Finance Minister Anton Siluanov spoke about the cancellation of UTII in 2020 back in the summer of 2019 during his speech at the Federation Council. He announced the final solution of this issue, as well as the need for explanatory measures on the part of tax authorities for a painless transition of the business to other regimes. At the Ministry of Finance, as well as leading economic experts, the UTII taxation system was recognized as ineffective and outdated. Therefore, this tax must be replaced by a more productive regime that will show the true profitability of enterprises and be taxed in accordance with these data.
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Changes in UTII will come into force in 2020. Discussions about the appropriateness of applying this tax have been ongoing for a long time. They wanted to cancel it back in 2018, inviting businesses to use the patent system instead, but it did not become popular. In 2019, the head of the Ministry of Finance said that the extension of the tax on imputed income is not possible. Therefore, a complete departure from this tax system remains a matter of time.
Adequate legislative framework has been prepared for a long period. It applies not only to UTII, but also involves other changes in tax legislation, many of which will begin to be in effect from 2020. Law No. 325-FZ, ratifying the amendments to the first and second parts of the Tax Code of the Russian Federation, was signed by President Vladimir Putin on September 29, 2019. In accordance with the articles of the law, the cancellation of UTII from January 1, 2020 will apply to a certain category of goods that require mandatory labeling by means of identification in accordance with federal law:
- medicines;
- shoes and shoe products;
- items of clothing and their accessories, as well as other products from natural fur.
Duration of the tax regime
If the new September law says where UTII will be canceled from 2020, and the restrictions on its use are partial, then the law of June 2016 finally approved the terms of its existence (Federal Law No. 178). The document, which entered into force in January 2017, states that the special single tax regime for imputed income for certain types of activities will be valid until 2021.
Thus, from January 2021, organizations and entrepreneurs who use UTII in their work will have to switch to a different taxation regime. Those entrepreneurs who are engaged in the sale of goods requiring mandatory labeling and provided by law No. 325 of September 2019, will have to switch to another system as of January 1, 2020.
Pros and cons of cancellation
A single imputed income tax was put into operation in 2002. He helped solve the problem of control over the circulation of funds of medium and small entrepreneurs. Also, with its help, it was possible to simplify the system of business administration by replacing many taxes with one payment. UTII became the tool that in the 2000s allowed to train entrepreneurs to pay taxes and take the business out of the shadows. And municipal budgets began to receive funds to replenish the local treasury. At that time it was almost impossible to determine the real turnover of the enterprise, so the application of such a tax regime was the most correct decision.
After almost 20 years, the situation in the country has changed significantly.Therefore, economic experts who work closely with the government, I believe that the UTII system has long become obsolete and is ineffective both for the state and for small businesses. It does not contribute to increased tax revenues, and creates an obstacle to healthy competition between representatives of microbusiness and large companies.
One of the reasons for the cancellation of UTII, cited by the Minister of Finance Anton Siluanov, is the exploitation of this tax by unscrupulous entrepreneurs for their own selfish purposes. The use of UTII can significantly reduce the tax burden for large organizations that are hiding under the guise of a small business. In practice, the scheme of “artificial crushing” is widely used, in which large companies use controlled IPs and form many small enterprises. Each of them works according to the UTII system (that is, the estimated income is not taxed, but the estimated income), which allows a large company to save significant amounts. Perhaps the Minister of Finance had in mind such a scheme when he spoke in his speech to the Federation Council about "substantial tax evasion." However, it is not entirely correct to use the word "evasion." Rather, it is the use of legal measures to reduce taxation.
However, this statement can be attributed only to large enterprises. For microbusiness UTII is the most profitable and allows you to honestly work, pay the required taxes to the treasury and at the same time earn income. The abolition of the tax will create an additional tax burden, as a result of which many representatives of small businesses will be forced to close their business. It is these circumstances that appear among opponents of innovations in taxation.
The government assumes that the transition to other tax regimes will not cause special difficulties for several reasons:
- To select a different taxation system, a transitional period is envisaged until 2021 (for those enterprises that fall under the law No. 325, the period is provided for until 2020).
- UTII applies only to certain types of activities, therefore, to optimize processes, it will be possible to use the regime that applies to other activities.
- Organizations that work on UTII, from 01.07.2019 should already use online cash desks, so the upcoming transition to other modes (such as a patent or USN) should not cause difficulties.
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