Amendments to legislation in 2019
VAT increase, abolition of movable property tax, new procedure of financial statements filing and 7 more changes in companies activity, 5 tax news and 3 draft laws.
1. Free of charge web registration of individual entrepreneur or LLC.
Since January 1, 2019, state registration of legal entities and individual entrepreneurs, liquidation of a legal entity out of bankruptcy proceedings, termination of an individual entrepreneur and all amendments to the statutory documents will be free of duties when filing to the FTS online.
Ground: Federal Law as on 29.07.2018 N 234-FL.
2. Procedure of reporting will become easier.
Beginning from the financial accounts for 2019, all companies will be obliged to file accounts only in electronic form. Small business entities have to file electronic reports since 2020. Along with these, there will be no obligations to file financial accounts to the state statistics authorities. According to the amendments, the State information resource of accounting (financial) statements will be organized in Russia. The Federal Tax Service is authorized to maintain the resource.
Those are not obliged to file accounts to this resource: public sector organizations; the Central bank of Russia; religious organizations; credit and non-credit institutions filing accounting statements to the Central Bank of Russia; organizations that accounting statements are concerned as state secret; ther organizations – according to the decision of the Government of the RF.
Ground: Federal Law as on 28.11.2018 N 444-FL.
3. The State will insure bank deposits and accounts of small business.
Since January 1, 2019, the deposit insurance system will be implemented to micro and small business entities. If the Central Bank revokes or cancels the bank’s license, the company will have zero-loss recovery of funds up to 1,4 million RUB. Previously, this service was available only for natural persons.
To minimize the risks, it is recommended to open accounts and deposits in publicly owned banks largest by assets (Top-10), as they have almost zero probability of license revocation.
Ground: Federal law as on 03.08.2018 N 322-FL.
4. Mass adoption of online cash registers.
Since July 1, 2019, online cash registers will be mandatory for the entire Russian business when settling with counterparties and returning loans. Entrepreneurs using patent system of taxation and single tax on imputed income, as well as those hiring no employees, may conduct the activity without online cash registers until July 1.
Ground: Federal Law as on 03.07.2016 N 290-FL, Letter of the Ministry of Finance of Russia as on 18.07.2018 N 03-01-15/50059.
5. Employers who have not conducted a special assessment of working conditions will be required to pay a fine.
From January 1, 2019, all companies and individual entrepreneurs are obliged to conduct a special assessment of working conditions of employees (excluding out- and remote workers). Previously, in some cases the special assessment was not mandatory. If violation of the legislation occurs, there will be a fine from 60 to 80 thousand RUB for the company, and from 5 to 10 thousand RUB for director or individual entrepreneur (Part 2 of Art. 5.27.1 of the Code on Administrative Offenses).
Ground: Federal Law as on 28.12.2013 N 426-FL.
6. The procedure of obtaining the documents by the FTS officers during inspections will become easier.
Tax officers have rights to require reporting from auditing companies after inspection of their clients since January 1, 2019. Auditing documents prior to this date are not disclosed. This requirement was introduced by the Article 93.2 of the Tax Code of Russia and could be implemented if the company did not provide the requested documents or there was a request from competent authorities of foreign states.
Ground: Art. 93.2 of the Tax Code (introduced by the Federal Law as on 29.07.2018 N 231-FL).
7. Regulatory authorities will inspect small business
From January 1, 2019, supervising vacations for scheduled inspections of small business entities will be cancelled. The moratorium was in effect from January 1, 2016.
Ground: Art. 26.1 of the Federal Law as on 26.12.2008 N 294-FL.
8. Employees will have compensatory time off for periodic health examination.
Triennially, the employers are obliged to grant compensatory time off for periodic health examination upon the request of an employee. The employer cannot reject the request, but days of absence have to be agreed.
Ground: Federal Law as on 03.10.2018 N 353-FL.
1. Standard VAT rate will increase to 20%.
Since January 1, 2019, VAT rate will be increased from 18% to 20%. Preferential rates of 0 and 10% will be kept.
Ground: Federal Law as on 03.08.2018 N 303-FL.
