Self-employed citizens switching to the experimental tax regime will be exempt from paying personal income tax and value added tax (VAT), except for the situation when goods are imported into Russia, according to the set of laws on the professional income (the law on self-employed), adopted today in the third (final) reading by the Russian State Duma.
From January 1, 2019 to December 31, 2028, a tax on professional income will be introduced in Moscow, the Moscow and Kaluga regions, as well as in the Republic of Tatarstan. According to the document, the tax rate for self-employed is set at 4% of the income for individuals and 6% of income for private entrepreneur and legal entities. The income threshold in this scheme should not exceed 2.4 million rubles per year (200 thousand rubles per month), Interfax reported.
Self-employed persons are individuals who receive income from their activities, do not have an employer and do not hire employees. Professional income includes income from the use of property. Transition to the new regime is possible for self-employed, if their activity does not require mandatory registration as private entrepreneurs.
There are exceptions in the law: people who sell excisable goods and goods subject to mandatory labeling, as well as those who "resale goods and property rights" and are engaged in the extraction or sale of minerals cannot switch to the new tax regime. It also applies to arbitration managers, mediators, appraisers, notaries engaged in private practice, as well as lawyers.
Associate Professor of Financial Management, Management Accounting and International Standards of Financial Activity of the Higher School of Finance and Management of RANEPA, Dmitry Tikhonov, speaking to Vestnik Kavkaza, noted in the first place that the new law will help to gather more information on the labor market situation. "It is estimated that about 20 million people are considered self-employed in Russia, and it is very important to know what happens to them. If we give them this system, then we will start to understand what kind of cash flow exist there, and our statistics will be more accurate," he said.
"If we talk about specific tax figures for self-employed, then it is appropriate to talk about the Laffer curve, according to which tax collection drops sharply after reaching a certain threshold rate. The tax rate of 4-6% is quite affordable. Under the simplified scheme, a private entrepreneur pays 6% and a bank commission of 1-1.5% - a total of 7-7.5%, so 4-6% will, of course, be more profitable," Dmitry Tikhonov stressed.
The vice-rector of the Academy of Labour and Social Relations Alexander Safonov, pointed to low expectations from this law. "People who provide services for cash, as a rule, use such activity as a part-time job. Therefore, most self-employed will most likely ignore this law. As for those for whom it is the main source of income, we may expect that those registered as private entrepreneurs will use the new system, since the law on self-employed makes it possible not to pay 32 thousand rubles per year as contributions to the Pension Fund. Even with a tax rate of 6%, they win this money compared to the private entrepreneur status," he said.
"The largest category of self-employed persons is related to agriculture, where we are unlikely to see salary deprivation. Legal entities who work with VAT are not always interested in working with self-employed, because it is difficult to write off the VAT in this case, as well as getting services from private entrepreneurs. Therefore, we don’t see any serious motivation for legalization, especially in the conditions of the ongoing crisis and falling incomes of the population. We will see an increase in statistics only due to the registration of self-employed," Alexander Safonov concluded.