Improvement of small business taxation in the Russian Federation

Sergey Belev, Konstantin Vekerle, A. Evdokimova and Aleksander Krasnoselskikh
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Sergey Belev: Gaidar Institute for Economic Policy
Konstantin Vekerle: RANEPA
A. Evdokimova: Northwestern University
Aleksander Krasnoselskikh: RANEPA

Working Papers from Gaidar Institute for Economic Policy

Abstract: The criteria of determining a small business requires careful analysis for developing tax policy. In this work an international analysis of tax regimes for small businesses was carried out. As part of this analysis, similarities and differences with Russian practice of small business taxation were identified. Small enterprises and self-employed in Russia are less subject to tax control than large enterprises, which is reflected in the lower probability of revealing hidden income. As a result of the analysis, it was revealed that the share of hidden income is approximately 15-25% of the actual income. Analysis of the demography of enterprises for the period 2010-2019 showed that in the vicinity of the revenue thresholds that determine the right to use the loyal tax system, there is an increase in the distribution density to the left of the threshold values. This suggests that representatives of small businesses are striving to make tax optimization by using the loyal tax system. This is especially noticeable for firms that are just entering the market.

Keywords: Russian economy; small business; small business taxation; tax avoidance (search for similar items in EconPapers)
JEL-codes: L25 L26 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2020, Revised 2020
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