23 October 2003 08:54
MORE SMALL BUSINESSES JOIN SIMPLIFIED TAX SYSTEM
As many as 370,700 proprietors switched to the system, 310% more,
Anatoly Melnichenko, the tax ministry official in charge of small
MOSCOW. Oct 23 (Interfax) - The number of small businesses that have taken advantage of the simplified tax system in
Russia soared 220% to 213,900 in the first half of 2003 compared with the same period last year.
business taxation, told reporters.
Melnichenko said he did not think large businesses were using the
new system as a way of minimizing tax payments. We tried to find out
Unified tax payments under the system totaled 10.8 billion rubles, of which the federal budget receives 3.2 billion
rubles, respectively 107% and 67% more.
The growth followed the enactment on January 1, 2003 of a new chapter (26.2) of the Tax Code, which simplifies
taxation and reduces the tax burden. Now, a taxpayer pays a single, lump-sum tax of 6% on turnover or 15% on profits,
plus mandatory pension deductions. The upper turnover threshold for a small business to be eligible for the system is 15
million rubles.
whether large businesses were fragmenting into smaller units but found no evidence of this so far, the official said,
adding that regional tax inspectorates would be keeping a close eye on the situation as well as the tax ministry in
Moscow.
Even so, just 220,000 small businesses have switched to the new system. The State Statistics Committee estimates
Russia has 880,000 small businesses, and that about 600,000 of them are actually functioning. They generate a fifth of
GDP or about 3 trillion rubles a year.
More amendments to existing laws enter into effect January 1, 2004. These are designed to enable enterprises and
proprietors who pay an imputed lump-sum tax on certain lines of business to switch to the new rules. This could bring
about a 50%-increase in the number of tax payers switching to the new system in 2004, including 30%-50% for proprietors
and 30%-40% (to 800,000) small businesses.
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