reference

FEDERAL LAW

NO. 222-FZ OF DECEMBER 29, 1995

ON A SIMPLIFIED SYSTEM OF TAXATION, ACCOUNTING AND REPORTING

FOR THE ENTITIES OF SMALL BUSINESS

(with the Amendments and Additions of December 31, 2001)

Adopted by the State Duma on December 8, 1995

Approved by the Federation Council on December 20, 1995

The present Federal Law shall determine the legal bases for the introduction and application of a simplified system of taxation, accounting and reporting for the entities of small business: juridical persons (hereinafter referred to as organizations) and natural persons conducting business activity without forming a juridical person (hereinafter referred to as individual businessmen).

Article 1. General Provisions

1. The simplified system of taxation, accounting and reporting for the entities of small business - organizations and individual businessmen - shall be applicable along with the earlier adopted system of taxation, accounting and reporting stipulated by the legislation of the Russian Federation.

The option of the system of taxation, accounting, and reporting, including the transfer to the simplified system or a return to the earlier adopted system, shall be granted to the entities of small business on a voluntary basis in the procedure stipulated by the present Federal Law.

2. The application of the simplified system of taxation, accounting and reporting by the organizations falling under the effect of the present Federal Law shall stipulate the substitution of the payment of the aggregate of the federal, regional, and local taxes and fees established by the legislation of the Russian Federation for the payment of a single tax calculated by the results of the economic activity of the organizations for the accounting period.

For the organizations applying the simplified system of simplified system of taxation, accounting and reporting there shall be maintained the effective procedure for the payment of the customs duties, the State duties, the tax on the acquisition of motor vehicles, the license fees, the uniform social tax.

3. The application of the simplified system of taxation, accounting, and reporting by individual businessmen shall stipulate the substitution of the payment of the income tax established by the legislation of the Russian Federation on the income derived from the conducted business activity for the payment of the cost of a patent for engaging in the given activity (hereinafter referred to as the patent).

4. The organizations applying the simplified system of taxation, accounting and reporting shall be granted the right to draw up the source documents of accounting and to keep the income-and-expenses record book according to a simplified form, including without applying the double entry method, the chart of accounts and the observance of any other requirements stipulated by the effective regulations on the keeping of accounting and reporting.

The simplified form of the source documents of accounting and the keeping of the income-and-expenses record book shall be established by the Ministry of Finance of the Russian Federation and shall be unitary on the whole territory of the Russian Federation.

5. For the organizations and individual businessmen applying the simplified system of taxation, accounting and reporting there shall be maintaining the effective procedure for conducting the cash operations and presenting the necessary statistical reporting.

Article 2. Subject of the Simplified System of Taxation, Accounting, and Reporting

1. The effect of the simplified system of taxation, accounting, and reporting shall apply to the individual businessmen and organizations with the maximum number of workers (including those working under contract agreements or other agreements of civil legal character) of up to 15 persons regardless of the type of the activity conducted by them.

The maximum number of workers for organizations shall include the number of those working in their branches and units.

2. The effect of the simplified system of taxation, accounting, and reporting shall not cover the organizations engaged in the output of excisable products, or the organizations created on the basis of the liquidated structural units of operating enterprises, and also the credit organizations, the insurers, the investment funds, the professional participants of the securities market, the enterprises of the gambling and entertainment business, and the economic entities of any other categories for which the Ministry of Finance of the Russian Federation has established a special procedure for the keeping of accounting and reporting.

3. The subjects of small business shall have the right, in the procedure stipulated by the present Federal Law, to switch over to the simplified system of taxation, accounting and reporting, if during the year preceding the quarter in which the application was presented for the right of applying the simplified system of taxation, accounting and reporting the aggregate amount of the total receipts of a given taxpayer had not exceeded the amount of the one-hundred-thousand-fold minimum rate of the remuneration of labour established by the legislation of the Russian Federation as on the first day of the quarter in which the application was presented.

