STS "Revenues minus expenses" - rate, accounting and calculation

The development of small and medium-sized businesses in Russia has significant reserves. Judge for yourself: the share of SMEs in the country's GDP is about 21%, the employment market is covered by 23.4%. World practice suggests this indicator is 2–2.5 times higher. Best practices in the development of small and medium-sized businesses are accumulated in the USA, France, and Great Britain. It is believed that a developed SME gives stability to the economy of the country, since it easily adapts to various macroeconomic changes.

Stages of development of the Russian tax legislation for SMEs

A significant incentive in the development of SMEs is the tax system. Its reform in Russia began in the 90s (the Soviet system simply did not foresee such a business). This constructive process was launched in 1996 by the Federal Law “On the simplified taxation system”. STS “Revenues minus expenses” and, as an alternative, STS “Revenues” were proposed as options for easing the tax burden for beginning entrepreneurs. They were followed in 1998 by the "Law on a single tax on imputed income ...", concerning certain types of activities. Further improvement of government regulation of the business sector was manifested in 2013 with the adoption of the Law on Patent Taxation.

Benefits of a simplified tax system

By introducing a single tax, entrepreneurs were offered really simplified tax accounting, which allows even people who do not have a special accounting education to fill out an accounting register - a journal of financial receipts and expenses. This journal keeps records according to the USN methodology. “Income minus expenses” - this ratio is determined directly by the journal. Once a year, a tax return is provided, as well as a report on the average staff. This system for SMEs is the opposite of classical taxation, which assumes an alternative to value added tax, profit, property for a legal entity, and for individuals - an income tax on individuals and on property of individuals.

It is estimated that due to the above tax optimization, a business focused on direct work with a consumer of goods and services receives 10% more profit, which contributes to a profit growth of at least 30%.

Preferential treatment - for a suspended business

The transition to a simplified taxation system minimizes the formal costs for entrepreneurship for a period when the business was practically not conducted. If during this period there was no movement of funds in bank accounts, at the cash desk, then the entrepreneur, according to the Order of the Ministry of Finance No. 62n of July 10, 2007, submits to the tax authority a simplified declaration “with zeros” until January 20 of next year, which is useless it does not oblige.

Legislation on the use of "simplified"

Chapter 26.2 of the Russian Tax Code clearly limits the size of a business to the right to use STS. “Income minus expenses” or purely “Income” as a tax base can be used by an entrepreneur (legal entity) in the context of a simplified system if the business meets certain criteria.

Simplified is recommended if the assets of the enterprise are not more than 100,000,000 rubles, the staff is limited to a hundred employees, and the annual revenue does not exceed 60,000,000 rubles. At the same time, participation in the authorized capital of the enterprise of other legal entities should not be “off scale” for 25%.

Simplified System Options

A taxpayer who meets the above criteria is given a free choice of the simplified tax system type: income minus expenses or total income from all types of commercial activities will be independently selected by him as a tax base. In the first case, the tax rate will be 15%, in the second 6%. The second option is used less frequently, it is beneficial in entrepreneurial activities with minimal costs.

It should be noted that at a rate of 15%, the entrepreneur must save and take into account documents confirming the fact of costs. They are the basis for reducing tax payments. The STS rate “Revenues minus expenses”, as a rule, is considered by entrepreneurs to be more practical and close to their active economic activity. Therefore, more often choose this option USN.

If we talk about the practice of paying a single tax, then it is paid to the budget as an advance payment, which is determined based on the turnover for the previous period. In addition to the amount of tax, the entrepreneur also makes payments to extrabudgetary funds.

In the business environment, it is generally accepted that with the help of a simplified taxation system, they provide an easier start for the business, especially if the STS tax “Revenues minus expenses” is chosen, that is, with a minimum tax base.

Tax return

The methodology for filling out a declaration on a simplified taxation system for legal entities and individual entrepreneurs is presented in chapter 26.2 of the current Tax Code. An entrepreneur or an accountant (director) of a legal entity fills it in and pays a single tax to the budget on time. The simplified tax system declaration for the past year is provided:

- organizations - until March 31;

- entrepreneurs - until April 30.

USN revenues

Russian Tax Code in part of Art. 26.2 defines three groups of income accounted for by legal entities and individual entrepreneurs under the simplified tax system:

• from the implementation of works (services);
• from the sale of property rights and property (249 articles of the Tax Code are determined);
• non-operating income (according to Article 250 of the Tax Code).

At the same time, income does not include the proceeds of funds listed in Art. 251 Tax Code.

If an organization or entrepreneur, working under the simplified tax system, receives dividends from another organization, moreover, the transferring company pays, withholds and transfers the corporate income tax in accordance with Art. 214, 275 of the Tax Code of the Russian Federation, then in this case dividends are not taken into account in the income of the recipient organization. Income also includes both property received as a gift, as well as property received under a barter agreement, as the simplified taxation system suggests. The revenues of an entity operating under a simplified system also include several potentially legally controversial issues. Say, in accounting for the advance received income.

