CC BY
54
FINANCES, CIRCULATION OF MONEY, THE CREDIT
удк 336.221 N. V. Artemova
SPECIFIC FEATURES OF SPECIAL TAXATION REGIMES FUNCTIONING IN MODERN CONDITIONS
Theoretical and practical aspects of special taxation regimes functioning in modern conditions are studied. Negative trends in their practical application are revealed. These trends prove the necessity for further improvement of these special taxation regimes.
Key words: finances, small business, taxation, unified tax on imputed income, patent taxation, micro-enterprise.
H.B. Артемова
ОСОБЕННОСТИ ФУНКЦИОНИРОВАНИЯ СПЕЦИАЛЬНЫХ НАЛОГОВЫХ РЕЖИМОВ В СОВРЕМЕННЫХ УСЛОВИЯХ
В статье исследованы теоретические и практические аспекты функционирования специальных налоговых режимов в современных условиях. Выявлены негативные тенденции в практике их применения, свидетельствующие о необходимости дальнейшего совершенствования специальных налоговых режимов.
Ключевые слова: финансы, малый бизнес, налогообложение, единый налог на вмененный доход, патентное налогообложение, микропредприятия.
Over the past ten years the main trends in taxation policy of the Russian Federation has been aimed at the decrease of tax burden on the economy on the whole and on small business in particular. These trends were most efficient in financial crisis when they were means of indirect State regulation of small businesses activity in taxation. In accordance with Chapter 26 of the Tax Code of the Russian Federation special taxation regimes are presented in the form of unified agricultural tax, simplified tax system, unified tax on imputed income, and system of taxation in the context of the performance of production sharing agreements. Special taxation regimes do not only reduce expenses of taxpayers on maintaining tax and accounting records and improve the quality of tax administration but promote the development of manufacturing, enhance investment activities and increase the rate of employment of population. However, practical functioning of special taxation regimes in modern conditions reveals some negative trends which prove the necessity for further improvement of both theoretical and practical aspects of their functioning.
It is our understanding that the definition of special taxation regimes given in the Tax Code of the Russian Federation does not fully reveal their substance and specific features from theoretical viewpoint. It is a well-known fact that single tax which is the core of the three out of four current special taxation regimes is the basis of special taxation regimes.
It is an important point to be made that Article 12 of the Tax Code of the Russian Federation mentions the introduction of special taxation regimes which may set-out federal taxes not stated in Article 13 of the Tax Code of the Russian Federation. In its turn, Article 18 of the Tax Code of the Russian Federation asserts that “special tax regimes may provide special procedure for determination of elements of taxation” and according to Article 17 of the Tax Code of the Russian Federation these elements are considered to be a taxable item, taxation base, withholding rate, tax period, tax computation procedure, and due date for tax payment. The question that has to be answered is what elements of taxation are regulated in a specific way -federal, regional or local taxes determined under Articles
♦
♦
13-15 of the Tax Code of the Russian Federation, or single taxes paid under special taxation regimes.
Thus, a special tax computation procedure and manner of payment of federal, regional and local taxes are established in the system of taxation in the context of the performance of production sharing agreements. Therefore, definition of this special taxation regime given in the Tax Code of the Russian Federation is rather consistent and reveals its substance. Under other special taxation regimes taxpayers are some taxes exempt but are liable to pay for instance, unified agricultural tax, tax under STS (simplified tax system), unified tax on imputed income, patent tax. All these taxes are not in the list of federal, regional and local taxes under Articles 13-15 of the Tax Code of the Russian Federation [1]. In fact, payment of unified tax on imputed income is a form that avails tax exemption. We consider this exemption not to be precisely relevant. Legitimization of status of unified taxes which are used to define special taxation regimes in Articles 18 of the Tax Code of the Russian Federation could be of use to avoid the given discrepancy.
There are positive and negative impacts of special taxation regimes application as tools for tax regulation.
Positive impacts of special taxation regimes on economy manifest themselves through the following factors:
- decrease of tax burden on small and medium-sized businesses which are involved in the activities of employment of population as well as enhancement of investment activity of population;
- improvement of procedure of administration for taxpayers, decrease of shrink the off-the-books turn-round, and, as a consequence, better tax collection under special taxation regimes application.
