Small business is going to be hit

31.03.2014

Last Saturday “Rossiyskaya gazeta” published information according to which small business and individual entrepreneurs, operating under the simplified system of taxation, are going to get a financial blow. The law, amending the Tax Code, in accordance with which those, who use simplified taxation system or do not keep accounting records, should pay property tax which tax base is the cadastral value of real estate (offices, restaurants, hairdressers, shops) is submitted to the President of the Russian Federation to sign.

According to Alexander Brechalov’s, the head of “OPORA Russia”, opinion such zctions will lead to additional exemptions from the "pockets" of small business in the amount of about 200 billion rubles, while a procedure of the cadastral evaluation of real estate is not transparent and therefore a business is not ready to challenge its exaggerated results in the court.

Experts predict that this innovation will cause “falling in the shadow” of business or increase of the final prices of goods and services for the population. Until now those who use the simplified taxation system were exempt from this tax.

Based on: http://www.rg.ru/2014/03/29/udar-site.html

Expert’s opinion

“To make a cow to give more milk and to eat less, you should milk it more and feed it less”.

This joke came from Nikolay Fomenko’s mouth, when he worked on “Russkoje radijo”.

Apparently, this ridiculous approach formed the basis for the decision to increase tax pressure on small business.

If this bill is adopted, there are only two recommendations for small business:

1) To increase profitability of business. The income should be enough for paying of a growing number of taxes and mandatory payments

2) To assess the value of real estate with the help of the BTI now

Taking into account the fact that there is no clear methodology for assessing the cadastral value of the objects, evaluators will be guided by “market prices”, which they are aware of from advertisement in free newspapers or on the same websites. Or they will be guided by information given in BTI registration certificate with the evaluation of the object.

To do it, firstly, it is necessary to conduct evaluation in BTI and then (sic et simpliciter) to self-declare this value in Federal Tax service for calculation of property tax.

Such variants as “slip into the shadow” or “close business and live on social welfare” we do not take into consideration

Yaroslav Lomakin ( Managing partner of Honest & Bright” company)