To fight the fragmentation of businesses

Tradesmen, restaurant keepers and realtors may lose the possibility to use the simplified taxation procedure. The Ministry of Finance submitted to the Government a draft law, which permits the constituent territories of Russia to lower the threshold for the right to use the STP.

According to the document, the indicators required for the receipt of the STP and the patent by small companies and entrepreneurs may be lowered by 90%.

The draft law affects three groups of companies: those active in the sphere of retail and wholesale commerce; catering services; and those performing immovable property operations (including its lease). The regions will fix the decrease of the threshold themselves. Currently the STP is available for the companies and entrepreneurs, whose income dos not exceed 60 million roubles per year and who employ not more than 100 people. Should the law be adopted, the regions will be able to fix the right to use the STP for the companies with the yearly income below 6 million roubles and numbering not more than 10 people.

The initiative of the toughening was moved by the governors, who are dissatisfied with the fragmentation of businesses as a way to evade taxes. However, the impossibility to use the STP will affect the small businesses and hamper their income. There are other ways to eliminate the violations connected with the fragmentation.

Experts believe that the conduct rules in business fragmentation have already been established. Ekaterina Boldinova, Senior Associate of the Tax Practice of the Law Firm "YUST", explains that businessmen do not fragment their companies wishing only to decrease the taxes: “When the Board of the HCA of Russia issued its resolution on the Metallurgservice case, the rules of the game were more or less set: the business understood that the fragmentation, when one of the independent activity types is given to another legal entity (if such activity is not a part of a single technological process) and officers actually manage that another legal entity, is legal. The other cases of fragmentation, when a large company is split in several lesser ones only for the purpose of lower taxes, may be qualified as receipt of undue tax benefits and may result in additional taxes”.