Negative impacts of special taxation regimes on economy manifest themselves through the following factors:
- downsizing enterprises to find out new tax-avoiding schemes using special taxation regimes;
- experiencing budgetary losses due to main taxes exemption (VAT income tax, property tax) of taxpayers who have changed general taxation system to special taxation system;
- replacing business activities into those ones that are on more favorable terms for entrepreneurs which leads to structural skewness in economy
Besides theoretical aspects of special taxation regimes application there are also practical aspects of their application. They are also of paramount importance especially in legislative changes that are not always positive. Today the application of special taxation regime such as unified tax on imputed income which implies computation of the tax on the basis of indirect measures which characterize business activity (floor space, number of employees, number of transport vehicles, etc.) is problematic. As practice shows this tax serves as a means of solving state fiscal tasks. Thus, in particular, since 2005 benchmark return on all types of activities has been increased by 1.5 times. This has lead to an increase in taxes [2]. At the same time circle of entrepreneurs, who have a right to apply unified tax on imputed income has become considerably bigger due to rising of threshold of business activities turn-round to 60 mln. Rub. This measure was undertaken by the government to compensate small businesses the effects of financial crisis in modern economy. It will be in force until 2013.
Introduction of unified tax on imputed income for entrepreneurs in various regions of the country with different economic potential only on the basis of typical physical criteria and adjustment factor while calculating taxation base, does not provide a tool for objectively finding out real earnings of a small business. So, one of the activity of taxpayers under unified tax on imputed income which demonstrates economic bias of defining the tax on the basis of typical criteria is rendering of services in public catering facilities, for instance, a catering facility with the floor space up to 150m2. It is well-known that catering facilities can be of different service category (cafes, snack bars, bistro, eating houses, cafeterias, fast-food restaurants, bars, restaurants, top-class eateries, etc.). These catering facilities may be open to all the public or only to a part of it, i.e. they can be a property of different organizations or enterprises and serve only their employees. It is doubtless they are considerably different in returns and earning capacity Thus, for example, a cafeteria and a restaurant with the same floor space cannot be the same as to their expenses and returns because these catering facilities provide different kinds of service, menu, interior decoration, entertainment. All this surely influences the price formation for the services provided and finally the operating revenue. However, benchmark returns are defined by the Tax Code of the Russian Federation irrespective of the service provided. Besides benchmark returns are the same for catering facilities in metropolitan cities with a great number of clients and for catering facilities in small towns.
Let us take the caffi “Old Town” in Balakovo town of Saratov region as an example. It is a catering facility with the area of full table service dining room of 20m2 [3]. In 2009 quarterly unified tax on imputed income was 7 629 Rub. after insurance contributions for compulsory pension insurance which was 2 100 Rub. Thus, taxation base was as follows:
TB = 1000 X 20 X 1,081 X1 X 3 = 64 860 X15% =
= 9729 - 2100 = 7629 (Rub.)
In this formula TB is taxation base; 1000 - benchmark returns in Rubles per month; 20 - physical indicator - the area of the full table service dining room in square meters; 1.081 - deflator coefficient; 1 - adjustment factor of benchmark returns; 3 - the number of months in tax period; 15% - taxation rate.
Thus, in 2009 the taxpayer paid unified tax on imputed income in the amount of 30 516 Rub. (7629 Rub. x 4 quarters). In its turn, the 2009 form 2 of the income statement “On Returns an Losses” says that the caffi “Old Town” had operating revenue - 633 000 Rub., product cost -313 000 Rub., total profit - 320 000 Rub., business expenses - 127 000 Rub., sales profit - 193 000 Rub., nonsale expenses - 12 000 Rub., pretax profit - 181 000 Rub., unified tax on imputed income (less 31 000 Rub.), net income - 150 000 Rub.
Assume that the amount of unified tax on imputed income is computed by taking the amount of the collected proceeds at the tax rate of 15%. In this case the total amount of unified tax on imputed income is 94 950 Rub. (633 000 x 15%). Then with the same indicators the amount of accrued net earnings at year-end is 86 050 Rub. (150 000 + 31 000 - 94 950).
♦-------------------------------------------------------------
Comprehensive solution for improvement of the mechanism of simplified tax system could be the decrease of the tax rate from 15% to 12%. In the case of the caffi “Old Town” in Balakovo town of Saratov region the amount of unified tax on imputed income would be 75 960 Rub. (633 000 x 12%), and with the same indicators the amount of accrued net earnings at year-end would be 105 040 Rub. (150 000 + 31 000 - 94 950). It is clearly seen that under these conditions the amount of unified tax on imputed income increases almost by 2.5 times (75 960 / 31000) and the amount of accrued net earnings decreases only by one third.
It is evident that this mechanism of computing unified tax on imputed income is not quite favorable for taxpayers as the amount of accrued net earnings of a taxpayer decreases almost by half and the amount of unified tax on imputed income increases by three times. These calculations show that some small businesses experience the so-called “reserves of tax endurance” (when using sales proceeds instead of typical indicators for taxation base) which can and should be useful for increasing taxation component of local budgets.
