What are the small and medium enterprises waiting from the State?

The operating efficiency of the small and medium enterprises (SMEs) is one of the main indicators of the State’s competitiveness. According to the experts, in France the share of SMEs by GDP cover is 62%, in Italy - 60%, Japan – 55%, Germany – 54%, Great Britain - 53%. The share of SMEs by GDP cover in Russia is about 20%. SMEs play important role in the market conditions, but can they unlock the potential and become the reason of rise and development of the Russian economy?

Legislation establishes the criteria of enterprises’ affiliation to the SMEs. The Federal Law № 209-FZ of July 24, 2007 «On the development of small and medium enterprises in the Russian Federation» (as amended on 29.12.2015) defines the average number of workers for small and medium enterprises. Meanwhile the order of the Government of the Russian Federation # 702 of 13 July 2015 set the maximum sales revenue for each category. The number of enterprises by categories and separation criteria are represented in Table 1.

Table 1. The number of SMEs in Russia by categories
The SMEs categoriesThe number of active legal entities, units
Micro-enterprises (up to 15 workers, maximum sales revenue up to 120 mln RUB) 1 428 536
Small enterprises (up to 100 workers and 800 mln RUB) 412 060
Medium enterprises (101-250 workers and 2000 mln RUB) 34 166

Taking into account the criteria above, according to the Information and analytical system Globas-i, currently there are more than 1,87 mln of SMEs in Russia; that is 37,5% of total active legal entities (4,99 mln legal entities). The comparison of SMEs number and the result of their activity demonstrate the minor contribution of SMEs to the country’s economy.  For incorporation and development of SMEs, as well as investors, it is necessary to create the conditions.

What are the small and medium enterprises waiting from the State today? Some interesting suggestions were made on the forum «Small business – the national idea», the Presidium of business association «Support of Russia», VII Conference of the Chamber of Commerce and Industry of the Russian Federation; the events were held in the first quarter of 2016 and dedicated to small and medium enterprises. Among noteworthy proposals are:

  • the use of VAT credit in the simplified procedure for enterprises, exporting non-oil and gas products;
  • leave the number of reporting forms at current level, simplification of HR record management in micro-enterprises;
  • depositing the amount of security by the winner of the contract in dependence on proposed price in the competition (now on price of the contract);
  • deliverance of respectable companies from banking collateral;
  • increase of maximum revenue amount from 60 mln to 120 mln  RUB for using of simplified taxation system;
  • extension of small business participation in procurement of state-owned companies up to 15% of annual procurement volume by direct contracts;
  • mitigation of the requirements for execution of contracts, the transition to life cycle contracts in procurement of state-owned companies (the cycle includes procurement, future maintenance, and disposal);
  • establishment of the uniform rules for taxation and others.

By the end of the events, the Administration of the President of the Russian Federation released a list of orders, which satisfied the representatives of SMEs. It is expected, that in April the Government of the Russian Federation will consider the number of bills, which let to facilitate business activities. However not all requests of SMEs will be satisfied.  For example, the Ministry of Finance of the Russian Federation imposes the restrictions on use of some tax benefits.

In particular, the abolition of unified tax on imputed income is transferred on 1 January 2021. It is also suggested to decrease the amount of expenditure tax instead of tax rebate for online buying of cash register equipment, if SMEs were not required to use the cash registers earlier; there are also other restrictions. However, one thing is obvious – the facilitation of small and medium business activities will contribute its revival, the growth of economic entities, their income and, accordingly, income of the State. 

Microcredits for business will increase

We have addressed earlier to the topic of legislative changes in the area of financial market. In particular, this theme was discussed in the article about self-regulated organizations at the financial market. Significant changes are also of concern to microfinance organizations.

According to the Central Bank of the RF, in the National Register of microfinance organizations on March 18, 2016, 3718 active organizations are registered, and 3917 have already excluded from the Register. It is possible to value range of activity by looking at statistics. For example, according to expert estimation, in 2014 microcredits in the amount of about 3 bln RUB were provided, and in 2015 - more than 15 bln RUB. At that, experts predict further increase in microcredits in 2016, explaining such prediction both with decrease inreal income of the population and absence of adequate credit market, for obvious reasons connected with complication of the international situation.  

Activity of microfinance organizations in Russia is regulated by the Federal Law of 02.07.2010 № 151-FL «On microfinancing activity and microfinance organizations». To this document a lot of amendments, having a great impact on this activity, were made by the Federal Law of 29.12.2015 №407-FL «On amendments to legislative acts of the RF and invalidation of particular provisions of legislative acts of the RF».

According to the amendments taking into force since March 28, 2016, microfinance organizations will be divided into microfinance and microcredit companies. 

Microfinance companies must have capital more than 70 mln RUB. They have the right to attract funds of physical entities not less than 1,5 mln RUB and also the right for bond issue. Consequently, the Central Bank`s supervision for microfinance companies will be enhanced.

Credit facilities of microfinance organizations on crediting of legal entities and individual entrepreneurs are increased to 3 mln RUB against 1 mln RUB earlier. 

Microcredit companies with capital less than 70 mln RUB are forbidden to attract funds of residents, and they can provide loans for physical entities only from own funds.

Above this, now by amendments are strictly regulated: status acquisition of microfinance organization and its liquidation, including at the initiative of the Central Bank; restrictions of activities and accounting conditions.  

By the above mentioned Federal Law №407-FL amendments to the Federal Law of 07.08.2001 №115-FL «Money laundering Regulations and terrorism financing» and to the Federal Law of 26.10.2002 г. №127-FL «On Insolvency (Bankruptcy)» were made.

Subscribing for the Information and Analytical system Globas-i, you may look at the Register of microfinance organizations in section «Selections and lists», as well as you may learn about activity of each company from the list.