On January 1, 2021, a new bill on self-employed citizens came into force.
Self-employed are people who offer services and goods of their own production to individuals and legal entities privately.
The bill invites people who run micro-businesses to record income and pay taxes to the state to obtain self-employed status and a number of benefits. The amount of monthly profit should not exceed 200 thousand rubles per month.
The tax percentage is:
- 4%, in cooperation with an individual;
- 6%, in cooperation with a legal entity.
The project covers 4 constituent entities of the Russian Federation: Moscow, Moscow region, Kaluga region, and the Republic of Tatarstan. The duration of the experiment is 10 years, until 2028.
A person can register at his own request in three ways:
- through the “My Tax” application on your smartphone. Indicates passport details, bank card number for debiting payment and personal photo;
- through your Personal Account on the official website of the tax service;
- through a credit institution that participates in this project together with the Federal Tax Service.
Every month, before the 12th day of the current month, the tax office notifies the person about the amount of the tax payment, which is paid before the 25th.
In connection with the emergence of a new type of businessman, questions arise: can self-employed people have a patent document and how the patent tax system differs from self-employment.
Who are self-employed citizens?
Normative acts do not provide an official definition of the term. A common understanding was formed through numerous discussions between business representatives and government officials. Even federal departments have not reached a consensus.
Thus, for the Federal Tax Service of the Russian Federation, self-employed citizens are a group of persons who independently provide themselves with work and systematically derive profit from professional activities. Their characteristic features are the absence of employees and entrepreneurial status. The business is built on personal labor contribution.
Paragraph 3.18 of Interstate Standard 12.0.004-2015 categorizes both ordinary citizens and single businessmen. The Russian Pension Fund adheres to a similar position.
Important! By July 15, 2021, the status of self-employed citizens must be legally defined. The requirement is contained in the order of the President of Russia No. Pr-436 dated March 16, 2018.
Currently, this category includes nurses, nannies, house helpers, cleaners, and tutors. The list is established by paragraph 70 of Article 217 of the Tax Code of the Russian Federation. Regions have the right to supplement this list. Since January, relevant regulations have been issued in a number of constituent entities of the Russian Federation. Thus, in Tuva, the list was supplemented with shepherds, photographers, hosts of festive events, etc. (No. 291-ZRT dated July 27, 2017).
According to estimates by the Ministry of Finance of the Russian Federation, 13–22 million people are involved in the shadow sector. The Ministry of Economic Development cites a different figure – 2.3 million. Such participants in the turnover combine the provision of services with work under an employment or civil law contract. Their revenue is minimal and their clientele is small. They are not registered as entrepreneurs, do not keep records and do not submit reports to the inspectorate.
Several years ago, parliamentarians attempted to solve the problem through tax holidays. By Order No. ММВ-7-14/ [email protected] dated March 31, 2017, the Federal Tax Service of the Russian Federation approved the procedure and recommended form of notification. The notice is required to be sent before the start of the activity. It does not give rise to obligations to pay personal income tax. Until the beginning of 2021, taxpayers are also exempt from insurance premiums. However, the service records information about the citizen in the departmental database. After the grace period expires, such a person is ordered to register as an individual entrepreneur or cease professional activities.
Important! The Federal Tax Service of the Russian Federation has repeatedly published clarifications about the inadmissibility of including employed migrants in the group.
The procedure can hardly be called proven. Formally, registration is free of charge, and there are “tax holidays” until 2021. In practice, notifications to self-employed citizens cause confusion even among inspectors. The lack of a clear legal status gives rise to a lot of problems. People are in no hurry to come out of the shadows and continue to work illegally. Since the amendments were made, just over 930 people have registered. Officials recognized the ineffectiveness of the mechanism and decided to develop a separate regime.
What types of activities can self-employed citizens engage in?
In 2021, there are intense debates regarding expanding the list of areas in which a new group of taxpayers can work. Article 217 of the Tax Code of the Russian Federation stipulates only three sectors:
- care for elderly patients over 80 years of age and children;
- tutoring;
- cleaning of premises.
The authors of the amendments insisted on the multiplicity of these segments and hoped to finalize the system after successful testing of the mechanism. Expectations were not met. The business ombudsman team, with the support of the Public Chamber of Russia, proposes to include additional types of activities in the list. There are about 40 industries in Titov’s project.
The professional community insists on including photographers, taxi drivers, designers, copywriters, translators, manicurists, jewelers, massage therapists, etc. in the group.
