In 2021, the grace period for start-up entrepreneurs registered since January 2015 ends. Tax changes this year have been significantly expanded. Let's take a closer look at all the nuances of this exciting topic.
Back in 2021, analysts from Alfa-Bank JSC presented the “Pulse of Small Business” analysis, the task of which was to study the problems and expectations of individual entrepreneurs, as well as assess the real economic situation. Experts noted that the most favorable factors for the successful development of individual entrepreneurs and small businesses and an increase in consumer demand are the following factors:
- reduction of tax burden
- reduction in interest rates on bank loans
2021 has become the most difficult year economically for individual entrepreneurs. Earlier, officials noted the need to reduce the fiscal burden. One of the reliefs was tax holidays.
Tax holidays for individual entrepreneurs
The tax holiday program is a measure to support individual entrepreneurs, which has been in effect at the federal level since the beginning of 2015. Initially, it was planned to close after 2021, but due to the crisis it was extended until December 31, 2023. Perhaps there will be another extension in the future.
Subjects of the Russian Federation introduce tax holidays on their territory through special laws. They also determine additional conditions for receiving benefits. You cannot receive such a benefit if a local law on tax holidays has not been adopted in the region.
The conditions for working at a zero rate are enshrined in Articles 346.20, 346.50, 346.51 of the Tax Code of the Russian Federation.
Under this program, the entrepreneur receives a 0% tax rate. The benefit will operate within two calendar years and no more than 2 tax periods in a row. The length of the tax period depends on the taxation system:
- for the simplified tax system, this is a calendar year, that is, the holidays will be valid for two calendar years;
- for PSN, this is the period for which the patent was purchased, that is, the vacation will last from two months to two years.
Who and when can take advantage of the tax holiday privilege?
Federal Law No. 477-FZ dated December 29, 2014 amended part two of the Tax Code of the Russian Federation. Innovations in the use of grace periods or fiscal holidays apply to first-time registered payers as individual entrepreneurs using:
- simplified taxation system
- patent tax system
Tax holidays or fiscal relief are the times when individual entrepreneurs can apply the 0% rate established by 477-FZ.
In order to apply a 0% rate, 4 conditions must be met:
- An individual must be registered as an entrepreneur for the first time in the period from 01/01/2015.
- An individual entrepreneur must apply the simplified tax system or PSN. If an individual entrepreneur uses a different taxation system, he can switch to a simplified tax system or a patent in order to take advantage of the privileges.
- The zero rate can only be applied in certain areas of activity:
- production
- social activities
- scientific field
- business in the field of hotel management: rental housing in accordance with paragraph 4 of Article 346.20 of the Tax Code of the Russian Federation. In the current 2021, guest houses and small hotels in Crimea can apply benefits
Regional legislative acts may supplement or change the types of business activities, so before applying tax holidays it is necessary to clarify this point.
- The share of income received from preferential activities must exceed 70% of total annual revenue .
The preference period is valid for 2 tax periods, the countdown of which begins from the moment of registration of an individual as an individual entrepreneur.
Authorities at the local level have the right to introduce additional restrictions on the use of tax benefits depending on the following factors:
- average number of employees
- annual income limit
Individual entrepreneurs should be aware that fiscal holidays apply only to taxes paid under a simplified or patent taxation system. This does not give the right to use benefits to calculate other types of taxes. In addition, during the application of the zero rate, individual entrepreneurs retain the obligation to pay insurance contributions to the Pension Fund for themselves and their employees.
The tax holiday is valid from 01/01/2015 to 12/31/2020 . This year, entrepreneurs can still take advantage of fiscal benefits, save money and improve their financial situation.
Reporting and contributions of entrepreneurs during the holidays
Tax holidays on the simplified tax system mean that an entrepreneur may not pay taxes and advance payments for two years from the year of registration. The minimum tax is also not paid. The declaration must be submitted, but it indicates a zero rate and, accordingly, the amount to be paid. However, please note that if you exceed the lower limits for the simplified tax system of 150 million rubles in income and 100 employees, you will be required to pay tax at an increased rate - 8% for the simplified tax system “income” and 20% for the simplified tax system “income minus expenses”.
