Registration of legal entities in electronic format will be free

The draft federal law on amendments to paragraph 3 of article 333.35 of the Tax Code of the Russian Federation, that describes the significant legal actions under which the government fees are not charged, was adopted by the State Duma of the Russian Federation and agreed with the Federation Council of the Russian Federation.
In case the amendments will come into force, since 2019 the payment of government fee will be not required in following cases: submitting documents in electronic format to registration authorities for registration of legal entities (individual entrepreneurs) and amending to corporate establishment documents; liquidation of legal entities or termination of individual entrepreneurs activity.
At the present time, the government fees for above registration actions are from 160 to 4 thousand rubles.
The payment of government fee is still required while submitting documents in paper format.
According to the authors of the bill, the amendments will help to increase the number of documents in electronic format, which in turn will reduce the costs of citizens and authorized state bodies for their acceptance and paperwork.

According to the Federal State Statistics Service, from 2016 to the first half of 2018 a growth rate of entities of all legal forms across the country is negative (Picture 1).

The ratio is calculated as the difference between the establishment and official liquidation ratios.

This fact testifies that within the specified period the number of entities is decreasing.

Picture 1. Growth rate of entities (units)

In 2017 1,3 mln contracts at total volume of 975 bln RUB were executed with small businesses.

The volume of contracts with small businesses (SMEs) is amounted a little over 15% of total cost of contracts executed for the reporting period (6 320 bln RUB) that corresponds to legislative regulation obliging governmental customer to place procurements with SMEs.

The number of contracts with small businesses increased by 12% and their cost — by 27% compared to 2016. Average price of contract executed with small and medium enterprises (SMEs) in 2017 amounted to 741 th RUB and increased by 28% compared to 2016.

The increase in rates of budget allocation to small businesses through contract system remains this year: 241 thousand contracts at total amount of 147 bln RUB are executed in the 1st quarter of 2018; that is more than in the similar period of the past year by 30% of the amount and 40% of the number.

Almost half of budget funds allocated for procurements with small business is accumulated in 10 regions.

The majority of procurements placed with small businesses is located in Moscow. The capital leads among all regions in terms of small business financing through contract system — 222 bln RUB or 19% of total value of procurements in 2017. Saint-Petersburg follows next with a noticeable lag and 95 bln RUB (8%). Moscow region with 73 bln RUB (6%) closes the top three. Totally 556 billion or 48% of the total procurement value was accounted for Top-10 regions (see Picture 1).

Picture 1. Total value of procurements placed with SMEs, by regions of RF, 2017, in %

A third of all procurements placed with SMEs is connected with construction activity.

Construction is most-coveted service for governmental or municipal customers — 30% of procurements are related to this activity. The share of repair of vehicles is 12%, and 10% of total procurements value falls for other activities (see Picture 2).

Picture 2. Most common types of activity by total value of procurements placed with SMEs, 2017, in %

The maximum price of the current contract, executed with a small enterprise, exceeded 10 bln rubles.

Among the small businesses, there are organizations which executed contracts on more than 1 bln RUB.

The small enterprise LLC Spetstrans providing services for processing of solid domestic waste in the North-West administrative district of Moscow executed the contract at 12,4 bln RUB (see Table 1). The microenterprise Tehnostroy LLC undertakes to accomplish construction of a highway bypassed Pskov until December 16, 2019. The contract price is 6,8 bln RUB.

The maximum price of the current contract, executed with an individual entrepreneur, does not exceed 100 mln RUB.

Individual entrepreneurs (hereinafter IE) actively participate in the procurement system. Although the maximum volume of contracts in force is significantly inferior to contracts concluded with SMEs. However the contract system has become an essential component in maintaining the financial well-being of small businesses and a source of «long» money. The maximum value of contract with IE is 99 mln RUB (see Table 2).

Since the 1st of July, 2018 amendments to the law came into force following the Government Decree as of April 12, 2018 N 439.

Having freed up small purchases worth up to 1 mln RUB from the need for security, the law now obliges participants in large procurements to place contract security in special accounts with accredited banks.

Following the changes in the legislation, it is necessary to expect a shift in the activity of SMEs towards small purchases, an increase in the number of competing participants, and, in view of the facilitated procedure for participation in small purchases, the need for companies to be checked for solvency and reliability.