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Two-year “tax holidays” will help engage up to 2 million Russians into small business– The Ministry of Economic Development

22nd of August 2013

Director of the Ministry’s Department of Small and Medium Business and Competition Natalia LARIONOVA commented on proposals addressed to the government

According to the Russian Ministry of Economic Development, the introduction of two-year “tax holidays” for newly registered individual entrepreneurs can stimulate two million Russians to start their own business – said the Director of the Department of Small and Medium Business and Competition Natalia LARIONOVA in her comments the “Prime” agency.

The representative of the Ministry of Economic Development said that the Ministry has already submitted ​​a proposal to introduce “tax holidays” to the government. “Such a benefit is provided only once and only for those who start their own business [...]. The main objective is to encourage the involvement of citizens into entrepreneurship and legalize “shadow employment”, - said Natalia LARIONOVA.

Given the fact that the maximum number of business closures happens during first 2 years of operation: “We believe that this measure will also increase the “survival” coefficient of new business units. According to our estimates, this solution can stimulate up to 2 million Russian citizens to establish their own businesses”.

Ministry of Economic Development proposes to maintain unchanged the right of entrepreneur to choose one of the existing tax regimes: general system of taxation, simplified system of taxation, patent and a unified tax on imputed income, and depending on the regime selected, to exempt from the tax payment. Such an approach, according to the ministry, will not result in an additional administrative burden on businesses by the end of the grace period.

As for the position of other ministries, the proposed introduction of “tax holidays” is not supported by the Ministry of Finance. In June 2013, Finance Minister Anton SILUANOV reported that the extension of benefits for insurance premiums for small businesses operating in the social and productive sectors is not provided. On August 5, no comments were given by Ministry of Finance concerning “tax holidays”.

In their turn, the Ministry of Labor and the Ministry of Finance did not support proposal of “Business Russia” to extend the payment of insurance premiums to the pension, health and social insurance system. This would deprive the individual employers of the right to insurance coverage, which, according to the Russian law, is provided due to the payment of contributions.