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Maximum Tax Increase is Planned for Small Business in Russia
October 13, 2019 16:10


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The Ministry of Economic Development has prepared the maximum tax increase for small business.

The Ministry of Economic Development proposed to raise by 4.9% three taxes that small businesses pay in 2020. For the most common of them - the single tax on imputed income - this may be the most significant growth since 2015.

A document of the Ministry of Economic Development with new deflator coefficients (K1) for taxes has been published on the portal of legal acts. For the single tax on imputed income (UTII), the ministry proposed a coefficient of 2.009, for a patent replacing taxes - 1.592, for a trade fee - 1.382.

All these taxes are paid by a small business. If the proposal of the Ministry of Economic Development is accepted, these taxes will increase by 4.9% in 2020, RBC estimates. Last year, they increased only by 2.5%, and for UTII it will be the most significant growth since 2015 (then it grew bu 7.5%). UTII growth in 2020 will be higher than expected inflation this year.

The Ministry of Economic Development sets coefficients for annual tax indexation for small businesses. They should take into account changes in consumer prices for goods and services in the previous year, the Tax Code says. There is no exact rule in it. The government has the right not to take inflation into account, and in 2016-2017 it froze UTII indexation, RBC notes. The final tax rate is also affected by municipal adjustment factors (K2). K2 is established by local authorities; they affect only some categories of taxpayers.

In absolute terms, the growth of the tax burden on small businesses is not really large, but entrepreneurs often suffer this case, as Natalya Nikitchenko, the expert of SKB Kontur, says. For example: if the tax base is 1 million rubles, then instead of 150,000 rubles, the UTII business will have to pay 157,363 rubles. UTII is the most popular tax regime for small businesses, and its increase will bring problems to some of the entrepreneurs.

The increase in workload will especially affect business in the field of trade, Vyacheslav Korochkin, the vice president of the Opora Russia business association, says. He noted that over two years the number of small trading enterprises has decreased by 200,000, and the increase in taxes will hit them even harder.

If the project is approved by the Ministry of Economic Development, this will be the last increase for UTII. From 2021 it will be canceled.

Support for small business is one of the main provisions of the May decree of Vladimir Putin, signed in 2018. In particular, the president instructed the government to increase the number of people employed in this area to 25 million by 2024.

Read More Articles about Russian Business




Author: Anna Dorozhkina

Tags: Russian economy Russian business Russian laws   

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