Review of Best Practices in Self-Employment Taxation

The rapid spread of freelancing as a form of employment requires the development of an optimal system of taxation of the self-employed population. When dealing with new types of commercial activities and the income received as a result of the implementation of such activities, the legislation often does not have time to adapt to new rapidly developing business areas. Moreover, legislative regulation often hinders the development of such areas and creates a lot of inconvenience for the subjects of their activities. This paper examines the level of satisfaction of freelancers with the new system of taxation and the tax rate for the self-employed workers in the Russian Federation. The issue is considered against the background of corresponding foreign practices. The research shows that most of the freelancers surveyed believe that the current tax rate is too high. Latter was introduced in 2021, under the special tax regime for the self-employed people. In order to avoid potential tax evasion, it is recommended to review the current approach to taxation and possibly reduce professional income tax. Also, one of the recommendations is to conduct regular tax audits, since the new taxation system for freelancers significantly reduces income tax, and unscrupulous entrepreneurs can take advantage of this by entering into a civil law contract with employees and losing the status of an employer.