax Code stipulates the tax allowance proce-dure and regulations for individual taxes and fees. As a result, a wide range of formerly valid legislative acts were repealed (e.g. Law of the Republic of Belarus “On Value-Added Tax”, Law “On Taxes on Income and Profit”, and Law “On Natural Persons’ Income Tax”).

Some of the most significant amendments to tax legislation are:• Increase in VAT from 18% to 20%; • Extending the options for tax computation; expenditure for consultation, marketing and market research

can be classed as expenses; • Decreasing the profit tax rate in relation to dividends: from 24 to 12% for legal entities and from 15 to 12%

for natural persons.

The following taxes and fees were repealed as of 1 January 2010:• Contributions to the Agricultural Producer Support Fund;• The old form of sales tax in the retail sector;• Parking fees;• Tax on car purchases.

The total tax burden in Belarus is 50.9% of GDP, whereby compulsory levies for specific funds that are established by presidential decree are not taken into account. The tax burden for companies in Belarus differs greatly depending on the sector (farming – 5-6%, manufacturers of alcoholic beverages – 72-78%). On average, this amounts to 15-25% of turnover.

Profit TaxA profit tax of 18% is imposed on company profits in Belarus. The profit tax is regulated in the Tax Code (Section 14). This tax must be paid by Belarusian legal entities and foreign legal entities with a permanent establishment in Belarus, but the tax levied on a permanent establishment of a foreign company in Belarus is limited to the profits recorded by that permanent establishment.

Under the double taxation treaty between Austria and Belarus of 23 April 2002, the profits of Austrian com¬panies operating in Belarus without setting up a permanent establishment are taxed in Austria. However, the profits that can be attributed to a permanent establishment of an Austrian company in Belarus (e.g. a subsidiary) are subject to Belarusian profit taxation. The representative office of an Austria company is not subject to profit taxation in Belarus so long as the Belarusian tax authorities have not deemed it to

3. Taxation and Legislation

be a per¬manent establishment on the grounds of its activities. The double taxation treaty also sets out special rules allowing the Belarusian taxation at source of the profit distributions of Belarusian companies with Austrian shareholders/members/partners. When rendering services in Belarus, one must take into account that the Belarusian tax code specifies that, when a foreign company renders a service in Belarus, the revenues from that service will be taxed at source at a rate of 24% of the value of the order. The recipient of the service must withhold the tax applying the reverse charge system. Installation and assembly services may be exempted.

Land Tax Land tax takes the form of a fixed annual amount. The taxable object is land owned, possessed or used by a legal entity or natural person. Land tax amounts to between 0.025% and 3% of the property’s cadastral valuation and is relative to its type, functional use and purpose (Tax Code Section 18).

Environment Tax An environment tax is levied on the use of natural resources, pollutant emissions, the transportation of mineral oil and petroleum products on Belarusian ter¬ritory, the extraction or mining of raw materials and the creation of waste for landfill (Tax Code Section 19). The rates for ecological taxation depend on the hazard classes of the substances which are emitted into the atmosphere or produced as wastewater by the company, or that are transferred to a final storage repository.

Immovable Property TaxCompanies must pay immovable property tax in the amount of 1% of the value of a property owned or possessed by the company and of immovable properties that are under construction but for which the completion deadline has passed. Natural persons are charged this tax at a rate of 0.1% of the value of the immovable properties they own (Tax Code Section 17).

Income Tax The progressive tax system was abolished on 1 January 2015 and the income tax rate has been 13% since that time. Income tax is assessed on the basis of all monetary and non-monetary income of natural persons with a permanent residence in Belarus. Foreign citizens are assumed to have a permanent resi¬dence in Belarus if they are in Belarus more than 183 days a year.

