Actual: Businesses have Turned to the Government for Additional Measures of State Support
8 May 2020

Chairman of the Board of Directors of the Moscow World Trade Center, President of the Chamber of Commerce and Industry of the Russian Federation, Sergey Katyrin, as well as the heads of three other Russian business associations "OPORA Rossiya" Alexander Kalinin, Chairman of "Delovaya Rossiya" Alexey Repik, President of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin came out with a proposal to provide a subsidy to pay two-thirds of the average monthly earnings of employees of companies facing forced suspension of work due to the coronavirus situation.

The letter sent to Russian Prime Minister Mikhail Mishustin states: "To encourage companies to save their jobs, take a radical reduction in taxation on the payroll, and for companies facing forced suspension of operations, consider using international practices for the period up to April 30 of this year (in case of an extension of non-working days – for the appropriate period), and provide a subsidy to pay two-thirds of the average monthly earnings."

Also, in their appeal, business associations are asked to consider the possibility of reducing operating costs by exempting companies from paying tax payments, as well as subsidizing payments for rent, leasing, and loans. For the period of forced downtime, an individual entrepreneur without employees is offered to pay a monthly allowance at a level not lower than the minimum wage, freeing them from paying fixed contributions.

"It is advisable to extend the self-employed regime to all regions of the Russian Federation from May 1, 2020, setting a single tax rate of 1% for maximum involvement of citizens in the search for additional sources of income and legalization of their activities," the appeal says.

Since January 1, 2019, a pilot project has been launched in the Russian Federation – the self-employed regime. It was first launched in Moscow, Tatarstan, the Moscow and Kaluga regions, and in 23 Russian regions as of 2020. It provides that entrepreneurs who provide paid services without employing employees must allocate only 4% of their income to the budget when working with individuals and 6% when working with companies. This tax regime is used by about 550 thousand people.

In addition, the letter notes that the monthly expenses of large companies to combat the spread of coronavirus reach several tens of millions of rubles.

"Given the relatively high volumes of companies' expenditures on sanitary and epidemiological measures in the fight against COVID-19, a popular measure of support (business-approx. TASS) could be a refund of part of the funds (up to 30%) paid as accident insurance premiums."

In a letter to the Prime Minister, Russian business associations reported the risk of mass bankruptcy of enterprises and increased unemployment due to insufficient state support during the coronavirus pandemic.

"In almost all regions of the country, there is a shock stop in demand, businesses are stopping their activities, losing the ability to cover operating costs, making tax payments and payments on loans. At the same time, the main task of the Russian economy today is to preserve jobs, which will both avoid social tension and end the pandemic in the future, while preserving the competitiveness of enterprises."

"Given that in some cases a reduction of employees allows to save the company in difficult economic conditions, and subsequently to restore and even increase the number of staff, please consider the possibility of temporarily reducing the timeframe for warning employees of the impending dismissal and the period of payment of the average wage by employers to employees if they are not employed». The letter is signed by Alexander Kalinin, President of OPORA Russia, Sergey Katyrin, President of the Russian chamber of Commerce, Alexey Repik, Chairman of Delovaya Rossiya, and Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs. 

The document notes that this measure is proposed only during the "acute phase of crisis phenomena".

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