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Reduction of social insurance tariffs for SMEs

Reduction of social insurance tariffs for SMEs

LEGAL DIGEST, NEWS \ 07.04.2020

In order to minimize the financial consequences resulting from the outbreak of the coronavirus epidemic, the Government of the Russian Federation has supplemented and approved the list of state support measures for small and medium-sized businesses (SMEs). One of these measures is that starting from 1 April and until 31 December 2020 SMEs will be able to pay insurance contributions at reduced rates.

These rates have been established with respect to monthly payments to workers which exceed the federal minimum monthly wage (amounts to RUB 12,130 in 2020). This means that:

  • If the amount of payments is less than or equal to the minimum monthly wage, the insurance contributions will be paid under the general rules and according to the basic tariffs.
  • If the amount of payments is greater than the minimum monthly wage, the final amount of insurance contributions will comprise two parts: one part will be calculated based on the minimum monthly wage under the general rules, and the other part will be calculated at reduced rates on the amount of the excess. In addition, you do not have to apply the accrual method to salaries.

It is worth mentioning that if a salary exceeds the threshold base for assessing insurance contributions, then, regardless of the minimum monthly wage figure, insurance contributions should be calculated by applying the following tariffs: mandatory pension insurance – 10%; mandatory medical insurance – 5%; and mandatory social insurance – 0%.

We remind you that threshold insurance contributions as follows have been established in 2020:

  • for mandatory pension insurance – RUB 1,290,000;
  • for mandatory social insurance – RUB 912,000.

For more details regarding the above changes, please refer to the table below:

The reduced rate applies to payments that will be made for April and subsequent months. Regarding March, insurance premiums are calculated according to the general rules. This means that there is no retrospective recalculation for such payments.

Those SMEs that are included in the Register of small and medium-sized businesses may use the reduced rates of insurance premiums. To determine whether such an entity is in the register you can visit the official website of the Federal Tax Service. If there is no information in the register, the SME entity may send an application to the specified supervisory authority in order to verify the information in this register.

Let us remind you that small, medium-sized and micro-enterprises that meet the following criteria are considered to be SME entities:

Please note that for IT companies that are not SME entities, the use of reduced insurance premium rates at the rate of 14% is maintained. For more information about using the reduced rate for IT companies, refer to the table below.

This benefit may be applied if the following conditions are met simultaneously:

  • The IT company has a document on state accreditation
  • The share of income from the sale of IT products from the total share of all income received is at least 90%;
  • The average number of employees of the company is at least 7 people.

Document: Federal Law No. 102-FZ dated 1 April 2020, article 4 of Federal Law No. 209-FZ dated 24 July 2007