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Value Added Tax/VAT NumberThe legal framework for VAT is the Tax Code (Section 12). Tax is levied on the sale or importation of goods and services and of intellectual property within or to Belarus. The standard VAT rate is 20%, and a redu-ced VAT rate of 10% is applicable to foodstuffs, goods for children and a number of agricultural products. Exports from Belarus are generally exempted from Belarusian VAT. There are also VAT exemptions for securities, pharmaceutical products, medical products, medical and cultural services, insurance and legal advice. These exemptions are regulated in detail by Belarusian gov¬ernmental and presidential legal acts. In Presidential Decree no. 287 of 21 June 2007 and Decree no. 118 of 6 March 2005, all medical products were made exempt from VAT, and the preferential VAT rate was applied to certain foodstuffs (meat, dairy products, bread, baby food, and seafood) and goods for children (children’s clothes, children’s shoes, and toys).

On 25 January 2008, the Agreement on the Principles for Collection of Indirect Taxes upon Export and Import within the Customs Union was signed by the three countries in the customs union (the Russian Federation, Kazakhstan and the Republic of Belarus). VAT is one of the taxes collected in accordance with the country of destination principle. This means that VAT is collected in the country where the goods are being imported, in accordance with the rates determined by that country’s legislation.

Tax Number In addition to registering the company and it being entered into the “Single State Register of Legal Entities and Individual Entrepreneurs”, you must also go through the process of registering with the tax authorities so that you can be entered into the “State Register of Taxpayers” which is kept by the Republic of Belarus’ Ministry of Taxes and Fees. This process allocates each taxpayer a taxpayer’s registration number which applies for all taxes, fees (contributions) and also to customs duty. The taxpayer will be entered into the register within five working days by the Republic of Belarus’ tax authorities in accordance with the territorial criterion, in other words in accordance with the taxpayer’s place of business (place of registration). When applying for this entry, the taxpayer must submit the founding documents, the certificate of state registration and the provisions concerning the organisation’s structure to the territorial tax authorities. If the taxpayer changes his or her place of business (place of registration), he or she is obligated to submit a registration of change in place of business or residence to the tax authority where he or she is currently registered. In case of liquidating or restructuring the organisation, or of the individual entrepreneur ceasing activity, deregistra-tion will be performed by the tax authorities within ten working days of the appropriate record having been entered into the Single State Register of Legal Entities and Individual Entrepreneurs. During a liquidation process, the tax authorities also perform a tax inspection on the company being liquidated.

Reverse Charge SystemWhen an Austrian company renders VAT-liable services in Belarus (which is the case if a service in Belarus becomes economically efficient) but does not have a Belarusian tax number, each Belarusian customer – effectively acting as a tax agent – must retain the VAT as part of the reverse charge system and pay it to the local responsible tax authorities. In other words, they must pay the part of the agreed gross price that corresponds with the VAT to the Belarusian tax authority, and can later reclaim it as input tax. We recom-mend that you clearly differentiate between the NET and GROSS PRICE when negotiating the contract, and that you take into account the VAT to be paid by the importer on the invoice accordingly. Otherwise, it may be the case – for instance with gross for net agreements – that the remuneration due to you is reduced by the amount of VAT to be paid.

In addition to the corresponding definition in the contract, the following statement should be added to the VAT amount on the invoice: “Belarusian VAT is paid directly to the Belarusian Ministry of Finances and Tax by the Belarusian importer in accordance with the reverse charge system.”

Excise Tax Excise tax is an additional tax levied on the sale of technical alcohol (with exceptions that include medi-cines, veterinary pharmaceuticals, perfumes and cosmetic products), alcoholic beverages, beer, tobacco prod¬ucts, crude oil, petrol, diesel, motor oil, jewellery, microbuses and passenger cars. Excise tax takes the form of fixed amounts in Belarusian rubles (BYR) charged per unit of goods. They are defined in the Tax Code (Annex 1). For instance, the excise tax is BYR 7,200 (€0.32) on champagne and sparkling wine (1 litre), € 0.07 on one litre of natural wine and €1.35 on one cigar. When importing goods subject to excise tax, the importer must apply for and purchase excise tax stamps (proving payment of excise tax) and affix them to the product.

