Who has the right to apply a tax rate of 0 percent when applying the patent tax system

Who can go on vacation

From January 1, 2020, constituent entities of the Russian Federation received the right to establish a zero tax rate for individual entrepreneurs registered for the first time. Corresponding amendments to the Tax Code of the Russian Federation were introduced by Federal Law No. 477-FZ dated December 29, 2014 (see “Tax holidays for individual entrepreneurs: who can avoid paying taxes”).

ATTENTION. Tax holidays have been introduced only for individual entrepreneurs. Organizations are not entitled to receive tax exemption.

According to the provisions of the Tax Code of the Russian Federation, tax holidays can be used by individual entrepreneurs who comply with the following requirements:

the entrepreneur registered for the first time after the regional law on tax holidays came into force;
The individual entrepreneur works on “simplified” or PSN;
an entrepreneur conducts business in the production, social or scientific sphere or provides personal services to the population (specific preferential types of activities are determined by the authorities of the constituent entities of the Russian Federation in accordance with OKVED);
income from activities transferred to the simplified tax system constitutes at least 70% of all income of individual entrepreneurs (no such restriction has been established for the simplified tax system).

Maintain separate accounting when combining simplified taxation system and PSN and prepare reports

Regions also have the right to set their own requirements. The laws of constituent entities of the Russian Federation on the introduction of tax holidays may provide for:

restrictions on the average number of employees of an entrepreneur;
maximum income from “preferential” types of activities.

If an individual entrepreneur violates any of the listed restrictions, then taxes under the simplified tax system and PSN will need to be recalculated for the entire tax period (calendar year) at regular tax rates.

IMPORTANT. Tax holidays apply to taxes paid under the simplified tax system and special tax system. They do not exempt entrepreneurs from paying other taxes (excise taxes, land, transport taxes, etc.) or from paying insurance contributions to extra-budgetary funds. In addition, entrepreneurs using the simplified tax system are required to submit tax reports with zero indicators.

Keep records and submit zero reports according to the simplified tax system (for new individual entrepreneurs - a year free of charge)

Conditions and OKVED for individual entrepreneur tax holidays

When developing the bill in 2014, it was assumed that holidays would be introduced for all business entities. But in the end, legislators introduced the benefit only for individual entrepreneurs. They are easy to track and determine by TIN in the tax database: whether they are newly created or re-opened, which cannot be said about LLCs.

To take advantage of the right to tax holidays for individual entrepreneurs, certain conditions must be met:

A citizen registers as an individual entrepreneur for the first time.
In the region where the individual entrepreneur is registered, the local law on “tax holidays” must be in force on the date of registration.
When opening an individual entrepreneur, he must declare the use of a patent tax system or simplified tax system. Systems such as UTII, Unified Agricultural Tax or OSNO do not participate in benefits.
The activity must be scientific, social, or industrial. The list of types of activities and limits on revenue and number of personnel are established by regional legislation.
Revenue from these types of activities must account for at least 70% of total income.

The benefit is valid from January 1, 2020 to December 31, 2020. In regions, these terms may vary, and the benefit may be present only for some specific regimes, for example, only for the simplified tax system or only for a patent. “Tax holidays” have already ended for the Kaliningrad, Samara regions, Stavropol Territory, and the republics of Adygea, Mordovia, and Chuvashia. In the Krasnodar Territory there are no longer any benefits under the simplified tax system, and the holiday for patents continues until 2021.

Read also: Tax holidays for individual entrepreneurs on the simplified tax system

Which entrepreneurs are considered to be registered for the first time?

In practice, there are cases when an entrepreneur ceases activities, is deregistered, and then re-registered as an individual entrepreneur after the regional law introducing tax holidays comes into force. Can he take advantage of zero rates?

Yes maybe. The Supreme Court, in a review of judicial practice dated 07/04/18, indicated that tax holidays also apply to those individuals who have ceased business activities and decided to resume them after the relevant regional law came into effect (see “What is allowed to “simplified”: five conclusions of the Supreme Court for the benefit of taxpayers").

The Ministry of Finance also refers to the opinion of the judges in its explanatory letters (see “In what cases are re-registered individual entrepreneurs subject to tax holidays”).

Where are tax holidays for individual entrepreneurs valid?

The decision to grant tax holidays, including their duration, is made by regional authorities. On the Internet you can find summary tables indicating in which region and under what conditions zero rates for the simplified tax system and special tax system for individual entrepreneurs were introduced. In particular, such information was also published by the Ministry of Finance.

But the fact is that many of these tables (including those of the Ministry of Finance) are no longer relevant. Regional legislation is changing - in some places tax holidays are abolished, in others they are introduced, and in others their conditions are changed. Therefore, it is best to find out reliable information by calling the tax hotline in a particular region. You can also make a written request, but the response will not be quick.

