Ekaterina Lutenko
Internal Auditor
It is no secret that small and medium-sized business plays an enormous role in the economic life of any country. It is the representatives of small businesses that make a considerable contribution to maintaining economic growth and ensuring the employment of the population.
In order for an organization to receive the status of a small or medium-sized enterprise (SME), it should meet a number of conditions in terms of the structure of its issued capital and the number of employees and total revenue, while it should also be included in the Unified register of SMEs. Having this status will allow companies to take advantage of a number of benefits and preferences and will significantly simplify the process of conducting their activities.
Since the amendments to Federal Law No. 209-FZ “On the development of small and medium-sized businesses” entered into force, Russian companies with a share of foreign capital exceeding 49% have been able to acquire the status of SMEs and to take advantage of the corresponding benefits. Let us look in more detail at what is necessary to do this.
SMEs include small, medium-sized and micro-enterprises. To correspond to each of these categories, a company should meet the following criteria as of January 1, 2020:
In cases when (*) the share of a foreign company in a Russian organization exceeds 49%, but the parent company meets the above requirements in terms of revenue and the average number of employees, such Russian company will also be able to acquire the status of a SME under a special procedure.
Therefore, a Russian organization will not be able to acquire SME status this year in the following circumstances:
How to check that the SME criteria are met in relation to foreign companies?
A check of compliance is performed by national auditing companies, with which it is necessary to conclude a corresponding contract. Next, the Russian company submits to the auditors a translation into Russian of the foreign legal entity’s reporting that has been submitted for 2019 to the tax authority of the country where the entity is established. Suppliers compare data on the amount of income and the average number of employees of the foreign company with the specified criteria for SMEs.
Based on the results of the audit, the auditors draw up an opinion and include the company in the list of economic entities whose participants are foreign companies that have been checked for compliance with the specified requirements. The list is sent to the Federal Tax Service in the form of an electronic document signed with an enhanced qualified signature. The term for submitting the document is from July 1 to July 5 of the current year.
Based on the information received, the tax authorities include the Russian company in the register of SMEs in August of the current year. This means that if an organization would like to be included in the register within the specified time limits, it should undergo an audit before July 1, 2020, since the list is submitted by the auditing company to the Federal Tax Service only once a year. If for any reason the company does not find itself in the Unified Register, it can contact representatives of the Federal Tax Service with an application to check the information in the Register.
If a company would like to maintain its SME status, it will have to go through the above procedure every year without failure.
What benefits may companies with the status of SMEs receive?
If a company is recognized as a SME, it may expect the following preferences from the state:
The main advantage of this relaxation of the rules is the submission of simplified accounting reports (the balance sheet report and Profit and Loss Account). It is not necessary to submit separate Appendices to the specified reports.
If a SME meets all the necessary criteria, it may submit an application to switch to one of the following tax regimes:
– a simplified taxation system where the item taxed is “Income” (the rate is 6%; regions may set their own rates up to 1%);
– simplified taxation system where the item taxed is “Income minus expenses” (the rate is 15%; regions may set their own rates up to 5%);
– unified tax on imputed income (the rate is 15%);
– unified agricultural tax (the rate is 6%; regions may set their own rates up to 0%);
State governments have the right to introduce tax benefits for companies that work in specific spheres – the industrial, scientific, social, and IT spheres, etc. Such relaxation of the rules is expressed in the form of a reduced tax rate, the possibility to obtain a tax deduction or an exemption from paying a specific type of tax.
The most accurate information may be found on the official website of the Federal Tax Service for the region in question.
Until December 31, 2020, a moratorium on scheduled inspections will apply to SMEs. Only those companies that use a risk-based approach in their activities, as well as legal entities that have previously had their licenses revoked or suspended, will not be able to avoid inspections.
For those SMEs from which state-owned enterprises purchase products, and order works or services, a gradual increase in quotas has been established. The annual volume of purchases in 2020 is 20% of the total annual value of contracts concluded by customers based on the results of purchases. And the minimum share of purchases from SMEs through direct bidding is 18%.
For SMEs, it is possible to transfer, for possession or use, property of the central or local government on a non-repayable basis or on preferential terms.
The list of cases in which SMEs may receive government subsidies is reflected in Decree No. 316 of the Government of the Russian Federation dated April 15, 2014. When receiving a subsidy, it is extremely important to focus on regional rules. Representatives of SMEs may also count on grants, loan guarantees, and the covering of a part of their expenses.
Do not forget that all these benefits may only be obtained if the company is listed in the Register of SMEs. More information about this may be found on the official website of the Federal Tax Service or by contacting Acsour for advice.
What assistance may SMEs receive in connection with COVID-19?
In connection with the case of the COVID-19 coronavirus infection, the state has developed additional measures of support for SMEs, including those from the most affected industries, in compliance with all the criteria established by legislation:
– a reduction of the rates of insurance premiums as regards payments to employees exceeding the federal minimum living wage from 30% to 15%;
– a deferral of the deadlines for the submission of tax reporting for profit tax, VAT, insurance premiums, property tax, and tax under the Simplified Taxation System (STS);
– a deferral of the payment of taxes, advance payments of them and insurance premiums;
– a deferral of lease payments until October 1, 2020;
– a deferral of the implementing of debt recovery with respect to taxes, insurance premiums and fines and on making decisions to suspend transactions on an account.
! Please note that the measures of state support proposed by the Government of the Russian Federation owing to the coronavirus infection epidemic apply to those SMEs that were included in the Unified Register of SMEs as at March 1, 2020.
Acsour’s specialists constantly monitor changes in the legal framework, which allows our clients not to worry about this issue. We undertake not only the updating of your documents, as well as legal, accounting and tax support of your activities, but also select the most effective solutions taking into account the specific nature of the relevant industry.
Internal Auditor
