Patent System for Sole Proprietors on Marketplaces

Содержание:

• What Is the Patent Taxation System?
• Advantages of the Patent-Based Taxation System
• How to Transition to the Patent Tax System (PTS) as an Individual Entrepreneur
• Features of Applying the Patent Tax System on Marketplaces
• Tax Reports for Sellers Under the Patent Tax System
• Combining the Patent Tax System (PTS) with Other Tax Regimes
• Possibility of Reducing Patent Costs
• Conclusion
• Q&A

When launching on any marketplace, it is crucial for a seller to first choose the appropriate taxation system, as it determines the format of reporting, tax burden, and various operational specifics. An ill-considered choice can lead to disappointment in trading and significant financial losses. In this article, we take a detailed look at income taxation under the Patent Taxation System (PTS) and explain how to work with it correctly.

What Is the Patent Taxation System?

The Patent Taxation System (PTS) is a special tax regime that allows individual entrepreneurs to pay taxes as a fixed amount calculated based on their estimated potential income. It is designed specifically for sole proprietors and applies to certain types of business activities.

Introduced in Russia to simplify tax accounting for small businesses and stimulate entrepreneurial growth, PTS enables entrepreneurs to avoid complex calculations and declarations associated with other taxation systems. To qualify for this regime, a sole proprietor must meet specific legal criteria regarding the nature of their business, the number of employees, and the annual income threshold.

Once a patent is obtained, the entrepreneur pays a fixed tax, the amount of which is determined by the type of activity, region, and duration of the patent. One of the key advantages of this system is that it exempts the entrepreneur from maintaining detailed accounting records or submitting tax declarations. Instead, a single fixed payment is made—significantly streamlining the taxation process.

Advantages of the Patent-Based Taxation System

• Simplicity and Convenience. The patent system significantly streamlines business operations, as it eliminates the need for full-scale accounting and the submission of tax returns. An entrepreneur simply acquires a patent for a specific period and pays a fixed tax amount. This proves particularly advantageous for small businesses and sole proprietors lacking extensive expertise in finance and taxation.
• Reduction of Tax Burden. The patent system enables a substantial decrease in fiscal obligations. Instead of paying income tax, value-added tax (VAT), and other levies, the entrepreneur remits a fixed sum calculated based on the estimated potential income of the chosen activity. This allows for meaningful savings and greater reinvestment into the business.
• Expense Predictability. By purchasing a patent, the entrepreneur gains clarity on the exact tax amount due over a given term, facilitating more precise budgeting and minimizing unforeseen expenditures.
• Flexible Term Selection. Patents can be obtained for a period ranging from 1 to 12 months, granting entrepreneurs the flexibility to tailor tax payments according to their business cycles and strategic plans.
• Exemption from VAT Registration. Entrepreneurs operating under the patent system are exempt from VAT obligations, which simplifies administrative procedures and alleviates additional costs associated with VAT reporting and payment.
• Compatibility with Other Tax Regimes. The patent regime may be combined with other tax systems, such as the simplified tax system (STS) or the unified tax on imputed income (UTII), offering entrepreneurs the opportunity to select the most advantageous structure for their specific line of work.
• Support for Small Enterprises. As a tool of governmental support for small businesses, the patent system reduces the financial and bureaucratic barriers for emerging entrepreneurs, allowing them to focus on business development rather than regulatory complexity.
• Broad Accessibility. The patent system is available to individual entrepreneurs engaged in designated activities outlined by legislation, making it an accessible and practical option for a wide spectrum of business owners, regardless of scale.

How to Transition to the Patent Tax System (PTS) as an Individual Entrepreneur

To transition to the Patent Tax System (PTS), an individual entrepreneur must complete several key steps.

Step 1: Verify Compliance with Criteria

The first step is to ensure that your business activity aligns with the criteria established for PTS in your region. The main criteria include:

• Type of Activity: The list of activities eligible for PTS is determined by local authorities and generally includes services, trade, domestic services, and more.
• Income Limits: The maximum income threshold for PTS eligibility is set regionally.
• Number of Employees: There is typically a limit on the number of employees an entrepreneur can have while using PTS.