Tax holidays for entrepreneurs 2020

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Support for entrepreneurship during a crisis

Tax holidays for entrepreneurs are provided for from January 1, 2015 to December 31, 2020 by the Tax Code of the Russian Federation, subject to certain conditions. If a corresponding law has been introduced in your region, then a first-time registered entrepreneur has the right to use a 0% rate for two tax periods (one period is equal to one year).

Conditions for applying the 0% tax rate for individual entrepreneurs in relation to the simplified tax system and patent system:

A law should be adopted by a constituent entity of the Russian Federation on the introduction of a zero rate for individual entrepreneurs;
An individual entrepreneur was registered for the first time after the law was adopted by a constituent entity of the Russian Federation;
The activities of individual entrepreneurs (at least 70%) relate to the production, social or scientific spheres.

As for legal entities, tax holidays for LLCs and JSCs, which exempt firms from paying taxes, are not provided, but individual constituent entities of the Russian Federation have the right to establish preferential tax rates for businesses.

Tax holidays for individual entrepreneurs in Moscow were introduced on March 25, 2015. This means that only those entrepreneurs who are registered for the first time after March 25, 2020 will be able to apply a 0% tax rate.

A zero tax rate for individual entrepreneurs in Moscow has been introduced for 25 types of activities under the simplified taxation system and for 17 types of activities under patents.

Currently, various bills are being prepared that should make life easier for small businesses and individual entrepreneurs, such as: increasing the frequency of scheduled inspections of firms and individual entrepreneurs from three to six years, limiting inspections of small businesses, a moratorium on the introduction of a trade tax for three years, etc. .

Do not forget about the program to support small businesses, which continues to exist in Moscow and in the regions of the Russian Federation. We recommend adding the company (IP) to the register of small businesses.

Unfortunately, most entrepreneurs and firms will not be able to apply the zero rate due to significant restrictions on the types of activities. In addition, it will not be possible to close a business and reopen it to apply a zero rate. Another reason why tax holidays for entrepreneurs may not work is the legislation of the constituent entities of the Russian Federation, since not every region will want to introduce a zero rate, reducing budget revenues. And, unfortunately, all entrepreneurs who registered before the entry into law of the zero tax rate will not be able to take advantage of tax benefits unless amendments to the Tax Code of the Russian Federation are adopted. For example, an individual entrepreneur registered in Moscow before March 25, 2020 must pay taxes on a general basis, and an individual entrepreneur who registered a day later will be able to enjoy a preferential treatment with a 0% rate for two years.

Despite all the difficulties that exist in the economy today, opening a new business during a crisis is the best chance for many entrepreneurs. Our company successfully registered a new business during the crisis years of 2008-2009, while many companies that opened at that time continue to operate and develop successfully.

We wish you success in your work! And we will help you solve all the legal issues of opening a company or individual entrepreneur at the lowest price with maximum comfort for you!

Get a free consultation when opening a company or individual entrepreneur on business organization and taxation systems! Knowledge of all possible options for doing business and the right choice will help you. Currently, various bills are being prepared that should make life easier for small businesses and individual entrepreneurs, such as: increasing the frequency of scheduled inspections of companies and individual entrepreneurs from three to six years, limiting inspections of small businesses, a moratorium on introduction of a trade tax for three years, etc.

We wish you success in your work! And we will help you solve all the legal issues of opening a company or individual entrepreneur at the lowest price with maximum comfort for you!

Get a free consultation when opening a company or individual entrepreneur on business organization and taxation systems! Creating your own business from scratch is real!

A complete list of activities with a preferential rate of 0% in Moscow for the patent system:

Repair and sewing of clothing, fur and leather products, hats and textile haberdashery products, repair, sewing and knitting of knitwear
Shoe repair, painting and sewing
Repair and maintenance of household electronic equipment, household cars and household appliances, watches, repair and manufacture of metal products, replacement of batteries in electronic watches and other devices
Furniture repair
Services for training the population in courses and tutoring
Services for supervision and care of children and the sick
Production of folk arts and crafts
Repair and production of cooper's ware and pottery
Engraving work on metal, glass, porcelain, wood, ceramics
Toy repair
Production and printing of business cards and invitation cards for family celebrations
Copying, bookbinding, stitching, edging, cardboard works
Production and restoration of carpets and rugs
Conducting physical education and sports classes
Engagement in medical activities or pharmaceutical activities by a person licensed for these types of activities
Excursion services
Translation and interpretation activities

Full list of activities with a preferential rate of 0% in Moscow for the simplified system:

