The complexities of tax policy were discussed at the “Supports of Russia” forum

Fiscal problems of small and medium-sized businesses became the topic of the tax session of the Supports of Russia forum held yesterday. They talked about the absence of a smooth transition period from the point of view of the tax burden for companies that have grown in size, as well as about the division of business not prohibited by law, which sometimes results in additional taxes and can lead to bankruptcy. The Federal Tax Service, however, insists that additional charges during fragmentation are not massive, and in order to avoid problems they urge reorganizing businesses to first consult with the tax authorities.

Small businesses still do not have tax incentives to increase in size, the head of this association, Alexander Kalinin, said yesterday at the Supports of Russia forum. Let us remind you that “grown” companies are deprived of tax preferences due to the SME sector. The problem has been raised for several years, but the mechanism for the “seamless” tax transition of small companies into the small category of medium-sized businesses is still being discussed by the Ministry of Economy and the Ministry of Finance (see “Kommersant” dated January 16, 2024).

With no incentive to get bigger, small businesses often become even smaller. A significant part of the tax session of the forum yesterday was devoted to the fragmentation of companies, which remains a popular tax optimization scheme (see “Kommersant” dated February 7, 2024). This topic is also not new, but it has become particularly acute after the emergence of a number of criminal cases against bloggers.

Deputy Head of the Federal Tax Service Dmitry Satin noted that the very approach of providing benefits to certain categories of business gives rise to such a tool as fragmentation, which, according to him, is often used by companies, “maybe not always according to knowledge.”

The head of the State Duma Committee on SMEs, Alexander Demin, recalled that the legislation does not contain the concept of “business fragmentation” and that “this is not a crime itself, but a method of committing an offense, the purpose of which is to obtain an unjustified tax benefit.” In his opinion, the freedom to conduct business should be preserved, and authorized bodies and courts need to determine whether in a particular case there is an unjustified tax benefit or not.

Alexander Kalinin noted that if previously fragmentation was determined by tax authorities only by the company’s turnover, now it is also determined by the number. He proposed that “fragmented” businesses be subject to additional VAT, income tax and penalties not for three years (as is happening now and sometimes leads companies to bankruptcy), but for one. “90% would pay and never do it again,” suggested the head of Opora.

Dmitry Satin explained that the tax service has already tried to formulate criteria for fragmentation, but the difficulty of this is that there are many “cases” and they are all individual. At the same time, he noted, in practice there are very few additional charges for crushing. The most effective way to avoid problems, in his opinion, is to consult with experts and tax authorities before deciding to structure the business in one way or another.

Another problem raised at the forum was the indirect increase in the fiscal burden. Chairman of the board of trustees of Opora Rossii Sergei Borisov drew attention to the significant increase in the cadastral value of real estate, from which taxes are calculated in some cases. They also talked about the unpredictable growth of non-tax payments, of which there are now about 160, and only “a few of them are growing due to inflation.” In this regard, business insists on updating the register of non-tax payments and limiting their growth – previously the Ministry of Finance called additional systematization of such payments excessive.

Evgenia Kryuchkova