2020-09-24
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a) аccess; agency; although; association; authorities; concession; emergence; essential; initial; initiative; laboratories; legislation; major; otherwise; ownership; patent; recreational; regime; requirement; therefore; triangular; venture;
b)accelerated depreciation; administrative barriers; administrative-territorial entities; agreement procedures; application acceptance; automobile tires; consumption of goods and services; created or acquired; highly qualified foreign staff; high-tech components; legal possession; special tax treatments; specific criteria; status; tax exemption; unified social tax; volume of scheduled investments;
c) be applied to; be engaged in; be entitled to; be exempt from; be granted to; be guaranteed by; be in demand; be intended for; be satisfied; be subject to; be worth; conduct; prevent; take into account; qualify; take benefit of.
Special tax treatments
Special tax treatments include the following: the simplified system of the taxation of small businesses; the system of taxation in free economic zones; the system of taxation in closed administrative-territorial entities; and the system of taxation during the fulfilment of contracts of concessions and production-sharing agreements.
There are several special tax regimes in the Russian Federation: a simplified tax system, a uniform tax on imputed income, a patent system of taxation and a unified agricultural tax.
The present simplified tax system was introduced by the Federal Law No. 104-FZ of 24 July 2002, and is a special system that can only be used by small businesses and individual entrepreneurs. The system allows legal entities and individual entrepreneurs to replace the obligation to pay a number of significant taxes (corporate profit tax, VAT, assets tax, unified social tax and tax on income from the entrepreneurial activities) with a single unified tax.
The unified tax under the simplified tax system is chosen by the taxpayer as either 6 per cent of turnover or 15 per cent of the difference between revenues and certain allowable expenses. Yet tax rates are varied for different tax regimes. If a taxpayer is an individual entrepreneur, he or she is exempted from paying a personal income tax, VAT, and a tax on the property of physical persons. Social dues are paid by both companies and individuals.
The simplified taxation system is intended for small business and therefore there are certain restrictions that prevent larger companies from using the system. The system cannot be used by:
· companies and entrepreneurs earning more than 50 million roubles (about $525,000 at the time of writing) of income during a calendar year;
· companies having branch offices and/or more than 25 per cent corporate ownership;
· companies and entrepreneurs engaged in certain activities (banking, insurance, gambling, and some other businesses);
· companies and entrepreneurs employing more than 100 employees;
· companies having amortized assets worth more than 100 million rubles (about $3,500,000);
· other companies and entrepreneurs meeting some specific criteria.
It should be noticed that Russian accounting requirements are very demanding and time consuming. They often require a large number of forms to be completed and filed even if the company is not conducting any business. Often these forms must be filed in person by a company employee and this can mean waiting in line outside the tax office for hours. For this reason, simplified accounting and reduced tax filing requirements are often bigger bonus to small businesses than reduced taxation!
Although the limits placed upon turnover and the limits placed upon corporate ownership effectively limit the application of small business tax preferences to the very smallest of small businesses, the benefits of the system are significant enough that any business that could be structured to use these benefits should seriously consider doing so.
It is important to note that the Russian Government is seriously considering expanding the definition of companies and entrepreneurs that will qualify to use the simplified taxation system. It is anticipated that a new definition would vastly raise the turnover limits and remove the corporate ownership limitation.
Therefore, when planning a start-up in Russia it will be important to see if the current simplified taxation regime could be applied to the venture. If it could be applied based on turnover but not based on corporate ownership, it may be appropriate to consider whether the very real advantages offered by the legislation are worth the individual owners holding a Russian company directly.
Exercise 2.
In the text, find the answers to the following questions.
1. What do special tax treatments involve?
2. What is a purpose of the present simplified taxation system?
3. How can the unified tax be calculated?
4. Do small businesses have the same opportunities as large companies?
5. Who cannot use the simplified taxation system?
6. Which is better for small businesses: reduced taxation or simplified accounting? Why?
7. What can be foreseen in case of expanding the definition of companies and entrepreneurs who could use the simplified taxation system?
8. Is it an advantage to hold a Russian start-up directly? Why? Why not?