We recommend that entrepreneurs not enter into an unnecessary dispute with the tax authorities on this matter, but accept their point of view in advance (cheaper for themselves). According to paragraph 1 of Art. 346.17 of the Russian Tax Code, the date of receipt of funds to the account or cash desk is the date of receipt of income. Entrepreneurs who have experience working with partners who prefer advance payments are advised to specifically familiarize themselves with the legal interpretation of this issue.

USN expenses

An entrepreneur or legal entity using a simplified taxation system should only consider expenses that correspond to the list presented in article 346.16 of the current Tax Code. The tax authorities verify the income declared by the entrepreneur for the previous year with the actual income represented by the entries of the primary documents in the transaction log (complete with the documents themselves). They also carefully analyze the costs that affect the accrued tax.

The simplified tax system, if summarized, involves such expenses that are associated with the main business activities. These include, for example:

• purchase, manufacturing, repair of fixed assets;
• working capital acquisition;
• rent;
• salary;
• taxes and obligatory payments;
• fare;
• business trips;
• costs of servicing bank loans.

Entrepreneurs should be aware that a simplified taxation system is designed to scrupulously comply with the regulated list. Costs, we recall, must be verified with the strict list presented in article 346.16 of the Tax Code.

The economic meaning of "simplified"

As practice shows, this taxation system is very popular for beginning entrepreneurs. Indeed, the nascent business, which is gaining momentum in a natural way, in its parameters falls under the criteria of "simplification" and, accordingly, saves money by using preferential taxation.

However, going beyond the revenue of 60 million rubles. or assets of 100 million rubles., staff of 100 people, the enterprise, according to the logic of its development, should switch to taxation of VAT, income tax, etc. That is, the tax STS “Income minus expenses” should basically be left by entrepreneurs. However, some of them continue to think in old categories, not noticing the new opportunities of their business that has grown out of “short pants” - the possibility of increasing labor productivity; attracting new investors; simplification of internal processes; reduction in the share of administrative costs; improving the terms of cooperation offered to partners. What do they do?

Artificially “delaying” the stage of simplified taxation

Instead of switching to new work criteria, these entrepreneurs continue to work “the old fashioned way”, in particular, trying to maintain tax accounting for the STS “income minus expenses”. Such unfortunate businessmen, instead of building a new corporate structure, see a priority in creating artificial prerequisites for preserving the old tax benefits offered by the single tax for “simplification”. They split their corporate structure into separate legal entities, each of which falls under the criteria of the simplified tax system. However, such an approach for them as a result carries significant costs of lost opportunities, which we will try to show further.

Organizational and tax costs in the "fragmentation" of the enterprise structure

Formally, each such mini-enterprise is independent and has “its own” leadership. Actually this is a “soap bubble”. The owner-owner, instead of having to centrally and efficiently manage at the same time the entire structure from the “single center”, has to agree with each of his “vassals”.

Such a transition from management classics to informal relationships complicates and confuses the workflow of mini-enterprises, which is not difficult to notice for an experienced tax specialist. The procedure for submitting a claim to the entrepreneur that his accounting for the simplified tax system “Revenues minus expenses” is unfounded, has already been worked out and diverts real financial resources from the business.

The real price of a business is falling

However, some successful entrepreneurs manage to develop such a “fragmented” structure. However, sooner or later a natural question arises about external investments in the capital of the enterprise or about its sale. The use of a simplified tax system in these cases, as we understand it, again becomes a brake. Investors in disbelief consider a distributed business in parts; they value optimization and manageability. And the profitability of such a business, obtained by the dubious way of tax benefits, they are overestimated with the help of financial multipliers. As a result, the real price of the business is falling.

Conclusion

A special taxation policy (which includes the Russian simplified taxation system) is practiced by many countries in relation to small and medium-sized businesses. How can tax support for small and medium-sized businesses change their forms in future Russia?

Our opinion is that in this rather delicate matter it is not worth reinventing the wheel. It is much more promising to take advantage of the experience of other states. For example, the United States, Britain, France. Oddly enough, these countries demonstrate various approaches to taxation, stimulating the development of small business with its help.

According to experts, the most effective government support program operates in the United States, a recognized world leader in the development of SMEs. Instead of tax regimes in the New World, income tax is used at lower rates. For example, if the annual profit of a business does not exceed $ 50 thousand, then the tax rate of 15% is applied, with a further increase in profit within the range of $ 50–70 thousand, the tax percentage also grows to 25%.

Unlike the United States, France, like Russia, uses special preferential tax treatment for SMEs. At the same time, taxation of SMEs in innovative industries was reduced by 50%. There is a humane practice of tax deferral in the "country of musketeers" of relatively small business.

The British acted differently: they, without declaring small and medium-sized businesses in principle, gave entrepreneurs with an income of less than £ 15,000 the right to use a simplified declaration, especially “not finding fault” with the details of displaying their assets and activities. Significant legislative assistance to British entrepreneurs is their fundamental exemption from advance payments (if their annual financial obligations are paid off on time and amount to less than £ 500 per year.) On Foggy Albion, there are also tax incentives for beginning entrepreneurs when they purchase high-tech equipment.

Which way will Russia go further in the development of tax legislation for SMEs? This will depend on the adoption of relevant laws by deputies, which the Russians themselves will choose.