Removal of an Individual Entrepreneur from the State Register

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Pepeliaev Group advises that starting from 1 September 2020, tax authorities can compulsorily remove inactive individual entrepreneurs from the Unified State Register of Individual Entrepreneurs (the “Register”).

On 1 September 2020 amendments to the Law on state registration of legal entities and individual entrepreneurs come into force that allow tax authorities to independently terminate the registration of individual entrepreneurs who have ceased to carry out their business operations.

Requirements for the compulsory removal of an individual entrepreneur from the Register

An individual entrepreneur is classified as inactive when the following requirements are met simultaneously:
• 15 months have expired after the patent expiration date, or during the last 15 months the individual entrepreneur did not submit any reporting documents or calculations to the tax authority as stipulated by Russian legislation on taxes and levies, and
• the individual entrepreneur has arrears and debts in accordance with Russian legislation on taxes and levies.

comment.jpgBefore the amendments come into force, removing an individual entrepreneur from the register without its application is possible only by a court decision, or, in the case of a foreign individual entrepreneur, after his or her period of stay in Russia has expired or if the document entitling him or her to stay in Russia has been cancelled.

The removal procedure of an individual entrepreneur

Within three days after a resolution is adopted regarding the removal, the registration authority enters information to this effect in the Register and publishes information in the State Registration Bulletin that it has adopted the relevant resolution and about the procedure and timeframes for well-grounded applications and objections to be submitted by the individual entrepreneur, his creditors or other interested parties.

If no such applications and objections have been received within one month, the individual entrepreneur will be removed from the Register by a relevant entry being made to this effect.

Creditors and other interested parties whose rights and lawful interests would be affected by the individual entrepreneur being removed from the Register can challenge such resolution within one year after they became aware or should have become aware of the infringement of their rights.

After an individual entrepreneur is removed from the Register by a resolution of the registration authority, this individual will be unable to register as an individual entrepreneur for three subsequent years.

What to think about and what to do

Considering the potential negative consequences of the removal from the Register, we recommend monitoring the news regarding the status of your contracting parties who are individual entrepreneurs in the Register and in the State Registration Bulletin to be able to submit on time your well-grounded applications and objections.

Help from your adviser

Pepeliaev Group’s experts are ready to offer any legal support in challenging registration procedures and to provide comments on contentious issues relating to the application of legislation.

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