BELARUS NEWS AND ANALYSIS

DATE:

06/04/2009

Belarus offers tax breaks to carmakers

MINSK, April 6 (Reuters) - Belarus is offering tax breaks to car companies willing to set up assembly plants in the ex-Soviet state and hopes ultimately to create a national automaking plant, a senior government official said on Monday.

Igor Rogozin, a senior economy minister official, told reporters a decree issued by President Alexander Lukashenko would exempt any company starting up a plant from all income and excise taxes for three years.

"This long-awaited decree has been signed and will allow us to create new production capacity for cars in our country," Rogozin told a news conference.

Rogozin gave no details on companies with which Belarus could hold talks on or whether Belarussian companies would take part in such a project. But he said authorities were hoping to create capacity to produce 10,000 cars a year.

"We expect that by the end of this year we will see some significant progress in this direction," he said.

Dealers say the annual market in Belarus, a country of 10 million wedged between Russia and three European Union members, amounts to about 25,000 new cars. Officials have said they hope some of the cars produced can be sold in Russia.

"No one has said Belarussian cars, with at least 50 percent assembled in Belarus, cannot be sold in Russia," Rogozin said.

Several large plants already operate in Belarus, including the Minsk car plant, the Belarus car plant and the Minsk tractor plant. A row with Ford resulted in a plant being moved out of the country to Russia's second city, St Petersburg.

A Belarussian-Iranian joint venture assemblying Samand vehicles outside Minsk last year had an output of only 300. (Reporting by Andrei Makhovsky, writing by Ron Popeski; Editing by David Cowell)

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