Tax holidays for individual entrepreneurs in 2020-2021 due to coronavirus

2024 Author: James Gerald | [email protected]. Last modified: 2023-12-17 14:00

As early as April 2, 2020, Government Decree No. 409 approved a preferential treatment for representatives of SMEs, individual entrepreneurs for a period of six months. In connection with the second wave of COVID-19, restrictive measures on November 7 by Government Decree No. 1791 extended the tax holidays for individual entrepreneurs in 2020-2021 in connection with the coronavirus.

Benefits for individual entrepreneurs and SMEs during a pandemic

The introduction of a high alert regime has led to a drop in many economic indicators. The crisis has hit especially hard on small and medium-sized businesses and on certain types of activities. Taking into account these realities, the Government of the Russian Federation is creating mechanisms to support entrepreneurs.

The state cannot completely exempt them from paying taxes, since it will not be able to maintain the social sphere at the proper level, but it introduces tax incentives. They are aimed at making it easier, softening the economic blow to businesses due to the coronavirus.

Initially, according to Decree No. 409, the grace period was established for 6 months, and Decree No. 1791 extends the vacation for another 3 months. What benefits does the government provide to individual entrepreneurs:

• the ability to postpone the deadlines for submitting reports to the Federal Tax Service;
• for the most vulnerable sectors - tax deferral;
• the possibility of paying off tax payments in equal shares within the next year;
• a moratorium on inspections by the tax service, including on-site inspections;
• no fines will be collected, penalties will be charged for the period specified in the regulations;
• the tax office will not be able to start bankruptcy proceedings;
• no sanctions will be imposed for the suspension of payments on the accounts of entrepreneurs, late reporting;
• will accrue compensation subsidies for each individual entrepreneur;
• it will be possible to obtain interest-free loans to pay salaries;
• possible reduction, re-registration of rent.

It is possible to receive a subsidy for April and May in the amount of 12,130 rubles for hired employees and the entrepreneur himself only if jobs are retained. Reduction of no more than 10% of employees is allowed. In the case when an individual entrepreneur independently carries out activities, he can be provided with compensation for 2 months in the amount of 24 260 rubles.

An interest-free loan is issued only for the first six months, then interest will be charged (from 3 to 4%). The loan amount is calculated based on the number of employees, the number is multiplied by the minimum wage (minimum wage). Lending for a period of more than 6 months is provided against bail, surety.

It is possible to reduce the rent by prior agreement with the landlord, based on the decision of the regional authorities. In this case, it is necessary to draw up an additional agreement to the lease agreement, with the attachment of an updated repayment schedule.

The situation is a little simpler in the case of lease of areas that are classified as state property. Depending on the individual characteristics of the object, the agreement of the parties, the rent can be suspended for several months, significantly reduced, and redistributed payments for the next year. Accordingly, an additional agreement is drawn up with a payment schedule.

Who can apply for tax deferrals

Deferrals for certain types of tax payments can be received by those entrepreneurs whose incomes have decreased due to the introduction of quarantine measures by 10% or more. If the individual entrepreneur has continued to work since April, then it is not subject to tax holidays.

A deferral for tax payments, first for 6 and then for 9 months, is provided for advance payments (March and I quarter of the current year), insurance premiums, tax returns for the I quarter, the previous year. Depending on how much income fell (from 10% or more), forms of payment of taxes to individual entrepreneurs, the amount and period of the grace period are regulated.

Remains obligatory to pay VAT, tax on professional activities, taxes, which are considered as payments of tax agents. The new reporting deadlines are listed in the table.

Interesting! Tax on individual entrepreneurs in 2021 on simplified tax without employees

What types of activities are subject to tax holidays

Tax holidays for individual entrepreneurs in 2020-2021 due to coronavirus do not apply to all types of activities. It is also necessary that certain conditions, formalities are met:

• The individual entrepreneur must be entered into the Unified State Register of Individual Entrepreneurs (Unified State Register of Individual Entrepreneurs) as of 2020-01-03;
• the type of activity of the individual entrepreneur is included in the list approved by the government (Resolution No. 434);
• excluded from the list of individual entrepreneurs who are entitled to benefits, which are closed, file for bankruptcy, excluded from the register of the USRIP;
• tax holidays apply to individual entrepreneurs who do not have debts on previous tax payments of more than 3,000 rubles;
• SP must keep jobs for hired employees (90%).

Entrepreneurs who transferred insurance payments to the pension fund in March 2020 (SZV-M form) are entitled to benefits. To obtain subsidies, tax incentives, it is necessary that the type of activity belongs to the areas most affected by the quarantine regime and be included in the list of the classifier of codes of economic activity (OKVED).

This category includes individual entrepreneurs working in the hotel business and the tourism industry, the entertainment sector, catering points of various profiles (from fast food to restaurants), involved in the field of culture, sports, organizing various events, exhibitions.

The full list of classifier codes by type of activity, which is entitled to tax holidays for individual entrepreneurs in 2020, may be replenished depending on the economic situation. Tax holidays due to the quarantine regime do not apply to pharmacy chains, retail outlets that sell essential goods, as well as to individual entrepreneurs associated with transport and logistics activities.

How an individual entrepreneur can receive subsidies due to quarantine, apply for benefits

A detailed step-by-step description of how to get subsidies is on the FTS website, in the "COVID-19" section. Here you can find answers to all questions related to tax holidays due to coronavirus. Here you can also find out a detailed list of documents for processing deferrals, benefits, subsidies, loans, and also check whether the individual entrepreneur is included in the number of "quarantine beneficiaries".

An application for registration of tax holidays, subsidies is submitted electronically via telecommunication channels (TSC) to the Federal Tax Service, through the taxpayer's personal account on the department's website. On paper, an application is sent to the tax office by mail, special boxes are used. A sample application can be viewed below.

The application is considered for 3 days, after which it is sent to the Treasury. The payments are not taxed and are at the free disposal of the entrepreneur.

Outcomes

Given the significant economic damage to IPs associated with quarantine due to the coronavirus epidemic, the government has developed compensatory mechanisms. Of course, they cannot fully cover the losses, but they will greatly facilitate the way out of the crisis. The question of whether the tax holidays for individual entrepreneurs will be extended in 2021 remains open. The decision depends on the epidemiological situation in the Russian Federation, the dynamics of the COVID-19 epidemic.