Opora Rossii Recommends Huge Tax Discounts For Russian SME’s

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Opora Rossii, the Russian Trade Union representing SMEs in the country, are to make a proposal to the Russian State Duma this week with recommendations designed to help Russia’s SMEs recover and get back on track after the Covid-19 pandemic.

Several of Opora Rossii’s proposals relate to Russian tax policy and regulatory changes as follows:

  • Raising the thresholds for the application of the simplified taxation system (STS) – up to 300 million rubles (previously, the authorities increased this criterion from 150 to 200 million);
  • The establishment of a non-taxable minimum area or a reduction in the marginal tax rate calculated on the cadastral value (now it is 2%);
  • The creation of a transitional tax regime for certain industries (tourism, catering, security services, production of sports goods) with a reduction in the VAT rate to at least 10%;
  • An extension of the tax on professional income for the rental of apartments;
  • An increase in the volume of application of the investment tax deduction in the regions (in 2021, the budget allocated 27 billion rubles for this purpose).

Concerning easing the regulatory environment for businesses, Opora Rossii have suggested measures such as limiting the growth rate of tariffs and payments in all areas at the legislative level, increasing the criteria for including businesses in the SME category, drastically reducing the so-called cross-subsidization in the power industry (when the corporate price of electricity is higher than the retail price for the population), and the legal protection of company directors and shareholders from the collection of LLC debts.

The current method of distributing the costs of grid organizations shifts the main burden of paying for electricity to small businesses and government agencies, explained the head of Opora Rossii, Alexander Kalinin. As a result, they are forced to pay several times more than other consumers, which is unfair: the distribution of tariffs should be made more even, he said.

In addition, Opora Rossii advocated an increase in the minimum quota for public procurement from small businesses to 25% from the current 15%, liberalization of liability for violation of currency legislation, a decrease in the rate of preferential lending to SMEs, which today is 7%, for the development of agritourism (for this it is allow farmers to build hotels on privately owned agricultural land) and a number of other initiatives. The package of SME initiatives will be presented to the government next week.

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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