The Parliament has reduced insurance payment rate for small and medium-sized companies

On March 25, 2020 the Russian president took initiative to reduce the general insurance premium rate for small and medium-sized businesses as part of a set of measures aimed to support Russian companies in the face of pandemic.

In this regard, on April 1, the Parliament adopted Federal law No. 102-FZ of 01.04.2020, which amends appropriate provisions of Russian tax legislation.

In accordance with new rules the general insurance premium rate to extra-budgetary funds is reduced twice, namely from 30 to 15% for small and medium-sized businesses. The insurance contributions to the Pension Fund will be paid at the rate of 10%, to obligatory medical insurance fund at rate of 5%, and social insurance fund contributions will not be payable.

It should be noted that the rates’ reduction applies to the amount of an individual’s salary only in the part that exceeds the minimum wage at the end of the calendar month. Let us remind that the minimum wage is 12 130 rubles at the moment.

According to the law, the right for reducing insurance premium rates is granted exclusively to small and medium-sized businesses that meet the following criteria.

1.         For small businesses:

• the total share of participation of foreign organizations or organizations that are not small business entities does not exceed 49%;

• the number of employees is up to 15 people (for microenterprises) and 16 -100 people (for small businesses);

• annual turnover does not exceed 800 million rubles.

2.         For medium-sized enterprises:

• the number of employees is 101-250 people or 251-1000 people as provided by the list of light industry enterprises in accordance with the procedure stipulated by Government Decree No. 1412 of 22.11.2017;

• annual turnover does not exceed 2 billion rubles.

Thus, in accordance with the new rules, an amount equal to 15% of the salary in the amount exceeding 12130 rubles is subject to payment as an insurance premium. Reduced rates of insurance premiums are valid starting from April 1, 2020. It is noted that the measures taken will ensure favorable business conditions and have a positive impact on the economic situation, complicated by the spread of COVID-19.