Today on Wednesday March 25 President Putin has proposed the following measures in response to combat the economic stagnation that many fear will start because of the worldwide COVID-19 pandemic.
A lot of closed companies from March 28 until April 5
Next week, from Saturday March 28 until Sunday 5 April will be a non-working week. The hope is that this will prevent the further spread of the COVID-19 virus. Employers, however will have to pay salary to their employees during this period.
Essential sectors, pharmacies and transport will not lay down their work during this week.
Social allowances and benefits that Russians are already enjoying will be automatically prolonged for a 6 months period.
If a person’s income has fallen with 30% or more, he should be allowed to temporarily not pay any repayments and prolong the loan without having to pay any fines.
Help for Sole Entrepreneurs in Trouble
Putin ordered the Central Bank to take measures to prolong loans form sole entrepreneurs who have gotten into trouble for objective reasons.
More detail about who can work as a sole entrepreneur in Russia, I have discussed in this blog post
Postponement of all Tax Payments, Besides VAT
Small and medium sized enterprises should be given the opportunity to get a 6 month postponement of pay all taxes, besides VAT.
Besides that, microenterprises (Russian companies with not more than 15 employees and not more than 120 million rubles turnover) can also get a postponement of payments of contributions to the funds.
A 6 month moratorium for bankruptcy cases (in certain sectors) and for debt recovery from companies in vulnerable sectors
For 6 months creditors will no longer be able to start a bankruptcy case against companies. Companies can of course still file for bankruptcy themselves.
It has not yet been indicated which sectors are these vulnerables sectors.
Lower contributions to the funds (15% instead of 30%)
For the part of the salary that is above the minimal salary (минимальный размер оплаты труда ор МРОТ in Russian) the contributions to the funds (Pension fund and other funds) are planned to be lowered from 30 to 15%.
On this website you can find an overview of minimum wage in Russia (it’s different for different regions).
President Putin commented that the lower contribution to the funds is not planned as a temporary, but as a long term matter, to ‘inspire employer to raise the salaries’.
Raise Tax on Dividends Payments Made to other Jurisdictions
It was proposed to raise this tax to 15%.
Install New Tax on Revenue on Interest from Bank Deposits larger than 1 Million Rubles
Currently the revenue in the form of interest from Russian bank deposits is not taxed in Russia. Putin has proposed to install a tax of 13% on the revenue of the interest of bank deposits larger than 1 million rubles.
Just Proposals for Now
The measures mentioned in this article have yet to be laid down in law. Are you wondering how these measures will affect you or your business? Feel free to contact us.