Step 2: Calculate the Cost of the Patent

The cost of the patent depends on the type of activity, the term of the patent, and the region. The patent fee is calculated based on the potential income associated with your type of business. You can use online calculators or contact the tax office for more precise information.

Step 3: Submit an Application for the Patent

To switch to PTS, you must submit an application to the tax office at your place of registration. The application can be submitted in person, through a representative, or electronically via the State Services portal. In the application, you must specify:

• The type of activity for which you wish to obtain the patent
• The term of the patent (from 1 to 12 months)
• The region where you will conduct your business

Step 4: Pay for the Patent

After receiving the notification of patent issuance, you must pay for it. Payment can be made at any bank or through online services. It is important to remember that the payment must be made within 5 days of receiving the notification.

Step 5: Start Operating Under the Patent

Once the patent is paid, you can begin your business activities as outlined in the patent. It is important to comply with all the terms and restrictions established for PTS and to submit any required reports to the tax office on time.

Before transitioning to PTS, we recommend thoroughly reviewing all conditions and requirements, as well as evaluating the economic feasibility of such a move. If you have any questions, it is advisable to consult with an accounting and taxation specialist.

Features of Applying the Patent Tax System on Marketplaces

It is essential to recognize that not all types of online trading activities are eligible for the Patent Tax System (PTS). For instance, the sale of goods requiring special permits or licenses may be restricted under PTS. Additionally, marketplaces may have their own specific requirements and conditions for sellers operating on their platforms. Therefore, before selecting the Patent Tax System, it is crucial to thoroughly examine the terms of cooperation with a particular marketplace.

Advantages of the Patent Tax System for Individual Entrepreneurs on Marketplaces:

• Simplified Reporting: The PTS eliminates the need for detailed bookkeeping and filing tax declarations. This significantly simplifies the reporting process for entrepreneurs, allowing them to focus on business development.
• Fixed Tax: The tax rate under PTS is determined in advance and does not depend on sales volume. This enables entrepreneurs to plan their financial flows and avoid unexpected tax expenses.
• Reduced Tax Burden: In some cases, the Patent Tax System may be more advantageous than other tax regimes, especially for entrepreneurs with a small turnover.
• Ability to Combine with Other Tax Regimes: Entrepreneurs working on marketplaces can combine PTS with other tax systems, such as the Simplified Tax System (STS), if their activities fall under different categories that have distinct tax regimes.
• Ease of Acquisition: Obtaining a patent typically does not involve complex procedures or significant time investments. This makes PTS accessible for many entrepreneurs.

The patent confirms the entrepreneur’s right to engage in specific activities within a given region of the Russian Federation. The cost of the patent depends on the type of activity, the region, the term of the patent, and the potentially achievable income established for that activity in the region. The tax calculation under PTS proceeds as follows:

• Determining Potential Income: Each region independently establishes the potential income for each type of activity eligible for a patent. This amount serves as the basis for the patent cost calculation.
• Patent Cost Calculation: The cost of the patent is calculated using the formula: Patent Cost=(Potential Income×Tax Rate)/100%\text{Patent Cost} = \left( \text{Potential Income} \times \text{Tax Rate} \right) / 100\%Patent Cost=(Potential Income×Tax Rate)/100% The tax rate is determined by regional legislation and can range from 0% to 6%.
• Account for Patent Term: If the patent is issued for a term of less than 12 months, the cost is calculated proportionally to the duration of the patent.
• Tax Payment: The entrepreneur is required to pay the patent cost within the established deadlines. Depending on the patent’s term, payment can be made either in full or in installments.

For example, let’s assume the entrepreneur intends to engage in retail trading in a specific region. The potential income for this activity is set at 1 million rubles per year, and the tax rate in the region is 4%.

The patent cost calculation would be as follows: Patent Cost = (1 000 000 × 4%) / 100% = 40 000 rubles.

If the patent is issued for 6 months, the cost would be: Patent Cost for 6 months = 40 000 / 2 = 20 000 rubles

Thus, the entrepreneur would need to pay 20,000 rubles for the patent, which allows them to engage in retail trading for 6 months.

