The Most Popular Types of IT Companies in Belarus

In recent years, Belarus has established itself as one of Eastern Europe’s leading information technology centres. Given the growing interest in startups and innovative solutions, choosing the right company form is essential to successful business in this area. In this article, we will look at the most popular company forms for the IT sector in Belarus and their features, and also give recommendations for those who want to create their own business in the IT sector in Belarus.

What is the type (form) of a company

The form of a company is a legal structure that defines a business’s organisational, legal and financial characteristics. It determines how the composition of the company’s owners is formed, how the company will be managed, what rights and obligations its owners will have, and how profits and losses will be distributed.

What types of companies are common in Belarus

There are several common forms of companies, each of which has its characteristics:

1. Limited Liability Company (LLC)
The most popular form among small and medium-sized enterprises. Participants are responsible only within the limits of their contributions to the company’s authorised capital. At the same time, the minimum size of the authorised capital for an LLC has not been determined in Belarus.
Organise (establish) An LLC can have 1 participant, and the maximum number of LLC participants is 50. The participants can be companies and individuals. The authorised capital of an LLC is divided into shares according to the number of participants. 
2. Additional Liability Company (ODO)
This form of business organisation is less prevalent. It differs from an LLC in that the charter must provide for subsidised liability of owners for debts of a company organised in the form of an ODO, in the amount of at least 50 basic units (this is 2000 Belarusian rubles or about 560 euros). Subsidiary liability refers to the owners’ additional liability to the company’s liability in the form of an ODO.
Otherwise, the ODO is organised analogously with an LLC: the authorised capital is divided into shares according to the number of participants in proportion to their contributions, and there can be no more than 50 participants, including companies and individuals.
3. Open Joint Stock Company (JSC)
By issuing shares, such a company can attract funds from a broad audience of investors. The company can dispose of its shares and transfer them to other persons through an open subscription.
In a joint-stock company, the authorised capital is divided into certain shares of a specific nominal value. The company’s authorised capital minimum should be 400 basic units. This is 16,000 Belarusian rubles, or about 5,000 euros.
There are no restrictions on the number of shareholders. The company decides for itself how many shareholders there will be.
4. Closed Joint Stock Company (CJSC) 
The requirements for creating such a company are similar to those of an open joint stock company, but the number of shareholder participants is limited only by the founders of the joint stock company. Public sale of shares is not possible in this case.
The minimum authorised capital of a joint-stock company should be equivalent to 100 basic units. This is 4,000 Belarusian rubles or about 1,250 euros.
5. Unitary enterprise
A unitary enterprise is a company with one founder—the owner of the property. Its authorised capital is not divided into shares. An individual or a company can organise a company as a unitary enterprise.
Choosing the right form for an IT company depends on many factors, including the planned business strategy, risk level, and the need to attract external investment.

Are there any peculiarities in choosing the type of IT company?

There are no requirements for the type of IT companies in Belarus. The future owners of the company choose the type before its state registration.

When choosing the type of IT company, future founders should consider several key factors:

1. Responsibility of the participants
An important point is the ability to limit the founders’ responsibility. For example, in an LLC, the founders are responsible only within the limits of their contributions.
2. Taxation and accounting
Different forms of companies have special taxation and accounting features. Studying the taxes that will be applied to the selected form and potential tax benefits is necessary. For example, when choosing the form of a joint-stock company, you need to keep in mind that:

• Shares are securities that have accounting features.
• Interacting with government agencies and professional participants in the securities market is possible.
• You must keep financial statements on securities and fulfil the obligation to disclose information.

3. The structure of the authorised capital 
Depending on the requirements for the size of the authorised capital and the capabilities of the founders, they often choose the economically more profitable form at the time of creation.
4. Management
It is necessary to determine how the company’s management will be organised. For example, it is easier to hold a general meeting of participants in an LLC with several participants than in an open joint stock company with many shareholders.
5. Attracting investments
If you plan to look for external financing, you should choose forms that allow you to attract venture investments more flexibly. For example, JSC and CJSC allow issuing shares to attract capital investments, while LLC and ODO have a different mechanism for attracting investments – through loans and increasing the authorised capital. A unitary enterprise can attract investments with the help of a loan. In some cases, companies can attract financing through the issuance of bonds.
6. Market positioning
A company’s status can affect its image. For example, a joint stock company may be perceived as a more significant and stable structure than a unitary enterprise.
7. Registration requirements and reporting
Different forms have different registration, bookkeeping, and reporting requirements. The simplicity and speed of registration can be important for a startup. It is easier to register an LLC or ODO than an open joint stock company with a large number of shareholders.
8. Future plans
It is necessary to consider the company’s plans for growth and development. If rapid development is expected, it is preferable to choose a form that can be easily transformed. 

Considering all these factors, the founders can choose the most appropriate organisational and legal form for their IT company, corresponding to their goals and strategy.

Why IT is beneficial for IT companies in Belarus to be residents of the Hi-Tech Park (HTP)

The main advantage of participating in HTP is tax preferences, which usually apply exclusively to companies’ activities as HTP residents – these are activities in the IT sector. Here are the main advantages of HTP resident IT companies:

1. No income tax is required. A 9% income tax rate is provided for some income. The total rate for non-HTP residents is 20%.
2. Belarus applies a VAT exemption of 20% to selling goods and individual transactions with non-residents.
3. Income tax is 0% and 5% for income paid to foreign founders-companies.
4. There is no need to pay an offshore fee for certain transactions.
5. An income tax of 9% has been established for the income of individuals who are founders of HTP resident companies, including foreigners. The rates can be 6% or 0%, depending on the frequency of profit distribution between the founders.
6. Exemption from real estate tax for objects located on the territory of the HTP that are not leased.
7. Obtaining permits from government agencies is not required to attract foreign workers.

Which IT companies can become HTP residents

IT companies already registered in Belarus, regardless of their location (in any city or village), including companies with foreign investments, can become HTP residents. To register as an HTP resident, you do not need to change the type of company specifically. A business project must be developed according to the HTP’s requirements and submitted with other documents on the company’s registration for consideration by the HTP Supervisory Board. Usually, the Supervisory Board accepts companies as HTP residents several times a year.

What types of IT companies are common in the Hi-Tech Park in Belarus

The following types of companies are most common in the Hi-Tech Park (HTP) in Belarus:

• Limited liability companies
  This is the most popular form, as it limits the participants’ responsibility and is relatively easy to manage. Many startups and small companies choose this form for their activities.
• Joint-stock companies (JSC and CJSC)
  These forms are also found, especially among larger companies and those who plan to attract investments through the issue of shares. However, they require a greater level of regulation and accountability.

In general, LLC companies predominate in the Hi-Tech Park, explained by their flexibility, ease of creation and management, and the possibility of limited liability.