Double Taxation Treaties Austria had a double taxation treaty with the Soviet Union dating back to 1981. The double taxation treaty of 16 May 2001 is currently in effect; this regulates profit tax, income tax, wage tax and capital taxes.

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Input Tax DeductionThe Belarusian VAT system is similar to the Austrian system and the systems of other European countries in terms of the basic principles. Paid VAT can be offset as input tax against owed VAT, which reduces the tax payable. The reverse charge principle is applied when exporting services from Austria to Belarus.

Input Tax Rebate/ AccountingThe system for offsetting input tax and rebating input tax credits in Belarus is also fundamentally open to foreign companies if they are registered with the tax authorities and have obtained a tax number and accrued VAT-liable turnover. It is not possible to calculate input tax from turnover which was generated before registering, or for unregistered companies. In this respect, there are unfortunately no similarities with the Austrian system, where foreign companies who do not have a place of business or business premises in Austria can apply for Austrian VAT rebates.

Since the obligation of limited accounting and costs are associated with the tax number, and contact with the authorities is typically handled by commissioned representatives (tax advisors), registration is only wor-thwhile if the foreign company has a certain amount of regular turnover in Belarus.

In terms of accounting, reference should be made to the distinctiveness of Belarusian accounting stan-dards, which, in comparison to the US Generally Accepted Accounting Principles (US GAAP), are characte-rised by their great number of formalities (submitting all types of documents, certifications and stamps). In contrast to the GAAP, the key issue is not whether goods have actually been delivered and paid for, but whether all of the necessary documents, signatures and stamps have been obtained.

4. Arbitration

Belarus has ratified the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Here, the contracting states undertake to recognise and enforce arbitral awards made in the territories of another contracting state. Thus in contracts with Belarusian counterparties, jurisdiction may be conferred on the Internationales Schiedsgericht der Wirtschaftskammer Österreich (International Arbitral Centre of the Austrian Federal Economic Chamber), the International Chamber of Commerce (ICC) or a different court of arbitration.

Unlike the judgements of state courts, arbitral awards can be enforced practically worldwide. For a dispute to be settled by a court of arbitration, its jurisdiction must have been agreed upon beforehand in writing. It is therefore advisable to include an arbitration clause in the contract with your foreign counterparty.

The Austrian Federal Economic Chamber offers institutional arbitration as a service through the International Arbitral Centre of the Austrian Federal Economic Chamber.

The arbitration clause of the International Arbitral Centre of the Austrian Federal Economic Chamber reads as follows (versions are also available in the languages that are most important for Austrian exporters):

‘All disputes arising out of this contract or related to its violation, termination or nullity shall be finally settled under the Rules of Arbitration and Conciliation of the International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna (Vienna Rules) by one or more arbitrators appointed in accordance with these Rules.’

Useful agreements to supplement this arbitration clause: • the number of arbitrators shall be .......................... (one or three); • the applicable law shall be ............................; • the language used during arbitration proceedings shall be ......................................

Detailed information: Internationales Schiedsgericht der Wirtschaftskammer Österreich International Arbitral Centre of the Austrian Federal Economic Chamber Dr. Manfred Heider; Phone: +43-5-90 900-4398; Fax: +43-5-90 900-216. E-mail: arb@wko.at; Internet: wko.at/arbitration

The fact that you as an Austrian company are a member of the Federal Economic Chamber can in some circumstances be a cause for concern for a strong foreign counterparty. In this case we recommend that you agree on a different arbitral court, such as the one belonging to the International Chamber of Commerce. This has its headquarters in Paris and is represented in Austria by ICC Austria.

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Therefore you have the following options:

• If your company has a strong starting position in contract negotiations or if you and your counterparty are roughly equal, we recommend you use the arbitration clause of the Austrian Federal Economic Chamber.

• If on the other hand your company holds a weaker position, or if your counterparty is of equal strength and will not agree to the Austrian Federal Economic Chamber’s arbitration clause, then we recommend that you agree on a different arbitral court, such as that of the International Chamber of Commerce (ICC).

