24.07.08

The business community is increasingly talking about the worsening situation for small and mid-sized businesses. They say that despite the government’s attempts to improve the situation, about 40 percent of Russia’s small and mid-sized businesses are unlikely to last to the end of the year. This was discussed Thursday at a breakfast held for the press by the advocacy group Delovaya Rossiya.

Delovaya Rossiya believes that attempts to save them have been inadequate, including what they consider to be the superficial attempts of the government to help them by limiting the number of inspections, as well as the lowering of the Value-Added Tax (VAT).

In July 2007, more than 70 percent of Russian manufacturers paid half of their wages under-the-table, said Boris Titov, the head of Delovaya Rossiya. Because of the cut-throat competition, the profitability of such companies amounted to 5-7 percent. In the fall of last year, fiscal agencies intensified their efforts. As a result, almost all businesses paid wages taking into account both VAT (18 percent) and the Uniform Social Tax (UST) (27 percent). Taxes have also increased over the last four months – VAT grew to 53 percent, Personal Income Tax to 37.7 percent, UST to 31 percent and the Tax on Natural Resources Production to 64 percent.

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