Tax for self-employed citizens of the Russian Federation 2021 – types of activities and regions

What is a self-employed person in the understanding of the tax code?

What is “self-employment” in simple words? This is when a person independently looks for a source of income, provides a service or manufactures a product himself, and disposes of the income received at his own discretion. The key requirements are:

• lack of hired workers;
• use of income for personal, family, household or other purposes.

Who does this definition apply to? From a taxation point of view, this population group includes citizens who are officially registered - about 1.3 million people. But in fact, this concerns from 14 to 20 million citizens of the Russian Federation who do not receive taxable income or social benefits, that is:

1. Not officially employed.
2. They are not registered with the Employment Service.
3. Does not apply to pensioners, disabled people, students, etc.
4. Not registered as individual entrepreneurs.

It is important to note that this category may also include employed people receiving additional income. For example, a teacher can earn extra money as a tutor, a taxi driver can provide individual driving lessons, and this activity is subject to separate registration.

Also, individual entrepreneurs without employees can switch to self-employment if their income level allows. There are a lot of options for activities that people can engage in independently, so the State Duma adopted a bill that includes only prohibited types of individual employment:

• trade in products that are subject to mandatory licensing and excisable goods;
• mining and trading of minerals;
• intermediary services (taking into account those who rent out commercial real estate under a sublease agreement);
• resale of goods, sale of property rights (except for payments upon rental);
• delivery of products with payment for third parties;
• activities that involve the application of other tax regimes.

Possible types of activities for self-employed citizens:

• cleaning of apartments and non-residential premises;
• nurses and nannies;
• individual trainers and tutors;
• photo and video operators, artists;
• hairdressers;
• those who repair clothes, shoes, and household items to order;
• The IT industry has become a large generator of self-employed workers: copywriters, graphic designers, website developers, meme generators, content managers (those who fill an online store) and other work options for freelancers;
• in regions there may be various specific types of seasonal work, and this can also include beekeepers and harvesters;
• theoretically, this list could include the provision of various advisory services (for example, on a specialized Internet resource), which can be provided by accountants, economists, engineers, builders and other specialists.

Branch of the MFC “My Documents” - Yaroslavl

Where to get it

New tax for self-employed citizens from 2021: latest news

The document introducing the tax on self-employed citizens in 2021 was signed; the President did this back in 2021. The change will begin to be tested in four regions of Russia from January 1, 2021, and a special regime will be introduced for 10 years. It is difficult to say when the professional activity tax will come into force for other regions; the experiment has only just begun.

Tax amount from January 1, 2021

From 2021, an updated mechanism for taxing citizens engaged in the individual provision of services or production of products will come into effect. They no longer have to pay personal income tax, contributions to the Pension Fund and other fees. The only tax they will be charged is professional tax (NPT):

• 4% of the amount of sales of services or products to individuals;
• 6% of revenue from legal entities.

At the moment, this is the minimum tax on personal income.

In which regions will it be introduced?

Cities that will be affected by the law on experimental taxation: Moscow, Kazan, Naberezhnye Chelny, Kaluga, Nizhnekamsk and other settlements of Tatarstan, Moscow and Kaluga regions. Changes in legislation do not apply to non-residents.

Income limit

If you want to take advantage of preferential taxation, your income should not be more than:

• 200 thousand ₽ per month;
• 2,400 thousand rubles per year.

If monthly revenue exceeds 300 thousand rubles, you need to switch to a different tax regime, for example, register as an individual entrepreneur. The following types of income are not included in the tax base for professional independent activities:

1. Payment for services under an employment contract.
2. Proceeds from the sale of own movable and immovable property.
3. Salary of a deputy and other officials, including municipal ones.
4. Proceeds from the sale of securities, shares, shares in capital, etc.
5. Service for the provision of services under civil contracts.
6. Income of those engaged in private practice: notaries, lawyers, appraisers, etc.

Will the innovation affect pensioners?

The innovation will affect only those pensioners who live in the experiment territory and are engaged in individual activities. The conditions for calculating the new tax for them are no different from others. A petition was put forward against the levy for older people (to establish a 0% personal income tax rate), since they often have to earn extra money not because of a good life, but so far this has not been supported by law. What will the new law mean for people of retirement age?

1. If they register as self-employed, they will be forced to pay a tax on additional income of 4% or 6%.
2. You will definitely need to install the “My Tax” application on your computer or smartphone and make all sales by generating a receipt in this program.
3. Indexation of pensions will most likely be equal to indexation for working pensioners.