The arbitration clause of the International Chamber of Commerce (ICC) reads as follows: ‘All disputes ari-sing out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.’ This arbitration clause is also available in other languages.

Detailed information:ICC Austria, International Chamber of CommerceDr. Maximilian Burger-Scheidlin; Phone: +43-5-90 900-3701; Fax: +43-5-90 900-3703; E-mail: icc@wko.at; Internet: www.icc-austria.org.

5. Subsidies and Support

EU cohesion policy / regional policy 2014-2020Initial situation / status quoThe various regions of Europe, especially Central and Southeastern Europe, exhibit large differences in economic and social development. To strike a balance between the regions, the EU has set the following targets as part of its Europe 2020 strategy:

• Creation of jobs• Strengthening companies’ competitive position• Promotion of economic growth and sustainable development• Improvement in EU citizens’ life quality

The cohesion / regional policy is aimed at all regions in the EU in order to create intelligent, sustainable and integrative growth. The cohesion policy is defined for a seven-year period (2014-2020). A budget of EUR 351.8 billion, i.e. almost one third of the entire EU budget, is set aside for achieving the above targets in the timeframe mentioned. Within the scope of this budget, funding is granted in the form of non-repayable grants.

Structure of the funding programmes / from the EU target to the national funding programmeThe individual EU member states use the EU targets set under the Europe 2020 strategy to define their national and regional priorities, from which the individual Operational Programmes (OPs) are derived.The Operational Programmes are structured according to region and topic. Within these programmes “priority axes” are defined, which are subject to guidelines approved by the European Commission. The following topics are priorities for the individual countries: Innovation, research & development, job creation, environmental protection, education, SMEs, transport and regional development.

Dedicated national funding agencies (ministries and investment agencies) are responsible for awarding the grants. While grants can be applied for continuously in framework programmes in Austria, they are mostly awarded in the context of “calls” (tender exercises) in Eastern Europe.

For each priority axis mentioned above, tender exercises are held once or twice a year and are open for one to three months. The main assessment criteria for company grants are company size, location, content and impact of the funding project.

How can your company obtain funding?Clearly defined projects can be submitted during the period when the tender exercise is open. Only complete applications (project description, approvals, budget,...) in the respective national language are accepted. The submitted projects are then evaluated by assessors using a points system based on the guidelines specified/defined in the program. All projects within a “call” take part in a competition. Only those with the highest score are shortlisted for funding commitments.

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Getting from the application to the possible disbursement of grants involves going through a complex, time-consuming process.It requires experience in dealing with public authorities and their targets.

National grantsIn addition to the EU structural funds, companies can also apply for funding from national resources.

The economic importance for the country or region is very important for determining whether the investment project can be funded.The criteria for evaluation are: Minimum investment volume and the number of jobs created as well as the minimum period for which these jobs will exist.

The following investment incentives are possible:• Tax reductions, tax deferrals and tax exemptions• Grants• Loans• Sureties• Equity participations• Discounted land purchases

However, these are subject to the respective national regulations and must be applied for at regional funding agencies.

Warning:• The application must be made before the project begins (= first legally binding obligation).• The details of the guidelines can change during the tender exercise and must therefore always be kept in view.• Make contact with the company’s bank/funding agency as early as possible.

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6. Risk Hedging and Financing

Risk hedging of Austria Wirtschaftsservice

Gesellschaft mbH (aws, federal funding agency)

Legal framework conditions:

The legal framework conditions of the guarantees issued by aws were redrafted on 1 January 2017.In detail, the regulations are based on the guidelines of the Austrian Federal Ministry of Finance (BMF) for accepting guarantees by aws pursuant to the Guarantees Act 1977, including supplementary conditions for grants.

The aws offers small and medium-sized companies (max. 3,000 employees) with their registered office and operating site in Austria guarantees for loans and lease financing as part of domestic and foreign invest-ments.

