Photo: Ekaterina Kuzmina / RBC
The Supreme court has determined that entrepreneurs that use the simplified system of taxation, may pay insurance premiums based on net profit instead of income. Position can help alleviate the burden on small businesses
Individual entrepreneurs operating on a simplified tax system (STS) with the “income minus expenses” should not have to pay insurance premiums to the Pension Fund based on total income are entitled to deduct expenses and to pay contributions based on net profit. A definition that potentially reduces insurance costs of entrepreneurs, made the Supreme court in April.
The Supreme court is particularly relevant for those entrepreneurs, whose turnover amounted to millions of rubles, net profit — much less (for example, it is typical for the trading business). In the extreme case when the revenue of IE more than 14 million rubles and net profit in the range of 300 thousand rbl. — the difference in the burden of pension contributions with the current approach and the approach that was made by the Supreme court, reaches 135 thousand rubles (the amount you could save these entrepreneurs in 2016, if paid contributions on the basis of the position of the Supreme court), estimate by RBC. USN is the most popular system of taxation of individual entrepreneurs: for example, in Moscow it is used 84% of FE.
In its determination, the Supreme court referenced the landmark decision of the constitutional court, which at the end of 2016, allowed the PI working on the common system of taxation, to pay insurance premiums to the Pension Fund based on net profit instead of income. The position of the constitutional court can be mirrored and used against USN, considered by the Supreme court.
The dispute about the arrears of 120 thousand
The court considered the appeal of the Kemerovo entrepreneur Olga Zharinova in the case of the recovery of her arrears of insurance contributions in 2014. The pension Fund branch in the Kemerovo region has considered that the entrepreneur has not paid insurance contributions from earnings in excess of 300 thousand rubles, and asked to collect 121,3 thousand RUB arrears plus interest of 5.2 thousand RUB Zharinova did not agree with these claims because the Pension Fund has estimated insurance premiums based on the income of entrepreneurs, but did not consider the costs that, according to the businessman, was illegal.
Case Zharinova addressed in Arbitration court of the Kemerovo region, the court supported the position of the FIU and decided to collect UI arrears. The entrepreneur appealed the decision first to the Seventh arbitration appeal court, then the Arbitration court of West Siberian district — the court also sided with the RPF. But the Supreme court after the hearing of the appeal Zharinova overturned the decision of the court of first instance and sent the case for retrial. There is no doubt that the Tribunal in the case of women entrepreneurs and other courts in similar disputes will take into account the position of the Supreme court, says the head of practice of tax disputes of AKG “MEF-Audit” Alexander Ovesnov.
Zharinova engaged in retail trade, in 2014, its revenues amounted to 29.9 million rubles., and expenses — 28,1 mln. of Insurance premiums of individual entrepreneurs paid based on net profit 1.7 mln., that is, in FIU Zharinova sent to 31.7 thousand rubles (17.3 thousand RUB fixed payment plus 1% of profits in excess of 300 thousand rubles). The pension Fund felt that the entrepreneur had to pay the maximum in 2014 it amounted to 138,6 thousand RUB (fixed payment plus eight times the minimum wage multiplied by the contribution rate of 26% and 12 months), and asked the court for the recovery of arrears. At the same time in 2015 and 2016 Zharinova continued to calculate and pay contributions for pension insurance on the basis of net profits, said RBC representative of the entrepreneur. But the claim PFR filed only by the end of 2014, questions the size of contributions paid in subsequent periods arose.
Tax and social contributions unlikely to begin to count the contributions of IP on the simplified tax system due to the determination of the Supreme court, says expert “SKB Kontur” Pavel Orlovskiy. The court’s position is relevant for entrepreneurs in the USN “income minus expenses”, which have no employees (pay contributions only for himself) and whose income exceeds 300 thousand rubles. “But now the taxpayers have a solution whereby they can start an argument about contributions of 1% charged on the excess of income in excess of 300 thousand rubles, including for last periods,” he said. For this you need to address in PFR with the statement for recalculation of the assessments for periods up to 2017. The dispute is likely to come to court, but the chances of winning increase — taking into account the already existing position of the Supreme court.
In the judgment there is no direct insights that would enable the taxpayer to sleep, warns Orlovsky. “There is no reference to the definition of tax base under the simplified tax system (article 346.18 of the Tax code) or expenses (article 346.16). Said only that the principles for determining the object of taxation for personal income tax and on the simplified taxation “income minus expenses” coincide”, — said the expert.
Lower courts are obliged to apply the opinion of the Supreme court, the case was sent for review just because the courts have not verified the calculation of contributions, which makes the payer, says Alexander Ovesnov. “Direct regulations, requiring all arbitration courts to apply the Supreme court’s determination, the law does not. However, one can hardly doubt that in similar cases under consideration, the courts will take the same position,” he said.
Most likely, the Kemerovo arbitration court on the appeal will render a decision in favor of the EP because lower courts, in practice, listen to the opinion of higher authorities, agrees Orlov. “The question is whether you can rely on this decision to other taxpayers. Of course, disputes the opinion of the senior judges can be counted, but count on the fact that the FIU and the tax will immediately recalculate the contributions should not be”, — says the expert. It is better to bring the question to the constitutional court to put an end to the dispute, said Orlowski. In the meantime, the expert advises, it is safer to pay contributions based on total income, and then to seek adjustments of accruals for the periods from 2017.
The Federal tax service (FNS) in response to a request to RBC stated that the Supreme court’s determination applies to the provisions of the law №212, regulating the procedure of payment of insurance contributions, but this law is repealed on 1 January 2017. For taxpayers applying the simplified tax system, contributions are calculated on the basis of the income without any deduction of costs regardless of the chosen object of taxation “income” or “income minus expenses”, reported the press-service FNS. The FIU forwarded the questions to the office of the Fund in Kiselevsk (Kemerovo region). It did not respond to a request RBC to date.