The President’s new address: tax support measures

On 11 May the Russian President held a meeting concerning the sanitary and epidemiological situation[1], announcing further measures to support the population and business, and officially terminating the period of “non-working” days that had been previously introduced.

The heads of constituent entities of the Russian Federation, depending on the development of the coronavirus infection in their regions, will be able to extend the suspension period for the activity of the enterprises taking into account the recommendations of the Russian Federal Service for Supervision over Consumer Rights Protection and Human Welfare (known in Russian as Rospotrebnadzor) and of the chief sanitary inspectors of the constituent entities. The relevant Order has already been published on the Russian Kremlin’s official website. [2]

The President has announced further measures to support business from the standpoint of taxation, which we believe will be reflected in a new Resolution of the Government:

• The tax and insurance payments for Q2 2020, except for VAT, will be written off in their entirety for businesses in the “affected” sectors. This support measure will apply to individual entrepreneurs, SMEs and socially-focused non-profit organisations.
• Individual income tax for 2019 will be repaid to self-employed citizens in full.

Since in 2019 such taxation regime was applied only in four “pilot” regions, this support measure actually extends only to the self-employed citizens of the specified regions (Moscow, Moscow Region, Tatarstan and Kaluga Region).

In addition, “tax capital” of one minimum monthly wage (RUB 12,130) will be provided to all self-employed citizens so they can pay taxes in 2020.

Presumably, this means that self-employed citizens will be granted a deduction up to the specified amount for the tax payable. It is unclear whether this measure will apply to all self-employed citizens or will again be limited to the “pilot” regions. We believe that the Government's Resolution will provide more detail.

• 
  Individual entrepreneurs in the “affected” sectors will be granted a tax deduction of one minimum monthly wage with respect to insurance contributions.