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National Interests: Priorities and Security
 

Patent-based taxation as a tool to support small businesses in Russia

Vol. 13, Iss. 5, MAY 2017

PDF  Article PDF Version

Received: 8 February 2017

Received in revised form: 16 March 2017

Accepted: 5 April 2017

Available online: 29 May 2017

Subject Heading: ECONOMIC POLICY OF THE STATE

JEL Classification: E62, H21, K34

Pages: 857-870

https://doi.org/10.24891/ni.13.5.857

P'yanova M.V. Financial University under Government of Russian Federation, Moscow, Russian Federation
marinapyanova@mail.ru

Importance Small and medium-sized businesses play a much lesser role that similar businesses do in most developed economies. It necessitates the development of such business forms in the current circumstances. Patent-based taxation is one of the special tax treatment designated to support small businesses.
Objectives The research analyzes practical aspects of patent-based taxation in Russia and identifies reasons why individual entrepreneurs are reluctant to apply this special tax treatment.
Methods Based on descriptions and summaries, I identified key strengths and weaknesses of the existing tax patent mechanism. I applied methods of comparison, statistical data analysis, graphic method of data presentation to examine trends in taxpayers and respective fiscal revenue.
Results It is possible to enlist the following advantages of the patent-based tax treatment: tax authorities’ valuation of the patent, no restrictions to the patent period, simple rules for keeping income ledger, exemption from tax returns, etc. However, the patent-based tax treatment has also its weaknesses enlisted in the article.
Conclusions and Relevance Having compared the uniform imputed income tax and patent-based tax treatment, I could find a number of similarities and differences. Under some circumstances, the uniform imputed income tax is still more convenient and beneficial for individual entrepreneurs as compared with the patent-based taxation, since they can deduct the amount of compulsory social security charges out of the total taxes payable.

Keywords: small business, tax treatment, tax patent, individual entrepreneurs, uniform imputed income tax

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