Resistance without result

All Duma parties, except for United Russia, opposed the adoption of a special tax regime for the self-employed. “The economy is stagnating, people’s real incomes have been declining for four years in a row, the state is increasingly shifting problems onto the shoulders of citizens, taxes and indirect payments are increasing, the retirement age has been raised, and in this situation, the introduction of an additional tax will simply lead to another social crisis,” he said. Deputy from the Communist Party of the Russian Federation Mikhail Shchapov. Behind the talk about legalizing the self-employed is the usual desire to impose additional payments on this category of citizens, he added. The law solves exclusively a fiscal problem, said LDPR deputy Alexei Didenko. “Obviously, this payment is in the nature of a tax. That is why the LPDR faction will not support [him],” he emphasized. Instead, the LDPR proposes introducing a progressive tax scale and raising the personal income tax rate for citizens with high incomes. The A Just Russia faction noted that the bill does not have a clear definition of the term “self-employed.” “We don’t see any motivation why people should decide to switch to this regime,” said deputy Oleg Shein. At the same time, when implementing the bill, there is a risk of a shift to the tax regime for self-employed citizens working as individual entrepreneurs, which could lead to a loss of income from the budgets of local governments, he noted.

What taxes are they exempt from?

The state actively pushes citizens to register with the tax office and promises them various benefits. For example: registering as self-employed will help you avoid the following fees:

1. There is no need to deduct personal income tax.
2. Contributions to the Pension Fund are not mandatory, they can be made on a voluntary basis in order to accumulate pension points, otherwise the government guarantees only a social pension.
3. Contributions for health insurance (MHIF) - in the amount of 1.5% are already included in the professional tax rate.
4. Revenue is not subject to value added tax; only input VAT will be required.

An additional incentive is also the possibility of a tax deduction of up to 10 thousand rubles:

• 1% of income when paying personal income tax at a rate of 4%;
• 2% – with the deduction of personal income tax at a rate of 6%.

Inspectorate of the Federal Tax Service of Russia for the Dzerzhinsky district of Yaroslavl

Where to go

What taxes do self-employed people still pay?

How the tax service controlled the self-employed before the new law was issued and how this continues to happen in the rest of Russia:

1. A person who is engaged in individual professional activities is registered with the Federal Tax Service, this is a voluntary matter, but if the authorized bodies calculate your activities independently, they may regard this as a violation of the rules of individual entrepreneurship;
2. In 2017-2018, those who registered and met certain requirements did not pay any federal tax fees will not be obligated to do so in 2021, and what will happen next is still unknown.

Requirements:

• voluntary registration;
• performing a specific type of activity, at the moment the benefit applies only to housekeepers, tutors, nannies, and caregivers;
• work without hired personnel.

If the requirements are not met simultaneously, then citizens are required to pay personal income tax and insurance premiums.

After the introduction of a new law on professional activities, there is a possibility that preferential taxation for other regions will also be gradually abolished. And those who fell into the hook of zero rates and registered their activities will be required to officially pay personal income tax in a few years.

Geographically separate structural unit of the MFC - Yaroslavl

Where is it issued?

What is the My Tax app and how does it work?

The Self-Employed Citizens Tax Law of 2021 obliges citizens to connect to the My Tax application and carry out all calculations through it. User's Manual:

1. Download the application from Google Play or the App Store, if it is not supported on your phone, then install it on your tablet or computer.
2. Please register:

• A simplified scheme: scan your passport on your phone and take a selfie. The system recognizes the signature, the seal on the issue of the document and compares photographs. What to do if registration is refused? Try redoing the selfie – without glasses or headgear.
• Creating a personal account: register an account through a personal visit to the Federal Tax Service, logging into the system will be done using the TIN. Pulls personal data from other applications, such as banking.

1. Enter data about each transaction into the system (this can be done during the operation or entered later before the end of the reporting period), a receipt will be generated automatically:

• click the “New sale” button;
• enter the transaction amount (it doesn’t matter whether the money is credited to the card or received in cash)4
• enter the name of the service;
• choose payment from an individual or legal entity (in the latter case, you must indicate the TIN and name).

1. The system will generate a receipt and display what it looks like, it can be printed or sent by e-mail, SMS, it is also possible to scan the quar code.
2. The tax is calculated independently by the Federal Tax Service, and the user receives a notification about the amount to be paid.
3. In the interface, the system immediately displays: the amount of sales for the month and for the year, the amount of accrued tax and the number of transactions performed, advance payments for tax.

Geographically separate structural unit of the MFC - Yaroslavl

Establishment

How to pay this fee

NAP payment algorithm:

1. Enter sales data into the My Tax app.
2. The entire registered income is taken into account in calculating the tax liability; this happens automatically: a tax of 4 percent for self-employed citizens on sales of a private entrepreneur and 6% of the amount of income from a legal entity. Explanations from authorized bodies regarding the return of goods or cancellation of a transaction - it is imperative to cancel or cancel the check in the system.
3. The tax deduction is also subject to automatic deduction; it is important to provide information about this right in a timely manner.
4. By the 10th day of the next month you should receive a message about how much you need to pay. Failure to pay the specified amount by the 25th is a violation of tax rules.
5. You can pay the tax directly at the Federal Tax Service office or you need to set up an automatic payment by debiting money from a bank card.

Branch of the MFC “My Documents” - Yaroslavl

Establishment

How will self-employed people be identified?

Taxes on the unemployed and self-employed are mandatory for those who register. And those who did not do this voluntarily may bear additional responsibility. The mechanism for tracking violators could be as follows:

1. Monitor posts on job boards and job sites.
2. Monitoring of Internet exchanges and platforms for freelancers.
3. Carrying out inspections through secret shoppers.
4. The most effective way is to analyze receipts on a bank card, but so far the Federal Tax Service does not have the right to do this. If banks give access to information, then many “outlaw” workers will need a new scheme for cashing out their earnings.