The difference between self-employed citizens and entrepreneurs
It is difficult to draw a clear boundary between participants in civil transactions. The absence of a normative act regulating the status gives rise to disputes literally in all directions. The only obvious difference from an individual entrepreneur is the implementation of activities without state registration.
| Criterion | Individual entrepreneur | Self-employed citizen |
| Registration | The procedure is of a notification nature. For registration, the applicant is charged a state fee of 800 rubles. The information is entered into the Unified State Register of Individual Entrepreneurs, and an extract from the register is issued as confirmation. From spring 2021, all documents are sent to the entrepreneur’s email address. | The notification must be submitted in writing using the recommended form (Order No. ММВ-7-14/ [email protected] ). The fee is not withheld from the citizen and supporting documents are not issued. The only evidence of registration is the second copy of the notification with the stamp of the territorial inspection. |
| Tax obligations | An entrepreneur must calculate his taxes independently. The order of deductions depends on the selected mode. Merchants are allowed to remain on the OSN or switch to the simplified tax system, UTII, unified agricultural tax or PSN. Tax holidays are provided for representatives of the production, scientific or social spheres. Persons who register an individual entrepreneur for the first time can take advantage of the benefit. Exemption is given to a merchant for two tax periods. This time period is not always equal to 2 years. | Paragraph 70 of Article 217 of the Tax Code of the Russian Federation exempts self-employed citizens from paying personal income tax until the beginning of 2021. The idea of extending the grace period is currently being discussed. |
| Liabilities to extra-budgetary funds | Tax holidays do not apply to fixed fees. An entrepreneur must pay contributions “for himself” even in the absence of real income. The list of cases of exemption of a merchant from obligation is fixed in Article 12 No. 400-FZ of December 28, 2013. The rules are clarified by letter of the Federal Tax Service of Russia No. BS-4-11/7990. | Part 3 of paragraph 3 of Article 422 of the Tax Code of the Russian Federation exempts self-employed citizens from contributions to the Pension Fund, Social Insurance Fund and Compulsory Medical Insurance Fund. The norm applies until the end of 2018. The benefits are planned to be extended until the beginning of 2021. |
| Reporting | Entrepreneurs are required to submit declarations and calculations taking into account the applicable regime. | Reporting is not required by law. |
| Right to attract workers | Merchants have the right to hire employees. | Self-employed persons cannot enter into employment contracts. |
| Legality of advertising | Promotion of services, goods and works is carried out in accordance with laws No. 38-FZ of March 13, 2006, No. 2300-1, No. 135-FZ of July 26, 2006. | There are no restrictions on advertising. Participants in economic transactions are required to comply with requirements for the reliability of information, rules on consumer protection and fair competition. |
| Termination of activities | The closure of an individual entrepreneur is accompanied by the submission of a corresponding application. A fee of 160 rubles is charged for making an entry in the register. The supervisory authority has the right to order an on-site inspection before official liquidation. | Termination of activity is carried out by sending written notice. The form was approved by order of the Federal Tax Service of the Russian Federation No. ММВ-7-14/ [email protected] The procedure is free. |
| Availability of loans | Representatives of small businesses have the right to loans at a subsidized rate and actively cooperate with Russian banks. Accounting statements are accepted as confirmation of solvency and financial stability. | Banks refuse to cooperate with self-employed citizens. Such clients do not keep records of income, and therefore cannot confirm the declared turnover. |
| Activities | Restrictions are established only for industries in which work is permitted on behalf of legal entities. | In 2021, only three areas have been approved: care for minors and the elderly; tutoring; help around the house, cleaning. Extensions to the list are being discussed at the government level, but no specific decisions have been made yet. |
The difference lies in the scope of responsibility. The lack of entrepreneur status excludes the imposition of increased administrative sanctions for misconduct. Authorities recognize businessmen as officials. In a number of compositions they are equal to organizations. There is a minimum penalty for self-employed citizens.
Documentation
When contacting the Federal Tax Service, in addition to the notification, you need to take your passport and Taxpayer Identification Number with you. If the document is submitted by the legal representative of the self-employed, he will be required to provide the original and a copy of the power of attorney.
Notification can also be submitted:
- by registered mail;
- by email to INFS;
- online through the government services portal or the Federal Tax Service website. To do this, the applicant must have an enhanced qualified digital signature.
The Federal Tax Service has not yet issued any response documents (patent, certificate or certificate). Those who want to have confirmation of their application must fill out and bring 2 copies of the notification. One will be given to the tax office, the other with a note of acceptance will remain with the self-employed citizen.
Advantages and disadvantages
Experts believe that the reasons for the formation of the phenomenon of self-employment are unemployment, extremely low wages and unreasonably high administrative pressure on business. Enterprising Russians are trying to secure a decent income for themselves, but are afraid to register a company or individual entrepreneur. Administrative and criminal liability for illegal business does not scare people. It is very difficult to prove the fact of conducting illegal activities on a systematic basis.
Important! In September 2021, Vladimir Putin demanded to exclude the possibility of recognizing self-employment as illegal entrepreneurship. The order was given at a strategic meeting dedicated to priority projects.
The pros and cons of independent professional activity follow from the comparative characteristics. Experts believe that the advantages of registration are:
- minimum formalities when assigning status;
- exemption from taxes and insurance premiums for the holiday period;
- complete lack of reporting;
- protection from administrative and criminal prosecution;
- lack of strict control by supervisory authorities;
- refusal to extend the rules on online cash registers to payments.
The key disadvantage remains legal uncertainty. The authorities have not yet decided on taxation and administration mechanisms. Self-employed citizens remain unwanted clients of credit institutions. Their income is almost impossible to verify. Since such persons do not make contributions to extra-budgetary funds, pension rights are not formed. It is impossible to prove the existence of work experience with documents. You can’t count on paying for sick leave.
