Labor Ministry suggests doing away with preferential terms for SMEs

August 23, 2013. The Labor Ministry drafted a project on changes in the pension insurance and the fees that will mean all the preferential terms offered to SMEs will be lifted. Within the next five years (starting from next year), the insurance fee will keep rising steadily from 20% to 30%. This means that by 2018, the rate imposed on the SMEs will be same as the one imposed on the larger businesses, Vedomosti reports.

The rate increase will affect small businesses and sole traders involved in construction, building, or social (education, healthcare, sports, culture), sectors, pharmacy chains, and non-profit organizations and charities.

Their current preferential rate was granted in 2010 when Russia switched to an increased insurance payment of 34% instead of the social tax of 26%, including the 26% of pension tax. At the same time, the taxed wage fund was reduced. This rate, however, was only good for one year and was then reduced to 30% for two years, while a number of industries and small businesses were offered even bigger reliefs.


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