Guarantees for national investments:aws guarantees the financing of economically desirable projects by Austrian companies, i.e.: Construction/expansion investments, modernisation of production facilities, the innovation of processes and procedures, environmental measures or the purchase of, or participation in, companies.

aws guarantees up to 80% (max. EUR 25 m) of the financing amount in the form of a financing guarantee and covers the economic risk of the investor (loan default due to the insolvency of the domestic company) for the bank. In the case of large projects, aws guarantees up to a maximum of one third of the project volume.

Guarantees for international investments:aws supports Austrian companies (max. 3,000 employees) with direct investments abroad, i.e. establish-ment of subsidiaries/joint ventures, acquisition of companies/company shares, expansion investments and investments in environmental technologies.The risk hedging of aws is provided either in the form of a project guarantee or a financing guarantee.

Under the project guarantee, aws hedges the economic risks (insolvency or similar circumstances) of a company’s investment project and undertakes to provide a certain amount of capital up to the maximum guaranteed amount in the event of damage or loss.

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aws guarantees up to 50% of the loan used (for large projects up to 1/3 of the project volume). The gua-rantee fee is dependent on the ratings result calculated when examining the respective project, as well as the term of the guarantee.

Under the international financing guarantee, aws guarantees the financing of Austrian companies for eco-nomically desirable projects abroad, i.e.: construction/expansion investments, modernisation of production facilities, the innovation of processes and procedures, environmental measures or the purchase of, or participation in, companies.

aws guarantees up to 80% (max. EUR 25 m) of the financing volume and thereby covers the economic risk of the investor for the bank.

Conditions of the aws guarantee:

National guarantees: • Processing fee: 0.25% (one-off) of the assessment basis (max. EUR 30,000)• Guarantee fee: The guarantee fee depends on the ratings result calculated when examining the

respective project as well as the term of the guarantee

International guarantees:• Processing fee: 0.25% (one-off) of the assessment basis (max. EUR 50,000)• Guarantee fee: The guarantee fee depends on the ratings result calculated when examining the

respective project as well as the term of the guarantee.

Austria

Abroad

BANK

OeKB (Oesterreichische Kontrollbank AG)In order to achieve sustainable success in the export business and for investments made abroad, com-panies need good risk management and attractive financing arrangements. With federal export guaran-tees and OeKB refinancing packages, the OeKB offers instruments via the respective house banks that strengthen Austrian companies and their partners in global competition. By processing export guarantees, the OeKB acts as the Export Credit Agency (ECA) of the Republic of Austria.

Export guarantees protect the entrepreneur against payment defaults (for economic or political reasons) related to export transactions. In the case of foreign investments, export guarantees provide protection against political risks.

Federal export guarantees also offer an attractive way to access financing for export and investment acti-vities. Export guarantees can be utilised by all large, medium and small companies whose guaranteed transactions have a positive impact on Austria’s current account balance or are in the national interest.

Companies can learn more about the ideal kinds of guarantee from the OeKB Export Service (www.export-service.at) or from their house bank. OeKB’s export financing process provides the possibility of refinancing exports and equity participations abroad. This export financing process is available as a source of refinan-cing at domestic and foreign commercial banks and is offered to companies via these banks within the scope of their export business and foreign investments.

The prerequisites for this type of financing are• A federal guarantee as required by the Export Funding Act (EFA), or• A guarantee from a credit insurer within the meaning of the EFA• A guarantee from aws, or• A guarantee of an international organisation within the meaning of the EFA.Furthermore, the financing of the underlying supplies/services must bring about a direct or indirect impro-vement in the Austrian current account balance or be in the Austrian national interest.

ERP fundThe ERP fund is a fund with its own legal personality, which was attached to aws in 2002. ERP loans are reduced-interest loans with multi-year redemption-free periods and multi-year redemption periods, and are collateralised by a guarantee from aws or a bank.