Production of food products, production of beverages (except for the production of alcoholic and alcohol-containing beverages)
Textile production
Clothing production, fur dressing and dyeing
Production of leather and leather products
Wood processing and production of wood and cork products, except furniture, production of straw products and wicker materials
Production of paper and paper products
Printing activities and copying of information media; publishing activities
Production of rubber and plastic products
Production of finished metal products, except machinery and equipment (except for the production of weapons and ammunition)
Production of machinery and equipment not included in other categories; installation of industrial machines and equipment; repair of machinery and equipment
Production of office equipment and equipment; production of computers and peripheral equipment
Production of electrical equipment; electrical equipment repair
Production of electronic and optical products; communication equipment repair
Production of medical instruments and equipment; production of devices used for medical purposes based on the use of X-ray, alpha, beta and gamma radiation; production of control, measuring and navigation instruments and apparatus; watch production; production of optical instruments, photographic and film equipment; repair of electronic and optical equipment
Furniture manufacture
Production of musical instruments
Production of sporting goods
Production of games and toys
Production of brooms and brushes
Production of other finished products not included in other groups; production of plastic products used in construction
Processing of waste and scrap ferrous metals; processing of waste and scrap non-ferrous metals; processing of waste and scrap precious metals; processing of secondary non-metallic raw materials
Research and development
Activities in the field of health care; veterinary activities; residential care activities; provision of social services without providing accommodation
Education
Activities in the field of sports

How long do tax holidays last?

The zero tax rate under the simplified tax system and special tax system can be applied from the date of registration as an individual entrepreneur continuously for two tax periods.

REFERENCE. Under the simplified tax system, the tax period is a calendar year. For PSN, the tax period is the validity period of the patent. It can range from 1 to 12 months within a calendar year.

For those who plan to register as an individual entrepreneur, we remind you:

You can start using the simplified tax system on the date of registration with the tax authority. To do this, within 30 calendar days from the date of registration (which is indicated in the issued certificate), you need to notify the tax office (clause 2 of Article 346.13 of the Tax Code of the Russian Federation);
to carry out business activities on the basis of a patent from the date of state registration, an application for a patent should be submitted simultaneously with documents for registration as an individual entrepreneur (paragraph 2, paragraph 2, article 346.45 of the Tax Code of the Russian Federation).

Tax holidays will cease to apply on January 1, 2021 - the relevant provisions of the Tax Code of the Russian Federation and, as a result, regional laws will no longer be in force.

Tax breaks for small businesses in 2020

The most important advantage of tax breaks for small businesses is that they directly reduce the amount of taxes that a businessman must transfer to the budget. In Russia, there are special taxation systems with low tax rates, which can only be used by small and micro businesses:

STS - annual revenue limit in 2020 - no more than 150 million rubles, number of employees - no more than 100 people.
UTII - there is no limit on annual revenue, but the number of employees should also not exceed 100 people.
PSN - only individual entrepreneurs can work in this mode, the permitted number of employees is only 15 people, and for all types of individual entrepreneur activities in total. The annual income limit for an entrepreneur with a patent is 60 million rubles.
Unified Agricultural Tax – there is no limit on annual revenue, but the share of income from the sale of agricultural products must be at least 70% of the total income. The number of employees is limited (no more than 300 people) only for individual entrepreneurs and fishing organizations and individual entrepreneurs. There is no such restriction for agricultural organizations.
NAP is a pilot regime for the so-called self-employed; it has been operating in 23 regions of the Russian Federation since January 2020. Professional income tax can be paid not only by ordinary individuals, but also by individual entrepreneurs. The most stringent income restrictions are established here (no more than 2.4 million rubles per year, a ban on hiring workers, only certain types of activities).

An additional implicit benefit for the simplified tax system Income and UTII is a reduction in the advance payment and quarterly imputed tax by the amount of insurance premiums paid in the reporting quarter for employees and individual entrepreneurs for themselves.

Since 2020, the list of tax benefits for small businesses has been supplemented by the right of regional authorities to establish even lower tax rates on their territory for payers of UTII and simplified tax system than those provided for by these regimes. Thus, the tax rate for UTII can be reduced from 15% to 7.5%, and for the simplified tax system – from 6% to 1%. In fact, regions can create real tax havens on their territory with almost zero taxation. All that the state requires from entrepreneurs registered in these regions is the creation of jobs and the payment of insurance premiums for workers.

Finally, during the period from 2020 to 2020, newly registered individual entrepreneurs have the right to work within two tax periods (maximum two years) after registration under tax holidays, that is, at a zero tax rate. To do this, you will need to satisfy a number of conditions:

be registered for the first time as an individual entrepreneur after the entry into force of the regional law on tax holidays;
choose the tax regime of PSN or simplified tax system;
carry out activities specified in the regional law on tax holidays.

Thus, tax breaks for small businesses in 2020 allow you to start your own business by investing most of the income received in the further development of the business, rather than giving it to the state in the form of taxes.

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How to get tax holidays

simplified tax system

Newly registered individual entrepreneurs submit a notification of application of the simplified tax system in form 26.2-1 immediately upon registration or within 30 days from the date of registration. There is no need to make any special statements about the application of tax holidays. Simply indicate a zero tax rate when filing your annual single tax return.

Submit a notification about the transition to the simplified tax system, keep records and submit reports via the Internet (for new individual entrepreneurs - a year free of charge) Connect to the service

If an individual entrepreneur has already worked for one tax period at regular tax rates, then it will not be possible to return the tax for this year. Tax holidays can only be used in the next calendar year.