The government intends to establish official relations with nearly twenty millions of Russians who work but do not pay taxes. This so-called self-employed. The possibility to provide them with tax breaks and special status. Will the reform bring these people out of the shadows?
The President of Russia Vladimir Putin at the meeting of the Council for strategic development said about the possibility of the liberation of self-employed citizens from taxes for a period of two years. According to him, the self-employed citizens remain in the “shadow” to “not to deal with the bureaucracy, extortion”. This account of self-employed citizens in Russia in the millions.
“For most self-employed this amount is too large. Few professionals, such as freelance programmers, unable to earn enough”
“We have discussed (…) about the need for a certain period, say two years, to exempt the self-employed generally from paying taxes and mandatory contributions so that they could enter into normal rhythm legal work and that it was not burdensome for them,” he said. Putin also demanded to eliminate the possibility of accusations of self-employed in illegal business.
Earlier, Prime Minister Dmitry Medvedev also has suggested to release from taxes for two or three years, self-employed people. After that, according to him, they could independently choose whether they work at “simplified tax system” or through a patent.
In Russia there is still no clear definition of who is self-employed. Accordingly, there is no accurate statistics on how many citizens fall under this definition.
Formally, to date, the definition “self-employed” include individual entrepreneurs, lawyers and notaries, as well as owners of farms. In practice, however, using this term for citizens involved in illegal business and not using the services of employees in conducting their activities, says the Chairman of inter-regional arbitration court of Moscow and the Moscow region, lawyer Oleg Sukhov. In other words, today, all self-employed are illegal entrepreneurs who do not pay taxes.
A problem with this concept should allow the law on patents for self-employed, where the definition of the category, will be assigned to the differences from IE. Self-employed instead of the sole proprietorship and charges tax at a preferential mode to connect to the patent system. The patent fee includes Pension Fund contributions, medical insurance and other benefits.
“Self-employed will not be able to combine the patent with a different tax regime, use of hired labour, and the range of their activities will be limited to a certain set of occupations,” says Sukhov. The number of occupations in the various projects varies from three to 40. In particular, to self-employed activities include, as a rule, services of the tutor, housekeeping and assistance with household management, repair of residential and non-residential premises. Under the concept of the self-employed also fall providing minor household services (repair of shoes, clothing, shop), child care, translation, services for the carriage of passengers and goods, baking and milk production for sale, fish farming and fishing, retail trade at fairs and agricultural markets.
According to the labor Ministry, self-employed people in Russia there are about 22.5 million people. This assessment appeared in the materials of the working group on this issue. And the main task of the government today is out of the shadow of these people. Called more modest assessment 3-16 million self-employed. However, they can turn out to be far from reality in light of the fact that in 2013, government officials said the lack of information about the sources of income of 38 million citizens, said Sukhov.
This is a huge loss for the formal economy, given that taxes can not pay at least a fourth part of the economically active population of Russia is 20 million of the approximately 86 million economically active population, says Georgy Vashchenko of IR “freedom Finance”.
Roughly speaking, if the 20 million self-employed out of the shadows and each of them paid was at least 6 thousand rubles per year, the state would receive 120 billion rubles. It’s a good boost to the revenue side of the budget, given that the excise duties (alcohol, tobacco, fuel, auto) the government earns 700-800 billion rubles.
The government is trying to find a way to get out of the shadow of those who are now working without official registration of the individual entrepreneur or the employment contract. However, experts believe that to get people to come out of the shadows will not help any of the new patent system, no tax holidays.
Should be finally adopted the law on patents for self-employed. The patent system of the self-employed provides for an advance payment of the licensing, and its size can vary from 6 to 20 thousand depending on the region. “For most self-employed this amount is too large. Few professionals, such as freelance programmers, unable to earn enough, to painless to part with so much money,” – said Sukhov.
There is another unfair from the point of view of the state of time. “The difference in monetary terms between the minimum old-age pension that freelancers in any case to pay the state, and normal (in the case of payments of contributions to the Pension Fund) does not look attractive incentive to come out of the shadows” – said Georgy Vashchenko.
Finally, part of the earnings of self-employed borders on violation of the law, and they just do not want to “Shine”. For example, many literary workers engaged in the writing of educational works and scientific texts in order.
“On the position of freelancers certainly have an impact and some of the features of psychology. A self-employed blame the government that the policy of the state in the economy deprived them of the possibility “okay” to earn a living. This setting will surely lead to failure of many freelancers patent”, – said Sukhov.
Thus, the attempt of the authorities to convince the illegal small-scale entrepreneurs to legalize their business through a system of patents self-employed and tax holidays is likely to be doomed to failure, experts say.
Vashchenko considers that some tax breaks to bring it to light be no more than 5-10% of the total mass of the self-employed, approximately 1-2 million people. Today, however, the state collects less. “To state the amount collected from the official freelancers today, is insignificant due to their small official numbers. Previously published data that there were about 200 thousand, but it is possible that even smaller,” says Vashchenko.