Registration in accordance with the rules of Article 83 of the Tax Code of the Russian Federation does not provide obvious advantages. Information about taxpayers is recorded by the regulatory authority. After the end of the grace period, Russians will have to either register an individual entrepreneur or refuse further work. The lack of prospects and the unclear position of the state frightens people.
Patent cost
An alternative to registering as a self-employed citizen is entrepreneurship on the PSN. The price of a patent is calculated taking into account the selected industry and period of activity. The provisions of Chapter 26.5 of the Tax Code of the Russian Federation secure the taxpayer’s right to purchase a document with a period of 1 to 12 months. In this case, it will not be possible to avoid payments to the Pension Fund and the Compulsory Medical Insurance Fund.
Self-employed citizens cannot yet buy a special patent. There are “tax holidays” in Russia until the end of 2021. However, the cost of a professional permit is being actively discussed at the federal level. It is assumed that the price will include not only tax, but also insurance fees. The idea is supported by Boris Titov. According to the business ombudsman, the document should cost no more than 20 thousand rubles. Payment for the patent will be required within 10 days after filing the notification.
What does this give?
Creating a self-employed regime has many advantages:
- Specialists will be able to legally provide services to the public and companies without fear. Now they will not be afraid that the tax office will audit them and impose many fines.
- The activity will become legal, you can officially work with companies and legal entities. There will be no problems with paperwork when working with legal entities.
- Entrepreneurs will be able to reduce their tax burden and pay less without closing their individual entrepreneurs. They will be able to work in the same mode, but with significantly lower mandatory payments.
In addition, many companies are more willing to work with self-employed people, because in this case their tax burden is reduced. It is more profitable and easier for them to work with the self-employed.
A self-employed person does not need a current account, does not have to provide a tax return, does not require a cash register, and can be combined with his main job.
Problems of legal regulation
Current legislation does not contain precise legal characteristics of self-employed citizens. Articles and paragraph 70 of Article 217 of the Tax Code of the Russian Federation remain the norms devoted to this category of persons. The Russian Government is trying to fill the gap. Thus, in the spring of 2018, two bills No. 434180-7 and No. 434182-7 were introduced into the State Duma. The developers of the documents are specialists from the Ministry of Finance.
The first set of amendments concerns language regarding the exemption of self-employed people from taxes. The department limited itself to clarifications and additions. No major changes are being made to Articles 217 and 83 of the Tax Code of the Russian Federation.
The second bill adjusts the rules for registering entrepreneurs and legal entities. 129-FZ should include a norm legalizing systematic professional activities without acquiring the status of a commercial entity. The norm will be reference. The right to work without registering as an individual entrepreneur will be given to persons who meet the requirements of the new edition of Article 23 of the Tax Code of the Russian Federation. Officials did not propose an option to legally consolidate the term “self-employed citizens.” Already at the first stage, the initiative caused a storm of criticism from independent experts.
In May 2021, the Deputy Minister of Finance announced the introduction of a new tax regime. A representative of the department announced the launch of a pilot project. Persons who provide themselves with work will be offered to switch to a special system. Tax will be withheld from each transaction using a mobile application. The rate will be set depending on the type of counterparties:
- individuals – 3%;
- firms – 6%.
It was decided to set the annual revenue limit at 10 million rubles. There is no need to submit reports when applying the regime.
Another important initiative is the proposal of the Russian Ministry of Justice. The agency insists on increasing the duration of tax holidays. Officials propose extending the period until the end of 2019.
Normative base
Order of the Government of the Russian Federation dated January 27, 2015 N 98-r (as amended on July 16, 2015) “On approval of the plan of priority measures to ensure sustainable economic development and social stability in 2015”
Federal Law No. 422-FZ dated November 27, 2018
Whether a self-employed person needs to buy a patent or not depends on his status. If a citizen registers as an individual entrepreneur, he can switch to a patent tax system. But he also has the right, without becoming an individual entrepreneur, to pay tax on professional income.
conclusions
Thus, the legislation on self-employed citizens requires serious revision. Existing regulations do not allow private professional activities to be carried out without fear. Representatives of only three industries can register.
Exemption of a group of persons from taxes and insurance fees is valid until the end of 2021. If the project of the Russian Ministry of Justice is not supported, registered citizens will have to become entrepreneurs or refuse further work. Experts consider the benefits system ill-conceived and insist on adjustments.
The statement of the Ministry of Finance of the Russian Federation on the introduction of a new tax regime inspires some hope. However, before this, an official definition of self-employment must appear in the legislation. Otherwise, it will be very difficult to implement even a successful idea in practice.
How to accept payments?
A self-employed person can accept payments to any card he has. You can even receive money from clients on the card where your salary from your main job comes.
Many banks currently offer to open an account with them in order to be self-employed. These are actually unrelated concepts. A current account will be required when working with certain companies. If an individual plans to simply give violin lessons or sell homemade cakes to ordinary citizens, then he will not need such an account.
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