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Russia's state Duma has begun consideration of a bill that would abolish the requirement for taxpayers applying uniform tax on imputed income to use cash registers. The law states that upon request from the purchaser, documentation must be provided confirming the completed sale. The refusal to produce such documentation goes directly against Article 14.5 of the Russian Federation’s Administrative Code.

The law also releases organizations and individual entrepreneurs from paying a single tax on imputed income earned from certain activities.

The law came about because Russia is constantly looking for new ways to lend support to small businesses.

One of the main purposes the Second Article of the Federal Law “On the Use of Technology in the Accepting of Cash or Credit Card Payments" is to ensure the interests of the state and tax discipline; meaning that the state can gain more from business activities conducted in cash.

At the same time, in accordance with Chapter 26.3 of the Russian Federation Tax Code, the subjugation to the Unified Tax on Imputed Income, is not based on actual earnings. The size of the imputed income depends greatly on the legally defined base income, the physical characteristics of the sales area, the location of the commercial premises, and the number of employees. Thus, the amount of earnings received by the company before taxes is not even considered.

Further, given the fact that the payment of the single tax on imputed income releases taxpayers from paying other taxes, the use of cash registers has no affect on tax collection for these companies.

In this regard, it doesn’t make sense to use registers in the case of taxpayers opting to pay the Unified Tax on Imputed Income.

Abolishing the requirement would also free all business from potentially unnecessary expenses for the purchase and maintenance of their registers. Taxpayers are required to register their machines with the tax authorities, and only have maintenance performed on them by authorized centers.

The adoption of the proposed bill would stimulate the creation of new businesses and the development of those already in existence.

Now Russian businesses must await the approval of the Russian Federation Council and the President’s signature. The law will take effect on the date of publication.

Alinga Consulting Group

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