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The economy of the country has been passing through some kind of a crisis for some time: a high level of inflation. In this condition, use of a loan for investment is better than to use one's own money. The leasing companies, more or less quickly, get the limits of loans from banks. However, the banking loan limitations are easily circumvented by proliferation of entities - the same owner putting on a different facade and approaching the bank.

Hence, leasing in Belarus is mainly a bank-financed industry.

The investments of the leasing companies (about $40,000,000) are 1% of the gross private investments into equipment in 1997. This index is not formal, but this is an estimate of the Union of lessors.

Recently (March, 03, 1999) in Moscow a meeting of the Executive Committee of the Union of Russia and Belarus had taken place to sign a treaty about development leasing of agriculture equipment: tractors, combines, etc. In result the sides signed a protocol. The protocol contains a proposal to working organs of the Union to give a projects on financing the idea, stimulant changes of revenue law, stimulant changes of bank law, etc.

Leasing is regulated in Belarus in the last section of Civil Code (October,1998). Unfortunately, this juridical act made leasing identical to financial transaction. Besides, the juridical act of inferior level called "Act about leasing in territory of Republic of Belarus" ( December, 31, 1998) contradicts the Civil Code, inasmuch as it determines categories of operatiing leasing and finance leasing. The distinction is brought about in the following version of the original law (translated by Mr. E Minovich) :

"Finance l e a s i n g is a delivery of an leasing object for using on definite time, and a subsequent purchase of the object. This is a sale in which payment is made in installments. This is a credit in a goods form."

" Operating leasing is a delivery of an leasing object for using on definite time, and a subsequent return of the object to leasing-holder."

The leasing law prescribes that a) only a juridical person must be a lessor and b) only an subject of economics, that is, a producer-entity (not a consumer) must be a lessee. Thus, consumer leasing is proscribed in Belarus.

By way of a singular incentive, leasing companies are allowed to depreciate their assets @ 100% for income-tax purposes. Others have straight-line rates prescribed.

Besides, a 20% value-added tax is applicable on all services, including leasing.

Belorusan Union of Lessors