Business will be bound in place

The draft law that improves application of the patent taxation system has been filed with the State Duma. For example, it is planned that the patents’ application be limited to the territory of the municipal district, city district, federal city or region, which is mentioned in the document. This will help prevent tax evasion accomplished by way of using a single patent for operating in several administrative territorial units at once, with the use of several means of transportation, commercial objects etc.

Should the law be adopted, both those, who violated the rules, and those, who observed them, will have to pay more. Advocate Maxim Rovinskiy, Partner, Head of the Tax and Customs Law Practice of the Law Firm "YUST", says: “If the law is adopted, patents will only be valid in the territory of certain municipalities or administrative territorial units, and not in the entire territory of a unit of the Russian Federation. Certain transportation services as well as “at-the-door” retail commerce will be the exceptions.

Those individual entrepreneurs, who perform operations of the same type in several municipalities or administrative territorial units, will have to obtain additional patents on their operations once the law is adopted. This will undoubtedly lead to more expenses”.