A newly created organization or a newly registered individual businessman that have presented the application for the right of applying the simplified system of taxation, accounting, and reporting shall be deemed to be entities of the simplified system of taxation, accounting and reporting from that quarter in which their official registration took place.

Article 3. Objects of the Taxation of the Organizations in the Simplified System of Taxation, Accounting and Reporting

1. The object of imposition with a single tax of organizations in the simplified system of taxation, accounting and reporting shall be established to be the aggregate income derived during the accounting period (a quarter), or the total receipts derived during the accounting period. The choice of the object of taxation shall be carried out by the body of State power of the entity of the Russian Federation.

2. The aggregate income shall be calculated as the difference between the total receipts and the cost of what has been used in the process of the production of goods (works, services): the raw and any other materials, complementary parts, acquired goods, fuel, operating expenses, running repairs, expenses on the rent of the premises used for the production and commercial activity, expenses on the rent of transport facilities, expenses on the payment of interest for the use of the credit resources of banks (within the limits of the effective refunding rate of the Central Bank of the Russian Federation plus three per cent), the services rendered, and also the value added tax amounts paid to the suppliers, the tax on the acquisition of motor facilities, the allocations to the State social nonbudgetary funds, the paid customs duties, State duties and license fees.

3. The total receipts shall be calculated as the sum of the receipts obtained from the realization of the goods (works, services), the selling price of the property realized during the accounting period, and the nonrealizational income.

Article 4. Rates of the Single Tax

1. For the entities of small business applying the simplified system of taxation, accounting and reporting there shall be established the following rates of the aggregate-income single tax that shall be subject to be transferred to:

the federal budget - at the rate of 10 per cent of the aggregate income;

the budget of the entity of the Russian Federation and the local budget - at the total rate not exceeding 20 per cent of the aggregate income.

In the case when the total receipts are the object of taxation for the entities of small business of certain categories, there shall be established the following rates of the single tax that shall be subject to be transferred to:

the federal budget - at the rate of 3.33 per cent of the total receipts amount;

the budget of the entity of the Russian Federation and the local budget - at the total rate not exceeding 6.67 per cent of the total receipts amount.

The yearly cost of the patent paid by individual businessmen shall be transferred in full to the budget of the entity of the Russian Federation.

2. The concrete rates of the single tax - depending on the type of the activity of the entities of small business, and also on the proportion of the distribution of the entered tax payments between the budget of the entity of the Russian Federation and the local budget - shall be established by a decision of the body of State power of the entity of the Russian Federation.

3. The bodies of State power of the entities of the Russian Federation may - instead of the objects and rates of taxation stipulated by Articles 3 and 4 of the present Federal Law - establish for the organizations, depending on the type of the activity conducted by them:

the calculation procedure for determining the single tax on the basis of the indices of typical representative organizations. In this case the single tax amounts payable by the organizations for the accounting period may not be lower than those determined by the calculation method, and the procedure of their distribution between the budgets of all levels must correspond to the norms established by the present Federal Law;

the privileges and/or the privileged procedure for the payment of the single tax for certain categories of payers within the scope of the tax receipts that are subject to be entered to the budget of the entity of the Russian Federation and the local budget.

Article 5. Procedure for the Application of the Simplified System of Taxation, Accounting and Reporting

1. The official document certifying the right of the application by the entities of small business of the simplified system of taxation, accounting and reporting shall be a patent issued for a period of one calendar year by the tax bodies at the place of the tax registration of the organizations and individual businessmen.

The form of the patent shall be established by the State Tax Service of the Russian Federation and shall be unitary on the whole territory of the Russian Federation.

2. The yearly cost of a patent for the entities of small business falling under the effect of the present Federal Law shall be established with regard to the single tax rates by a decision of the body of State power of the entity of the Russian Federation depending on the type of activity.

The payment of the yearly cost of the patent shall be made by the organizations and individual businessmen quarterly in accordance with the distribution of the payments established by the body of State power of the entity of the Russian Federation. The payment of the cost of the patent shall be set off in the obligation of the organization to pay the single tax.