2. Companies will not pay movable property tax.
From January 1, 2019, movable property tax will be cancelled for organizations. They will be obliged to pay only immovable property tax. To reduce the tax base, these assets have to be excluded from the reporting.
Movable property is determined in Art. 130 of the Civil Code of the Russian Federation: movable property is any items, including money and securities, not classified as real estate.
Ground: Federal Law as on 03.08.2018 N 302-FL.
3. Russian companies and individual entrepreneurs will not pay “Google tax”.
Since January 1, 2019, foreign providers of digimatic services in Russia will be obliged to pay VAT. Russian service buyers will be granted a remission of this obligation.
Ground: Federal Law as on 27.11.2017 N 335-FL.
4. Level of income for the simplified tax system (STS) is freezed, and agricultural producers paying unified agricultural tax (UAT) will have to pay VAT.
Annual income limit for the simplified tax system is freezed until 2020. Usually the limit increases due to annual increase of the deflator ratio for which income is indexed. As in 2018, according to the end of the financial (tax) period the income in 2019 should not exceed 150 million RUB to be applied for STS.
Ground: Order of the Ministry of Economic Development as on 30.10.2018 N 595.
From January 1, 2019, entrepreneurs using UAT will be obliged to pay VAT.
Ground: Federal Law as on 27.11.2017 N 335-FL.
5. Reduced insurance payments will not be prolonged for small and medium sized business.
From January 1, 2019, reduced insurance payments will be cancelled for companies using simplified tax system, single tax on imputed income and patent system of taxation. According to the general tariff, the insurance payment for them will be 30% instead of 20%. Only charity and non-profit organizations, applying STS, will keep tariff of 20%.
Ground: Federal Law as on 03.08.2018 N 303-ФЗ, Letter of the Ministry of Finance of Russia as on 01.08.2018 N 03-15-06/54260.
6. While calculating salaries and benefits the new minimum wage should be considered.
Since January 1, 2019, the federal minimum wage will be defined according to the minimum subsistence level of working population throughout Russia for the 2nd quarter of the previous year. The minimum wage for 2019 is 11 280 RUB, which has to be taken into account when calculating the minimum wage, sickness and children's benefits.
Ground: Federal Law as on 28.12.2017 N 421-FL; Order of the Ministry of Labor of Russia as on 24.08.2018 N 550н.
1. Registration and reporting.
Until January 1, 2020, it is planned to adopt the federal law, which will enable small businesses to apply the legal address issued at the opening of a bank account or provided in the post office. Thus, the state aims to release the company from the formal obligation to have a physical office. On the other hand, if the law is adopted, new type of shell companies may emerge.
In January 2020, an initiative is expected to be implemented that will legitimize the possibility of non- providing of tax return to STS applying organizations and individual entrepreneurs with the income as the object of taxation. Tax officers will receive all necessary reports through online cash registers on their own.
2. Preferential rent of property.
By December 1, 2021, it is planned to adopt a law obliging to transfer unused state property to lease to small and medium-sized businesses on preferential terms. The list of such property will be compiled and updated annually based on the results of inventories.
3. Participation in procurement.
It is planned that in 2020 the amendments to the legislation on procurement will be adopted in order to bring the share of small business as suppliers of state and municipal customers up to 18% of all their purchases for the year. Now the required bar is slightly lower - 15%. Huge money is being circulated in the Federal Contracting System: for the incomplete 2018, notices under the 44-FL at the amount of 7,6 trillion RUB and at the amount of 20 trillion RUB under the 223-FL were placed. Participation in procurement is a significant additional source of funding.
By May 2020, it is expected to make amendments to the Administrative Code of the Russian Federation, which will introduce fines for delaying payment by the customer of goods and services to supplier. Currently, there is no such obligation and customers, taking advantage of gaps in the legislation, often postpone payments under the guise of various circumstances.
There will be many significant changes in 2019. We will continue to inform about entering into force of new laws, and analyze of consequences of their enforcement. Whether cancelation of benefit will cause a decline in operating efficiency? Will the intention to replenish the budget be satisfied due to tax increase? Let’s hope, there will be more useful improvements for business, such as cancellation of company registration fees, simplified reporting procedure, insurance of deposits of legal entities that will have positive effect on the economic growth.