21.01.07

The Russian Federal Tax Service (FNS) is intent on reducing the number of companies receiving special tax treatment. FNS specialists have developed amendments to the Tax Code which prohibit companies who outsource employees from using simplified taxation systems (USN). It is also possible that a whole series of other businesses will also soon lose the ability to use USN. Neither the Ministry of Finance nor the Tax Service is pleased with the rules for converting to the simplified system. The Ministry of Finance calculates that companies using USN pay three to four times less tax than companies using the standard taxation system.

Thus, tax officials want to end outsourcing, whereby companies transfer a majority of their employees to another company which uses USN and then leases their labor from the "simplified" company. The FNS is also working on amendments that will make it impossible for companies to "fragment" for the purpose of switching to USN. The plan is that not only will those companies using USN be unable to take advantage of special taxation systems, but the companies who cooperate with them will also be denied this advantage.

Tax officials also intended to disallow use of USN by companies which were formed as part of a company liquidation or reorganization via subdivision or separation. Tax consultants have the following things to say about the situation: when it comes to outsourcing, instead of concluding an outsourcing agreement, one may conclude a services agreement. Regarding "splintered" companies and other rules, experts fear that FNS lawyers simply will not be able to give a specific enough definition of "cooperating companies."