Legal entities and entrepreneurs have the right to apply the simplified taxation system (STS).
The simplified taxation regime exempts businesses from paying income tax, value added tax (VAT) and property tax.
The law provides for the following tax rates for the STS.
* 6 percent – tax is paid only on income. The advantage of using this regime is that the taxpayer knows in advance the amount of taxes that will be obliged to pay. For example: the company received a payment of 100,000 rubles for the services performed, the amount of tax will be equal to 6,000 rubles.
* 15 percent – tax on income reduced by the amount of expenses. In this case, it is permissible to reduce the tax base by the amount of expenses and, accordingly, optimize the taxation of the company. Accordingly, using the example given above, the amount of tax as a rule will amount to 15,000 rubles, but the taxpayer has the right to declare reasonable expenses incurred during the performance of work and, as a result, reduce the amount of tax.
Simplified taxation system
Business has the right to apply the STS if it meets certain requirements:
-the staff of employees is no more than 100 people.
-the average annual size of fixed assets is no more than 150 million rubles.
-income during the year should not be more than 200 million rubles.
-the amount of participation of foreign companies in the authorized (charter) capital of a Russian legal entity is not more than 25 percent.
-absence of branches and representative offices.
There are two options for switching to the STS:
Switching to the STS when registering an organization or entrepreneur.
Notification of the transfer of the STS is submitted simultaneously with a package of documents for the state registration of an organization or entrepreneur. If this has not been done, taxpayers have the right to apply for the transition to the STS within 30 days after registration.
Transition to the STS from other tax regimes
In this case, the transition to a simplified taxation system is permissible only from the first of January next year.
A prerequisite is that the notification of the transition to the STS must be submitted no later than December 31 of the current year.
In practice the simplified taxation system is the most preferable option for companies that are just starting their business because tax document management is greatly simplified; there is no need to calculate and make advance payments of income taxes, property taxes and VAT. Accordingly, the cost of accounting services will be much lower than when using other tax regimes.