3. For the organizations applying the simplified system of taxation, accounting and reporting the paid yearly cost of the patent shall be entered to the federal budget, and also to the budgets of the entities of the Russian Federation and the local budgets in the ratio of one to two.

For the individual businessmen the paid yearly cost of the patent shall be a fixed payment substituting the payment of the single tax on the income for the accounting period.

4. The organizations and individual businessmen shall be issued the patent by the tax bodies at the place of their tax registration on the basis of a written application presented no later than one month before the beginning of the next quarter, provided that the following conditions are observed:

the total number of the workers employed in the organization does not exceed the number established in accordance with the present Federal Law;

the organization has no overdue repayment of debts on the taxes and on any other obligatory payments for the preceding accounting period;

the organization has in due time presented the relevant calculations on the taxes and the accounts for the preceding accounting period.

The branches and units that are taxpayers shall present to the tax body at the place of the tax registration the notarially certified copies of the patents issued to the organization no later than 15 days before the beginning of the next quarter.

5. The decision to permit an organization or an individual businessman to switch over to the simplified system of taxation, accounting and reporting or a reasoned refusal to do so shall be made by the tax body within fifteen days from the day when the application is presented by the organization or individual businessman.

6. When receiving the patent in the tax body the organization or individual businessman shall submit for registration the income-andexpenses record book, in which there shall be indicated the designation of the organization (or the surname, name and patronymic of the individual businessman), the type of the activity being conducted (only for the individual businessmen), the location, and the numbers of the settlement accounts and any other accounts opened in banking institutions. The tax body shall fix the registration number of the patent and the date of the issue thereof on the first page of the incomeand-expenses record book. When issuing the patent there shall also be filled in its duplicate, which shall be kept in the tax body.

When the patent expires, upon an application of the organization or individual businessman the tax body shall issue a patent for the next (yearly) period of validity with the registration of a new income-andexpenses record book.

The patent and the income-and-expenses record book shall be covered by the rules for handling the reports established by the effective normative acts of the Russian Federation.

Where a patent is lost it shall be renewable by the tax body with the observance of the conditions indicated in the present Article and with the imposition on the organization or individual businessman of a fine whose rate shall be established by the body of State power of the entity of the Russian Federation.

The form of the income-and-expenses record book and the procedure for reflecting therein the economic operations by the entities of small business applying the simplified system of taxation, accounting and reporting shall be established by the Ministry of Finance of the Russian Federation.

7. By the results of the economic activity for the accounting period (quarter) the organization shall present to the tax body in the period before the 20th day of the month following the accounting period the calculation of the payable single tax with the offset of the paid cost of the patent, and also an extract from the income-and-expenses record book (as on the last working day of the accounting period) with the indication of the aggregate income (total receipts) obtained during the accounting period.

When presenting the indicated documents to the tax body the organization shall submit for checking the patent, the income-andexpenses record book, the cashbook, and also the payment orders on the payment of the single tax for the accounting period (with a note of the bank on the effecting of the payment).

When exceeding the maximum number of workers determined by the present Federal Law the taxpayers shall switch over to the earlier adopted system of taxation, accounting and reporting beginning from the quarter following the quarter in which there must be presented the report according to Item 7 of the present Article.

8. The refusal to apply the simplified system of taxation, accounting and reporting and the return switch over to the earlier adopted system of taxation, accounting and reporting may be carried out by the entities of small business from the beginning of the next calendar year, provided that the relevant application is presented to the tax body in the period no later than 15 days before the close of the calendar year.

Article 6. Responsibility of the Entities of Small Business Applying the Simplified System of Taxation, Accounting and Reporting

The responsibility of the entities of small business applying the simplified system of taxation, accounting, and reporting shall arise in accordance with the Law of the Russian Federation on the Bases of the Tax System in the Russian Federation and other legislative acts of the Russian Federation.

Article 7. Implementation of the Present Federal Law

The present Federal Law implemented after its official publication.

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