ERP financing programme Companies are eligible to apply which have their registered office and operating site in Austria and which are active in one of the following sectors: industrial or commercial production, research and development services, transport, processing of agricultural products, and trading companies.

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The following provides an overview of the available ERP financing programmes:• ERP - Micro-Credit• ERP - Technology Programme• ERP - SME Programme• ERP - Regional Programme• ERP - Tourism Programme• ERP - Transport Programme• ERP - Forestry Programme• ERP - Agriculture Programme

Conditions of ERP loansThe maximum financing volume is EUR 30 m.• Term: 6 years (up to 15 years is possible)• Utilisation period: 0.5 years• Redemption-free period: 2-3 years, interest fixed at 0.50% p.a.• Redemption period: 3–4 years, interest fixed at 0.75% p.a.

- Longer redemption-free and redemption periods are offered for some programmes, i.e.:- Future industries, research infrastructure within the scope of the technology programme- Infrastructure measures within the scope of the Regional Programme

• Interest rate and redemption costs are anticipatory• Processing fee: 0.5% - 0.9% of the ERP loan• The guarantee fee of the guaranteeing bank must be added to these costs.

Austrian Company

BANK

Guarantee

Trust Money

ERP LoanLoan Agreement

Chart 2: ERP Loan Process

The fundable projects/costs are dependent upon the respective ERP financing programmes, based on the purpose and mandate of the respective programme.

ERP loans for large companies:For large companies, ERP loan financing is provided by the ERP Regional Programme and the ERP Technology Programme. Within the scope of these two programmes, large companies in particular can apply for funding for the following projects/costs:

Fundable projects for large companies:• Initial investment in NEW economic activities (new NACE-4 provider)• Construction of a NEW independent operating site• Within the de minimis limits (max. fundable value of EUR 200,000 within the last 3 years), further projects

can also be funded (product and process innovations, innovative services through implementation of in-house research results, purchase and adaptation of new technologies, modernisation and expansion investments, construction/acquisition of start-up, technology and innovation centres)

• Research/development projects for the introduction of new/significantly improved products• Projects for prototype production• Construction of pilot/demonstration/testing facilities

Fundable costs for corporations:• New investments and in-house services to be capitalised• Construction investments• Land purchases for founding new companies, business expansion and business location to the extent

required by the business• Costs for intangible assets (patents, licences, etc.) and consultancy costs• Regarding R&D projects: Staff costs, laboratory facilities, costs of consultancy and provision

of services, equipment costs for pilot and demonstration facilities

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7. Payment and Account Services at

Priorbank, JSC

7.1. Cash management productsAccount Services Local Currency Foreign Currency (LCY) Current Acc. LCY Deposit (FCY) Current Acc. FCY DepositResident 3 3 3 3

Non-resident 3 3 3 3

Credit Interest 3 3 Overdraft Facility 3 3

Cash Management: Group Products and Services

• Intra-group Payments (IGP)• Cross Border Marging Pooling• SWIFT for Corporates (SCORE)

Payments, Deposits • Domestic payments LCY• Domestic payments FCY• Foreign payments LCY• Foreign payments FCY• Domestic Direct Debts (LCY, FCY)• Cash payments / withdrawals LCY*• Cash payments / withdrawals FCY*• Purchase & Sale of FCY• Corporate debit cards in LCY• Corporate debit cards in FCY• Salary Cards project

Cash Management local Products & Services

Electronic Banking• Local electronic banking• Internet banking

solutions• SWIFT MT940

Liquidity Management• Zero Balancing• National Pooling• Margin Pooling

7.2. Legal & Foreign Exchange RegulationsCurrent Accounts • Corporate customers may open more than one current account in local currency and in any foreign

currency. Domestic Payments • Any payment in local currency from one bank to another bank is processed by Belarusian Interbank

Settlement Center. All domestic payments must contain the payment title (purpose of payment). All pay-ments are performed to the day.

