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Leasing encyclopedia

The main regulatory legal acts governing leasing in the Republic of Belarus are:

  • Civil Code of the Republic of Belarus dated 07.12.1998 No. 218-З (Chapter 34 "Rent", paragraph 6 "Financial lease (leasing)").
  • Decree of the President of the Republic of Belarus dated February 25, 2014. No. 99 "On issues of regulation of leasing activities"
  • Resolution of the Ministry of Finance of the Republic of Belarus dated April 30, 2004. N 75 "On approval of the instruction on the accounting procedure for leasing operations"
  • Resolution of the Council of Ministers of the Republic of Belarus and the National Bank of the Republic of Belarus dated January 22, 2010 No. 69/1 "On interest rates when banks provide loans for the purchase of automobile vehicles under financial lease (leasing) agreements"
  • Resolution of the Interparliamentary Assembly of Member States of the Commonwealth of Independent States No. 25-6 "On the Model Law" On Leasing "(adopted in St. Petersburg on April 14, 2005)
Leasing

a set of economic and legal relations arising in connection with the implementation of a lease agreement, including the acquisition of a leased asset

Lease agreement

an agreement in accordance with which the lessor undertakes to provide for a fee for temporary possession and use to the lessee the property acquired by him under the contract of sale in the ownership of the seller (supplier) at the choice of the lessee in order to obtain profit, income or to achieve another useful effect. The leasing agreement may stipulate that the choice of the seller (supplier) and the acquired property is carried out by the lessor

Leasing activities

type of entrepreneurial activity associated with the investment of the lessor's own and (or) borrowed funds (investments) for the acquisition of property and its leasing

Lease term

the period for which the leased asset is provided to the lessee for temporary possession and use in accordance with the lease agreement

Subject (object) of leasing

any movable and immovable property related, according to the established classification, to fixed assets (funds) or to separate groups of intangible assets in accordance with national legislation, except for those prohibited by national legislation for circulation on the markets or for which a special procedure for circulation is established. The leased item cannot be used during the lease term for personal, family and household needs

Leasing entities

A lessor is an individual or legal entity who, in the course of leasing activities, acquires property and provides it as an object of lease to the lessee for a specified fee, for a specified period and on conditions specified in a lease agreement, into temporary possession and use with or without transition to to the lessee of ownership of the leased asset upon termination of the lease agreement. 

Lessee - a natural or legal person who is obliged to accept the leased asset for a certain fee, for a certain period and on conditions determined by the lease agreement for temporary possession and use for business purposes or to obtain other socially useful effect. 

Seller (supplier) - an individual or legal entity who, in accordance with the terms of the sale and purchase agreement with the lessor, sells to the lessor within the specified period the property being leased. The seller is obliged to transfer the leased asset to the lessor or lessee in accordance with the terms of the purchase and sale agreement. The seller can simultaneously act as a lessee within one leasing legal relationship (leaseback). 

Types of leasing

inancial leasing is a type of lease associated with the implementation of a lease agreement in which the lessor, as part of lease payments through depreciation (according to the rules of the country specified in the agreement), is reimbursed the cost of the leased asset in the amount of at least 75% of its original (replacement) value, regardless of whether whether the transaction will be completed by the purchase of the leased object by the lessee or its return to the lessor. 

Operational (operational) leasing is a type of lease associated with the implementation of a lease agreement, in which lease payments during the lease agreement provide reimbursement to the lessor through depreciation of the cost of the leased object in the amount of at least 40% of its original (replacement) value. Upon expiration of the lease agreement, the lessee returns the leased object to the lessor, as a result of which it can be leased out multiple times. At the end of the term of the operating lease agreement, it can be continued or the leased asset must be returned to the lessor and may be re-transferred by the lessor for use to another lessee under the lease agreement. 

Leaseback is a type of lease associated with the implementation of a lease agreement, in which the seller (supplier) of the leased asset simultaneously acts as a lessee within the same leasing legal relationship. 

Secondary leasing is a type of lease in which the leased asset that remains in the ownership of the lessor in the event of termination or termination of the lease agreement is leased to another lessee in accordance with Article 2 of the Law "On Leasing". 

Subleasing is a type of lease agreement in which the lessee transfers to a third party (the subleaseholder under the sublease agreement) for possession and use for a fee and for a period in accordance with the terms of the subleasing agreement the property previously received from the lessor under the lease agreement and constituting the subject of lease. When the property is transferred to sublease, the right to claim against the seller passes to the subleaseholder under the sublease agreement. When transferring the leased asset to sublease, the lessor's written consent is required. 

Leasing for small and medium businesses

Small and medium-sized businesses is the key to stability and balanced economic development in our country. However, one of the main causes constraint on the development is lack of financing.

In most cases, leasing is almost the only accessible way to financing for small and medium-sized businesses.

Leasing is a financial instrument, combining elements of bank loan and long-term rental with purchase option. The head of a small business himself chooses supplier and the being acquired property, pays advance payment and receives this property on a finance lease.

During the leasing period, lease payments are paid and on expiration of the leasing agreement, the property comes into the possession of the client.

Leasing property for small businesses and sole proprietor may consist cars, equipment, special equipment and real estate (except for land plots).

One of the features of small business is low share of equity in the cost of all capital and a high share of borrowed funds.

Therefore, the maximum use of leasing in the activities of small businesses can significantly solve the investment problem, which is very important, since the small business sector is characterized by relatively low profitability, high intensity, difficulty in introducing new technology, and limited own resources.

The advantages of using leasing for small and medium-sized businesses include:

minimum rise in the prices of the leased object;

the ability to modernization of manufacture with minimal investment;

the possible to obtain financing in large volumes and for long periods;

no need to add additional collateral;

recognized as an expense of lease payments;

flexible lease payment schedule.