It is important to note that when calculating taxes under PTS, all regional legislative specifics and requirements must be considered. Additionally, PTS is not a one-size-fits-all solution for all entrepreneurs, and the choice of tax regime should be based on the specific conditions and features of the business.

Tax Reports for Sellers Under the Patent Tax System

When applying the Patent Tax System (PTS), entrepreneurs are not required to submit declarations for personal income tax (PIT), value-added tax (VAT), or other tax declarations typically required under other tax regimes. However, there are several important aspects to keep in mind:

• Notification of Transition to PTS: Before beginning to apply the PTS, an entrepreneur must submit a notification about the transition to this tax system to the tax authority. This should be done before starting the activities for which the patent is obtained.
• Copy of the Patent: After receiving the patent, it is advisable to provide a copy to the tax authority. While this is not a mandatory requirement, doing so can help avoid potential misunderstandings.
• Income and Expense Record Book: Despite the absence of a requirement to submit tax declarations, entrepreneurs under PTS are still obligated to maintain a book of income and expenses. This is necessary to monitor compliance with PTS criteria (e.g., limits on the number of employees and income).
• Social Insurance Contributions Reports: Entrepreneurs on PTS must also pay social insurance contributions for themselves and their employees. The reporting for these contributions follows the general rules.
• Reporting in Case of Combining with Other Regimes: If the entrepreneur combines PTS with other tax regimes (such as the Simplified Tax System – STS), they must submit reports in accordance with the requirements of each respective regime.

Combining the Patent Tax System (PTS) with Other Tax Regimes

It is possible to combine the Patent Tax System (PTS) with other tax regimes when working on marketplaces, but certain restrictions apply. According to the Tax Code of the Russian Federation, an individual entrepreneur (IE) using PTS may combine it with the general taxation system or the Simplified Tax System (STS), but cannot simultaneously apply two special tax regimes (e.g., PTS and STS).

It is crucial to consider the limitations related to the types of activities subject to taxation under PTS and to comply with the income and employee limits set for PTS application.

If you plan to combine PTS with other tax regimes while working on marketplaces, it is advisable to consult with a tax specialist or your local tax authority to clarify all the nuances and requirements applicable to your specific situation.

Possibility of Reducing Patent Costs

Although the tax amount under the Patent Tax System (PTS) is fixed, certain conditions and limitations may affect the overall cost of the patent. Let us examine some of these factors:

• Change in Type of Activity: If an entrepreneur intends to change the type of activity for which the patent was obtained, they will need to acquire a new patent reflecting the new business activity. This could impact the cost of the patent, as the potential annual income may vary.
• Change in Place of Activity: If an entrepreneur plans to conduct their business in a different location, a new patent will also be required. The cost may vary depending on the region and the place of business operations.
• Maintaining Eligibility for PTS: To retain the right to apply the PTS, certain conditions must be adhered to, such as limits on the number of employees and income. Failure to comply with these conditions may result in the loss of PTS eligibility, requiring the entrepreneur to switch to another tax regime, potentially leading to higher tax liabilities.
• Application of Tax Benefits and Preferences: Some regions may offer tax benefits and preferences for specific types of activities or categories of entrepreneurs. These incentives can reduce the cost of the patent.
• Timely Payment of Tax: It is essential to pay the patent tax on time. Delays in payment may result in penalties and fines, increasing the overall tax burden.

Thus, while the patent cost is fixed, various factors can influence its amount. Entrepreneurs should take these considerations into account when planning their business operations and calculating their tax obligations.

Conclusion

The Patent Tax System is an effective tool for optimizing tax payments for small businesses. It enables entrepreneurs to simplify tax accounting, reduce tax burdens, and focus on growing their ventures. However, before transitioning to the patent system, it is crucial to thoroughly examine all conditions and requirements to ensure that it is suitable for the specific type of business and activity.

For entrepreneurs operating on marketplaces, the Patent Tax System can be a favorable option. It streamlines tax reporting, alleviates the tax load, and allows entrepreneurs to focus on business development. However, before deciding to adopt the PTS, it is essential to consider the specifics of one’s business operations and the requirements of the marketplaces on which they trade.

Q&A