Changes in laws for entrepreneurs

Amendments to the laws “Special tax regime – simplified taxation system” and “Special tax regime – patent taxation system” were adopted by the Parliament in the second reading in the course of the plenary session held on December 6. 

Entrepreneurs began to work in 2023 under new tax rules, which were introduced into legislation in 2022. Entrepreneurs encountered some difficulties in concluding and terminating civil contracts with employees in the course of implementing the laws on the application of simplified and patent taxation systems.

The law-in-draft adopted today for entrepreneurs working under a simplified system has changed the procedure for concluding and terminating contracts between individual entrepreneurs and employees. Individual entrepreneurs can terminate contracts with employees and enter into new contracts in the current month now. This rule applies only if the entrepreneur has no more than 5 employees at the same time. The changes are primarily aimed at small catering establishments and small retail outlets, since they most often face the constant problem of staff shortages.

There are similar changes in the patent tax system. The legislative initiative adopted in the final reading provides for granting individual entrepreneurs and heads of peasant farms the right to terminate civil contracts with current employees and conclude new contracts with new persons within a month. An important condition is compliance with the limit on the number of persons involved, which should not exceed 3 people at a time. It is expected that innovations will improve the efficiency of business activities and contribute to the development of the small and medium-sized business sector.

Amendments to the second reading in the law “Special tax regime - simplified taxation system” regulated the situation with non-compliance with deadlines for paying taxes by individual entrepreneurs in 2023. According to current legislation, “simplified” persons must pay all tax obligations within 5 days of the next month, and within 30 days there is the possibility of adjustments for social payments. However, a significant number of entrepreneurs made mistakes, despite consultations with tax authorities. More than 180 entrepreneurs committed similar violations in 2023. They could lose their individual entrepreneur status under the “simplified procedure” in 2024 according to the law.

The relevant parliamentary Committee noted that not all entrepreneurs managed to familiarize themselves with the new laws or carefully study them on time most likely.

The legislations were unanimously supported by the parliamentary corps; they will be sent to the President for signature and will come into force from the date of signing.