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Simplified Taxation System: First Estimates of 2024 Changes in Tax Legislation

Author

Listed:
  • Aleksandra L. Osmolovskaya-Suslina

    (Economic Expert Group, Moscow, Russian Federation; Financial Research Institute, Moscow, Russian Federation)

  • Sofiia R. Borisova

    (Economic Expert Group, Moscow, Russian Federation; Financial Research Institute, Moscow, Russian Federation)

Abstract

Changes to the simplified taxation system (STS) introduced in the course of the tax system fine-tuning will significantly alter its design: income limit requirements will be expanded and STS payers will be recognized as VAT payers. The objective of this study is to find out what percentage of STS and CIT payers will be affected by these changes. For this purpose, a distribution of STS and CIT payers by income level was plotted. Information from tax forms of the Russian Federal Tax Service, Registers of SMEs and the SPARK database for the period 2019–2022 was used as input data. It was found that there is a shift in the structure of both STS and CIT taxpayers towards lower incomes: about 70% of CIT payers and about 90% of STS payers earn less than RUB 60 million per year. The analysis revealed that for 85% of STS payers the reform will be neutral, while for 9% the situation will slightly worsen. The winners of the reform will be those companies that will switch from CIT to STS. This transition will be formally available for 87% of CIT payers, and most of them will switch due to the possibility to pay VAT. Expansion of income limits under STS may become a decisive factor for only 10% of CIT payers.

Suggested Citation

  • Aleksandra L. Osmolovskaya-Suslina & Sofiia R. Borisova, 2024. "Simplified Taxation System: First Estimates of 2024 Changes in Tax Legislation," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 97-108, October.
    • Handle: RePEc:fru:finjrn:240506:p:97-108
    DOI: 10.31107/2075-1990-2024-5-97-108
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    References listed on IDEAS

    as
    1. Belev, Sergei & Vekerle, Konstantin & Evdokimova, Anastasiia, 2021. "The difference in tax evasion amount among various taxpayers’ groups in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 62, pages 66-84.
    2. Vladimir V. Gromov & Nikolaj S. Milogolov, 2019. "Simplified Taxation System and Unified Tax on Imputed Income: Objectives, Problems, Long-term Vision," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 2, pages 9-21, April.
    3. Vladimir V. Gromov, 2022. "Features and Problems of Tax Incentives for Small Software Companies in Russia," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 8-25, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    SME; simplified tax system; CIT; tax reform; taxpayers;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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