The Federal Tax Service on the reduced rate for insurance contributions
The Russian Federal Tax Service has published Letter No. BS-4-11/7300@ dated 29 April 2020, in which it has clarified the procedure for paying reduced insurance contributions for small and medium-sized enterprises (“SMEs”).
According to Federal Law No. 102-FZ dated 1 April 2020, contributions made by SMEs in relation to individuals in an amount
exceeding the monthly minimum wage (which is RUB 12,130 starting from 1 January 2020) will be subject to the following reduced rates for insurance contributions:
- 10 % for mandatory pension insurance (irrespective of the coverage limits);
- 5 % for mandatory medical insurance; and
- 0 % for temporary incapacity to labour and in connection with maternity leave.
below, or equal, to the monthly minimum wage will be subject to the standard tariffs:
- 22 % for mandatory pension insurance (10 % when the coverage limit is reached);
- 5.1 % for mandatory medical insurance; and
- 2.9 % for temporary incapacity to labour and in connection with maternity leave.
The established amount of the monthly minimum wage is fixed for the entire territory of Russia and is not increased by coefficients or increments for working in the Far North and areas equated to the Far North.
The Federal Tax Service points out that reduced tariffs may be applied by SMEs starting from the month when they were included in the relevant register but no earlier than starting from 1 April 2020. If they are excluded from the register, the right to apply reduced contributions is lost starting from the first day of the month when they were excluded.
In the appendix to its Letter, the Federal Tax Service sets out a monthly algorithm which should help taxpayers calculate the monthly amount of the reduced insurance contributions for SMEs in accordance with the formula set out.