A draft law extending the application of the patent taxation system

The Government has developed amendments to the Tax Code relating to the application of the patent taxation system (the “PTS”) and has submitted them to the State Duma. The number of entrepreneurs allowed to use the PTS has been significantly extended. The list includes new types of activity, such as: car washes, car parking services, the placement of advertising on transport and billboards, pet care, etc. In addition it is suggested to increase (from 50 to 150 square meters) the maximum size of the area of premises used for retail trade or supplying public catering services.

The draft law also provides for the possibility to decrease (up to 50%) the tax paid within the framework of the patent system by the amount of insurance contributions to non-budgetary funds (the Russian Pension Fund, the Federal Compulsory Medical Insurance Fund and the Social Insurance Fund) and payments for temporary incapacity for work.

It can be presumed that such a large scale addition of subjects of the PTS (and the second from the beginning of the year - see Federal Law No. 8-FZ dated 6 February 2020) is connected with the fact that from 1 January 2021 the other special tax regime - the unified tax on imputed income - will be cancelled and the state proposes that those who have used the unified tax on imputed income use the PTS regime, which is similar to the maximum extent to the one being cancelled, instead of moving to the general taxation system.