Foreign Payments • Any payment in a foreign currency is treated as a cross-border payment and is sent through corre-

spondent banks because there is no clearing center for foreign currency in Belarus. All incoming and out-going cross-border payments must have a payment title (purpose of payment) and correspond to foreign exchange regulations.

7.3. Clearing MechanismsSettlement

• Description: Automated System of Interbank Settlements (ASIS):a real-time gross settle-ment – Belarus Interbank Settlement System (BISS). All payments in local currency are settled through the BISS.

• Transaction value: Same day

• Settlement cycle: BISS works with payments from 8:30 till 16:30 (payments are excuting every 10 minutes)

Clearing Membership of the BankMandatory for all banks.

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9. Your International Business

Specialists at Priorbank, JSC

and the Global Raiffeisen Network

Your specialist at Priorbank, JSCNatalia SELICKAYAinternational@priorbank.by+375 172 89 93 55

Your international business specialists Raiffeisen Bank International AGHerwig Haidnherwig.haidn@rbinternational.comPhone: +43 / 1 / 717 07 – 1574

Raiffeisen Bank International AGRudolf Lercherrudolf.lercher@rbinternational.comPhone: +43 / 1 / 717 07 – 3537

Raiffeisenlandesbank NÖ-Wien AGNadja Wattinadja.watti@raiffeisenbank.atTel: +43 / 5 / 1700 – 92426

Irene KammerhoferIrene.kammerhofer@raiffeisenbank.atTel: +43 / 5 / 1700 – 92157

Raiffeisen-Landesbank Steiermark AGFranz Rogifranz.rogi@rlb-stmk.raiffeisen.atPhone: +43 / 316 / 4002 – 7110

Beatrix Narathbeatrix.narath@rlb-stmk.raiffeisen.atPhone: +43 / 316 / 4002 – 7141

Assets, €m 1,524

Branches 91

Staff 2,005

Established in 1989, Priorbank has been a Raiffeisen-subsidiary since 2003. It is one of the largest local private banks ranking seventh among Belarussian banks and also one of the leading local financial institu-tions in terms of efficiency and profitability.

As a universal bank, it services corporate customers, small and medium-sized enterprises as well as private individuals and offers the full range of banking services. At year-end 2016, Priorbank had a countrywide distribution network of 91 business outlets and more than 760,000 customers.

Priorbank has a number of subsidiaries, of which Raiffeisen Leasing JLLC is the largest. Co-operating clo-sely with Priorbank’s branch network, it is one of the country’s largest leasing companies.

Priorbank, JSC31-A, V. Khoruzhey Str., Minsk, 220002Phone: +375-17-289 9087Fax : +375-17-289 9191www.priorbank.by

8. Priorbank, JSC

Shareholder structure:

Raiffeisen Bank International 87,74 %

Others 12,26 %

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Notes

Raiffeisenlandesbank Oberösterreich AGHelmut Zeindlingerzeindlinger@rlbooe.atPhone: +43 / 732 / 6596 – 23113

Artem Snegirevsnegirev@rlbooe.atPhone: +43 / 732 / 6596 – 23161

Raiffeisenverband SalzburgBernhard Knollbernhard.knoll@rvs.atPhone: +43 / 662 / 8886 – 14161

Raiffeisen-Landesbank Tirol AGAndrea Zanklandrea.zankl@rlb-tirol.atPhone: +43 / 512 / 5305 – 12230

Raiffeisenlandesbank VorarlbergAlexandra Weltealexandra.welte@raiba.atTel.: +43 / 5574 / 405 - 528

Raiffeisenlandesbank BurgenlandWilhelm Schedlwilhelm.schedl@raiffeisen-burgenland.atPhone: +43 / 2682 / 691 – 605

Raiffeisenlandesbank KärntenMichael Stegmüllermichael.stegmueller@rbgk.raiffeisen.atPhone: +43 / 463 / 99300 – 2280

Herbert Schöffmannherbert.schoeffmann@rbgk.raiffeisen.atPhone: +43 / 463 / 99300 – 2269

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