Entrepreneurs with a patent will be able to avoid paying for the first two patents. In the application for a patent, you will need to indicate a 0% rate in the field “Individual entrepreneur applies the tax rate of __ percent established” and the data of the law that establishes this rate.
During the holidays, an entrepreneur is exempt from the single tax under the simplified tax system or payments under the special tax system, but he is required to pay insurance premiums and submit reports.
Income reports are required to be submitted. You must also make contributions for employees to the Social Insurance Fund, Pension Fund and Compulsory Medical Insurance Fund, pay personal income tax on their salaries and report on employees.
In both taxation systems, an entrepreneur is required to pay insurance premiums for himself to the Pension Fund and the Compulsory Medical Insurance Fund, and for his employees - to the Social Insurance Fund, the Pension Fund and the Compulsory Medical Insurance Fund. Personal income tax must be withheld from employee salaries and transferred to the budget. Reporting on employees is also not canceled.
What should those who did not know about the holidays and have already paid tax do?
There are no direct comments from legislators on such situations. If you are sure that you are subject to the holiday, but have already paid the simplified tax, you can submit an updated declaration with a zero rate and return the tax. Attach explanations and documents confirming that you were entitled to the benefit. Be prepared that tax officials will carefully check the information, because we are talking about tax reduction.
A patent is more difficult because you have already applied for and purchased the patent. We recommend that you contact your tax office with this question.
Conditions for entrepreneurs applying for holidays
Individual entrepreneurs have the right to apply tax holidays from the date of registration of their business if the following conditions are met:
- The benefit can be applied to those individual entrepreneurs whose registration has not passed two calendar years. For example, if an individual entrepreneur was registered on March 15, 2021 and has been working on the simplified tax system since that date, then he will be able to apply vacations until December 31, 2021 inclusive. Starting to apply tax holidays after registration shortens their period. To make the most of your holidays, it is better to register at the beginning of the year.
- An individual entrepreneur must work on the simplified taxation system (simplified taxation system) or PSN (patent taxation system).
- There should be no interruptions in work during the two tax periods. If you stop using the special regime for some time, you will lose your vacation. This is especially important for entrepreneurs with a patent, since they need to ensure its continuous validity - buy two patents that are strictly consecutive.
- The zero rate applies to the sphere of consumer services to the population, the provision of places for temporary residence of the population, as well as social, scientific and production activities. Regional authorities independently determine the specific types of activities that they want to exempt.
- For individual entrepreneurs using the simplified tax system, the share of income from activities for which vacations are used should not be less than 70%. The share must be determined at the end of the year in total income.
- Legislative bodies of constituent entities may introduce additional restrictions (on the average number of employees, amount of income, types of activities, etc.) - study the laws of your region in this regard.
An entrepreneur can receive a tax holiday only if he registered later than this benefit was introduced in the region. For example, if you registered on December 15, 2021, and your entity allowed vacations from January 1, 2021, then you will not be able to use them. At the same time, individual entrepreneurs who previously closed but decided to resume their activities can count on tax holidays - this is allowed if the entrepreneur resumed activities for the first time or re-registered after the introduction of holidays in the region.
Share of preferential type of activity in the income structure
If an entrepreneur is simultaneously engaged in several types of activities, then he may have difficulty calculating the share of revenue from a preferential type in the total amount of income.
Example. IP Sidorov uses the simplified tax system and during the calendar year received the following amounts of revenue from each type of activity:
- first direction 200,000 rubles
- second direction 700,000 rubles
- third direction 150,000 rubles
The total for the year was 1,050,000 rubles. The second area of activity is recognized as preferential in accordance with regional legislation; it is necessary to check its share in the total volume. It is necessary to divide the revenue of a particular type of activity by the total amount of income and multiply by 100%.
