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The tax holidays in Smolensk region

24.11.2016 The tax holidays in Smolensk region

The tax holidays in Smolensk region

The regional law of 21.04 2016 No. 43 «About establishment in Smolensk region of the tax rate in the amount of 0 percent for taxpayers – the individual entrepreneurs applying a simplified taxation system, patent system of the taxation» comes into force since January 1, 2017.

The law grants for the first time registered individual entrepreneurs the right to apply the zero tax rate in case of the choice of a special tax regime – a simplified taxation system and patent system of the taxation.

The privilege will be provided to the businessmen for the first time registered as the individual entrepreneur since January 1, 2017 and performing in the territory of the region activities in production, social and scientific spheres, and also the sphere of household services of the population.

The tax holidays will be extended during two tax periods (2 calendar years) from the date of the state registration of the individual entrepreneur.

«Tax holidays» extend to such types of business activity as the agricultural industry, forestry, fishery and fish breeding processing production, research and development, information technologies, additional education of children and adults, social services, services in the field of financial accounting, in the field of design, translation service, household services (repair of household appliances, repair of footwear, repair of furniture, repair of hours and jewelry, washing and dry cleaning, services of hairdressing and beauty salons).

At the same time other taxes which payer the individual entrepreneur is (excise taxes, land and transport taxes, etc.) remain. Besides, the individual entrepreneur having tax exemption is obliged to pay insurance premiums for mandatory pension insurance for himself and hired employees.

According to the Tax Code of the Russian Federation regional legislators can limit the right of entrepreneurs to receipt of tax benefits depending on the extreme size of the income and average number of hired employees.

Entering of restriction for application of the specified privilege in the form of the extreme size of the income, proceeding from the maximum permissible income possible is provided in the regional law in case of application of a simplified taxation system, reduced by 10 times that is sufficient for business development by the beginning entrepreneurs and will allow to avoid a re-registration of unfair entrepreneurs.

If the individual entrepreneur violates the established requirements, then he will be deprived of the right to use a privilege. 

Restriction on the average number of hired employees in the regional law isn't set as a task of the new law in removing small business from «shadow», to involve in business activity of new people and to create additional workplaces.