Expert Advice

“If your company qualifies, don’t wait and make sure you get into the SME registry NOW. The biggest savings to be made are at the beginning of the new fiscal year!”

What is the SME Registry?

In 2020 the Tax Code was adjusted to reduce social charges to be paid by SMEs down to 15% of the salary. Only the so-called Minimal Salary (12’392 RUB per month for 2021) is charged at basic rate of 30%. Since November, the Registry will be updated monthly (compared to the previous annual updates). Link to the Registry: https://rmsp.nalog.ru/

Which company qualifies?

Criteria to be qualified as SME are:

-       Annual revenue < 2 Bln. RUB

-       Number of employees <250 people

-       More than 51% of the company owned by individuals or other SMEs

Companies owned by foreign legal entities also can also be included into the Registry if:

-       The mother company meets the revenue and number of employees criteria

-       Is registered in a non-offshore jurisdiction

Those facts should be confirmed by a certified auditor who transfers the results of the review directly to the Federal Tax Service.

Why should a listing into the registry be done now?

The basic social charges rate is not flat but regressive: Generally, it is 30% in total, but when the amount of salary accrued from the beginning of the calendar year exceeds a certain limit, the rate decreases.

In 2021 the rate will be 27.1% for amounts in excess of 966 kRUB and 15.1% for amounts in excess 1465 kRUB.

Therefore, the first months of the year are the most “expensive” for companies in terms of social charges – none of employees (even top-paid ones) reach the limit for decreased rates yet.

This Expert Advice was provided by Marina Golubentseva, Partner at Bellerage. You can contact her at M.Golubentseva@bellerage.com