(700 000 / 1 050 000) * 100%
In the example under consideration, the share was 66.67%, therefore, the entrepreneur cannot qualify for a tax holiday.
How to apply for benefits for an individual entrepreneur who is on tax holidays in 2021
To switch to a tax holiday, an individual entrepreneur using the simplified tax system can simply stop paying tax, and at the end of the year submit a declaration with a 0% rate. No special application is required to switch.
If you want to take advantage of the tax holiday on a patent, then in the application for its receipt, indicate the 0% rate and the article of the regional law that allowed the holiday for your type of activity.
To clarify your rights and benefits, take a number of actions:
- Check with the Federal Tax Service at your place of registration about the situation in your region.
- When registering an individual entrepreneur, submit an application to switch to the simplified tax system or apply for a Patent.
- During tax holidays, submit reports at a 0% rate.
- If you purchased a patent, report its value as zero on your reports.
Important! In any region where a “tax holiday” operates, there are certain conditions that can be regulated by the federal authorities. For example, in the Altai Territory the zero rate applies only to entrepreneurs working on the SSN.
Re-registration as an individual entrepreneur and tax holidays
If an individual entrepreneur was previously engaged in entrepreneurial activities, but was deregistered with the tax office, but after some time he decided to register again with the Federal Tax Service, then he can also take advantage of the right of tax holidays .
The date of deregistration is important; it must be earlier than the date of the regional law giving the right to use the benefit. Accordingly, from the point of view of legislation, repeated registration after the date of adoption of the law is equal to the initial one.
What will tax holidays lead to?
Officials assume that the application of a zero rate will lead to a reduction in unemployment and social tension. The bill also supports the development of agriculture and improves the quality of services provided.
Author of the article: Alexandra Averyanova
Tax holidays do not exempt an entrepreneur from tax accounting. Save time and money: keep records in the cloud service Kontur.Accounting. Enter primary documents, and the service will generate KUDiR, tax returns, employee reports, easily calculate salaries, exchange documents with counterparties, check their reliability and work in the service for free for the first 14 days.
Insurance premiums during tax holidays
If an entrepreneur is provided with tax holidays, it is worth remembering that they do not apply to insurance premiums: they will have to be calculated and paid in the same manner.
The Ministry of Finance of the Russian Federation explains that funds received from entrepreneurs in the form of contributions are used to pay pensions and other measures of social support for the population, and such payments cannot be postponed or deferred. This is precisely why the condition is connected that during tax holidays the obligation to transfer contributions is not removed from the entrepreneur.
Installment payment of taxes and contributions
Also, the listed SMEs can receive installments to pay taxes, advance payments and insurance premiums, for which a deferment is provided. The installment plan starts from the month following the month in which the extended payment period begins. You must pay in equal installments in the amount of 1/12 of the specified amount monthly, but no later than the last date.
For example, the extended deadline for making an advance payment under the simplified tax system for the first quarter is January 25. You will have to pay 1/12 of the tax amount monthly, starting in January 2021.
How do they report?
You can avoid paying taxes using tax holidays, but you cannot not submit reports during this period.
If you are on the simplified tax system, then once a year you submit a tax return, where you indicate that your tax rate is exactly 0%.
If you are on a patent, then you do not submit any reports.
Important! Tax holidays do not exempt you from paying insurance premiums! You pay them on time and in the required amount.
Tax holidays: list of subjects of the Russian Federation
The decision to grant tax holidays, including their duration, is made by regional authorities. In some regions, individual entrepreneurs receive three full preferential years, in others - only one year. Additional restrictions may also be established on the application of a tax rate of 0%, in particular, in the form of a limitation on the average number of employees or the maximum amount of sales income received by an entrepreneur when carrying out a preferential type of activity.
This document presents the subjects in which tax holidays are in effect in 2021 (including the subjects in which the holidays were years earlier, but ended).
