Ecovis Global > Russia Decreases Social Security Contributions for SMEs. Companies with Foreign Shareholders May be Affected
Russia Decreases Social Security Contributions for SMEs. Companies with Foreign Shareholders May be Affected
18. May 2020
Russia took a number of measures to limit economic consequences of the corona pandemic. One of them is a reduction of the level of social security contributions for small and medium-sized enterprises from 1 April 2020. Russian subsidiaries of foreign companies may also benefit from the reduced contributions rate.
The social contributions rate in the Russian SME sector is reduced from 30% to 15% on the portion of wages that is above the minimum wage (~EUR 150).
The benefit is available for companies that are included in SME register kept by the Federal Tax Service.
The change came into force on 1 April 2020.
Criteria for SME status in Russia:
Up to 250 employees
Revenue up to RUB 2 billion (~EUR 28 million)
The total share held by legal entities that do not meet criteria 1-2 above may not be more than 49%
We are closely monitoring the situation to help our clients make complex decisions, keep their workforce and network safe and move their business forward. Speak to us if you need support. Irina Makarova, Certified auditor, ACCA, Head of Audit, ECOVIS Audit-Avangard, Moscow, Russia
Companies with foreign shareholders
If a foreign shareholder of a Russian SME falls under criteria 1-2 above, its Russian subsidiary company may also benefit from the reduced social charges rate. Notably, the compliance of a foreign participant with the SME criteria should be confirmed by an auditor certified in Russia.
The Russian entity should analyse whether the entity itself and its parent company comply with the SME criteria (see above).
The parent company should provide its financial statements to a certified Russian auditor.
The auditor should provide information on compliance with the SME criteria to the Federal Tax Service between 1-5 July 2020.
The Federal Tax Service will include the company in the SME Register by 10 August 2020.
Determining whether a company is recognised as a SME in Russia and can thus reduce social security contributions involves a number of deadlines and possibly language barriers. Ecovis Russia is at your disposal if you need our support.
For further information please contact:
Irina Makarova, Certified auditor, ACCA, Head of Audit, ECOVIS Audit-Avangard, Moscow, Russia