Thus, to make the conditions for business activities equal and to avoid inequality in effecting retail sales through retail store chains and in providing services through catering facilities, the computation of the amount of unified tax on imputed income under existing taxation mechanism should be carried out in accordance with business receipts which a taxpayer gets.
In this regard the adoption of law which allows the taxpayers who pay unified tax on imputed income settling accounts without the use of cash register equipment is a premature measure. As it was mentioned above the adjustment factor K2 applied at present does not have a big impact on the amount of unified tax on imputed income. And in such a case taxpayers who carry out the above mentioned business activities and have equal sales areas are unequal as when adjustment factor K2 is decreasing a taxpayer gains income which is many-fold higher in comparison to a taxpayer whose adjustment factor is increasing and the amount of income is inconsiderable.
It is evident that computing unified tax on imputed income on the basis of operating revenue which taxpayers gain carrying out retail sales using cash register equipment is the most acceptable option when applied considers fiscal interests of both the state and the taxpayers who are under this special taxation regime.
Besides it is necessary to introduce a mandatory criterion of rating for public catering enterprises which can be assigned to each of them when the enterprise is registered. According to this rating it will be possible to define the amount of benchmark return or to apply a special adjustment factor which considers the rating of the given public catering enterprise.
Another aspect of special taxation regimes improvement is legitimization and taxation of income earned from business activities of physical persons without forming a legal entity. Since 2006 these entrepreneurs who do not use hired labor have had a right to apply patent form of taxation but not all regional authorities have adopted this kind of taxation by law. In fact, on the assumption of the taxation mechanism, simplified taxation system on the basis of patent is neither more nor less than unified taxation system on imputed income. Patent system is the simplest and cheapest one in
term of taxes. However, it is necessary to be an entrepreneur, to carry out one out of 92 business activities (instead of one out 69 business activities which were previously necessary) and to have not more than five wage earners to be eligible to apply this system [4].
Contraindications between taxation on the basis of patent and taxation on the basis of unified tax on imputed income are revealed in competitiveness of these systems when different taxation regimes are applied to the same kinds of business activities (personal services, car repair, maintenance support, and car wash services, veterinarian services) and these tax receipts are directed to budgets at different levels [6]. It is advisable to eliminate overlapping of the kinds of activities where level of income depends on the number of employees and to apply patent taxation to all “imputed taxation” where physical indicator is “the number of employees entrepreneur including” computing the amount of the single tax on the basis of the patent cost per number of employees.
Also according to the Federal Law dated 19.07.2009 № 209-FL “On Development of Small and Medium-Sized Business Enterprises in the Russian Federation” small business enterprises are enterprises with a number of employees up to 100 people and micro-enterprises are enterprises with a number of employees up to 15 people [5].
Taking into consideration that the Main Trends in Taxation Policy for the year 2011 approved by the Government on May 20, 2010 mentioned the idea of abolishment of unified tax on imputed income for some kinds of business activities in the medium term and reduction in the number of employees at enterprises applying unified tax on imputed income from 100 to 15 people. It is then evident that unified tax on imputed income can be applied only by micro-enterprises.
Thus small business enterprises practically forfeit State tax support. Besides they will not be able to apply patent tax system as well as it is intended for entrepreneurs only.
In case unified tax on imputed income can be applied by micro-enterprises only, it will lead to employment of wage earners without official conclusion of employment agreement which in the light of reform of payments of social insurance will create even larger problem both with social guarantees of employees and statistics of unemployment [7]. It is our understanding that it is necessary to reserve the right to apply unified tax on imputed income at enterprises with the number of employees up to 100 people. It will exclude the violation of the given taxation regimes.
1. Tax Code of the Russian Federation. P1, 2. M.: Omega-L, 2010.
2. Commentaries to the Tax Code of the Russian Federation. P. 2. M.: CJSC “Chief Accountant”, 2009.
3. Artemova N.V., Savinova T.K.Application and Improvement of Special Taxation Regimes for Small Business Enterprises // Finance and Accounting: Aspects of Methodology and Practice. 2010. № 1 - 2.
4. Federal Law dd. 22.07.2008 № 155-FL “On Introduction of Amendments in the Second Part of the Tax Code of the Russian Federation”.
5. Federal Law dd. 19.07.2009 № 209- FL “On Development of Small and Medium-sized Businesses in the Russian Federation”.
6. Kalashnikova I.N. Impact of Controlling Techniques on Tax Administration in Russia // Bulletin of Saratov State Socio-Economic University. № 4 (33).
7. Muravieva T.V. Aspects of Pension Insurance System Development in Rural Areas // Bulletin of Saratov State Agrarian University named after N.I. Vavilov. 2009. № 10.
