Ministry of Finance of Russian Federation proposes to strengthen companies’ liability for “grey” salaries.

08.04.2014

Russian Ministry of Finance proposed to strengthen companies’ liability for “grey” salaries: if a company will not submit to Revenue Service its report on personal income tax or the sum submitted in such report will be suspiciously low without any justification from a company, then there will be serious sanctions for a business.

Fee of 5000 rubles for each month of delay of the report submission to Revenue Service is suggested as a sanction. Company is threatened with actual blocking of its financial activity for the delay of 10 days.

Sanctions will be applicable even if the tax was partially paid. If the company does not withhold personal income tax from the employee or only partly transfers it to Revenue Service, the penalty will be 20% of the amount of tax. The amount of the fee may be doubled – up to the 40% of the amount of the tax to be withheld – in case of repeated violations.

Source: http://regulation.gov.ru/project/13942.html?point=view_project&stage=1&stage_id=5186

Expert’s opinion

The fiscal burden of the wage fund is more than 30%. And this number does not include personal income tax, that occurs with earning of the money in order to pay salaries.

The tendency for searching of ways to lighten this burden is not surprising. Especially for the small and medium size businesses, which are highly dependent on fluctuations in the market and are often balancing on the edge of self-sufficiency.

In case of the enforcement of this norm it is possible for “every fifth employee” to be out of the job since their employer will be bankrupt and out of the business.

Just think about it: 20% of the employed population of the country will be faced with the possibility of losing their job.

Strengthening of the fiscal pressure on business will result in reduction of business activity. And as a consequence – to the intensification of the pressure on budget from social wages and to the once again loop of tightening of administrative tax and fees.

And this will make the taxable basis grow even with the fiscal pressure in the background. Plus, it goes without saying, that the busiest people, businessmen, who create work places for people do not get any money from the budget. Therefore, the social pressure is decreasing. And as for civil servants – they could be paid more since there became less and less of them.

Yaroslaw Lomakin ( Managing Partner, Honest&Bright)