Inspectorate of the Federal Tax Service of Russia for the Leninsky district of Yaroslavl

Organization

Fines for violations

The bill provides for the following amounts of penalties when identifying illegal transactions involving the provision of services or the sale of goods for self-employed citizens:

• 20% of the transaction amount for the first violation;
• 100% of the cost of the service in case of repeated violation within six months.

The Ministry of Finance has received proposals not to introduce these sanctions for now, but to consider the identified violations in the legislative field of illegal conduct of individual entrepreneurship.

Branch of the MFC “My Documents” - Yaroslavl

Where to contact

Is it possible to evade paying tax?

Today, paying self-employed taxes is most likely a voluntary action. If the population does not self-register, it will be almost impossible to track the activities of up to 20 million people (about 10% are registered). The government is doing everything possible to ensure that the self-employed become registered and stimulates this process with various benefits. It is impossible to legally evade paying the new tax, since the document does not stipulate any exceptions, but you can avoid paying it if:

• do not register
• or not enter transactions into the My Tax application.

But these violations cannot be systematic, since upon first detection the size of the sanction will be 4%, and upon repeated detection - 100%. It is logical that if the tax office detects an illegal operation at least once, then this person will be under constant monitoring. Next time he will have to give away all his earnings. Then there are two ways: curtail activities or conduct them in the legislative field.

What is better: registering an individual entrepreneur or acquiring a patent?

Form an individual entrepreneur or obtain a patent? It all depends on the scale of the person’s activities. If the income is more than 1,000,000 rubles, and more than one employee is employed, you will have to register as an individual entrepreneur. In addition, on the basis of a patent, you can work only in several types of activities. The individual entrepreneur gets the opportunity to lead in a dozen directions at once.

It is beneficial to obtain a patent if a person is engaged in his activity alone. However, you need to keep in mind that the cost of the title document is fixed. That is, even if an employee receives 1,000 rubles a month from his activities, he will have to pay for an annual patent in the amount of 20,000 rubles. In addition, the SG will not have to maintain paperwork. There will be no need to prepare reports or declarations.

Working with legal entities

One of the reasons for legalizing the activities of self-employed people is the ability to provide services to legal entities, since they need documents for reporting.

Display in reporting

In order to display payments for the services of citizens on the NDP in the expenses of the enterprise, it is necessary to receive a check from them from the My Tax system and attach it to the accounting documentation.

What to consider for organizations working with self-employed people on special regime

When working with self-employed citizens in organizations and individual entrepreneurs, there are no tax agent responsibilities.

Department of the MFC “My Documents” - Yaroslavl

Establishment

Let's summarize: pros and cons. What to expect next

Having analyzed the discussion of legislative changes, we can conclude that the reaction of the population is ambiguous. Those who are actively engaged in professional activities perceive changes positively, since it is more profitable than individual entrepreneurs, they highlight the following advantages:

1. Legalization of activities opens up new opportunities for sales to legal entities.
2. There is no need to install an online cash register.
3. There is no need to submit a declaration or other reports to regulatory authorities.
4. There are no checks.
5. Lowest rates on income.

Negative comments are left mainly by those who are not yet ready to come out of the shadows; many do not want to give the state even 4% of their hard-earned money; they highlight the following disadvantages:

• insufficient motivation for registration;
• not everyone will be able to use a mobile application, and sometimes it is simply inappropriate, for example, when selling products from your own garden on the market.

Inspectorate of the Federal Tax Service of Russia for the Zavolzhsky district of Yaroslavl

Where to go

Interdistrict Inspectorate of the Federal Tax Service of Russia No. 5 for the Yaroslavl region

Where is it issued?

Who can become?

Any person who operates on the territory of the Russian Federation can become a self-employed citizen. Foreign citizens from Belarus, Kyrgyzstan, Kazakhstan and Armenia can also become self-employed if they have clients in Russia. They are allowed to change the tax regime under the same conditions as citizens of the Russian Federation.

Starting from October 2021, you can become self-employed in any region of the country.

From what age

Any citizen over the age of 18 and between the ages of 14 and 18 can become self-employed if he fulfills one of the conditions and is not an individual entrepreneur.

Who can become self-employed at 14-18 years old:

• who entered into marriage and became legally capable as a result;
• parents or guardians have given written consent to this;
• the court or guardianship authorities recognized him as fully capable in accordance with the established procedure.

Registering your business through Sberbank

Sberbank was one of the first to join this registration method. Self-employed people will be able to register their activities without leaving their home using Sberbank Online. Clients have the opportunity to enable automatic payment of tax deductions to avoid penalties for non-payment.

Application form for registration on the Sberbank website

On the page of the Sberbank website you are asked to fill out information about yourself (full name, email and mobile phone number) so that clients have the opportunity to be the first to know about the launch of the offer.

Federal Tax Service of Russia for the Yaroslavl region

Where is it issued?