The simplified taxation system is a unique tax regime from the point of view of choosing the object of taxation: you can not only choose it, but also change it every tax period. Read about what to pay attention to when choosing an object of taxation, as well as how to change it, in the proposed material.
The right to choose
Chapter 26.2 of the Tax Code of the Russian Federation regulates the application of the simplified tax system. According to Art. 346.14 of the Tax Code of the Russian Federation there are two possible objects of taxation:
- income
- income reduced by expenses
In this case, the choice of the object of taxation is made by the taxpayer himself. And this right is not limited in any way for the vast majority of “simplified” people: only taxpayers who are parties to a simple partnership agreement (joint activity agreement) or a property trust management agreement use income reduced by the amount of expenses as an object of taxation. There are no other restrictions for choosing the object of taxation Ch. 26.2 is not installed.
This conclusion is confirmed by the highest court. By voluntarily switching to a simplified taxation system, taxpayers, as a general rule, choose the object of taxation for themselves (clause 1 of Article 346.11 and clause 2 of Article 346.14 of the Tax Code of the Russian Federation). Thus, they independently decide when and how it is more profitable for them to dispose of the rights that belong to them, including taking into account the tax consequences of their actions (the size of the tax rate, the specifics of tax accounting and the consequences of switching to a different taxation system) (Definition of the Constitutional Court of the Russian Federation dated 22.01 .2014 No. 62‑O).
In addition to the right to choose, “simplified” people have the right to change the object of taxation at will, but according to the rules established by Chapter. 26.2 of the Tax Code of the Russian Federation:
- the object of taxation may change annually
- the object of taxation can be changed only from the beginning of the tax period; during the tax period, the taxpayer cannot change the object of taxation
- the taxpayer is obliged to notify the tax authority of his decision before December 31 of the year preceding the year in which the taxpayer proposes to change the object of taxation
Thus, when making a decision to apply the simplified tax system, the taxpayer must make a choice of the object of taxation, which is indicated in the notice of transition to this special regime. But the current tax legislation does not insist that the “simplified” apply only the initially selected object of taxation; today it can be changed annually.
Moreover, according to explanations from representatives of the Ministry of Finance, if a notice of transition to a simplified taxation system is submitted to the tax authority, but a decision is made to change the initially selected object of taxation, then it is permissible to clarify such a notice, but no later than December 31 of the calendar year in which this was submitted notification (letters dated January 16, 2015 No. 03‑11‑06/2/813, dated October 14, 2015 No. 03‑11‑11/58878). In this case, a taxpayer who decides to switch to the simplified tax system may change his mind and change the object of taxation, but must meet the deadline. In this case, an organization or individual entrepreneur can submit to the tax authority a new notification of the transition to the simplified tax system in form 26.2‑1 “Notification of the transition to a simplified taxation system”, approved by Order of the Federal Tax Service of Russia dated November 2, 2012 No. ММВ-7-3/ [email protected] , indicating a different object of taxation and attaching a letter stating that the previously submitted notification is cancelled.
But an organization or individual entrepreneur that has registered again and submitted an application to switch to the simplified tax system cannot change the object of taxation in the same tax period (Letter of the Federal Tax Service of Russia dated June 2, 2016 No. SD-3-3/2511). Let's explain what was said. According to paragraph 2 of Art. 346.13 of the Tax Code of the Russian Federation, a newly registered individual entrepreneur, for example, has the right to notify about the transition to the simplified tax system no later than 30 calendar days from the date of registration with the tax authority. In this case, he is recognized as a taxpayer using the simplified tax system from the date of his registration with the tax authority, indicated in the certificate of registration with the tax authority. If this notification is submitted to the tax authority (indicating the selected object of taxation), and the individual entrepreneur suddenly changes his mind and wants to change the object of taxation, then he will be able to do this only from the next tax period.
Tax officials justify this with this: Art. 346.14 of the Tax Code of the Russian Federation imperatively establishes that taxpayers using the simplified tax system do not have the right to change the object of taxation specified in the notice of transition to the simplified tax system during the tax period. This norm of the Tax Code of the Russian Federation does not contain any provisions on the possibility of correcting errors in the notification of the transition to the simplified tax system regarding the object of taxation.
This once again suggests that the choice of taxation object under the simplified tax system must be taken responsibly.
Especially for individual entrepreneurs, we note that if they choose the wrong object of taxation, in their opinion, it will not be possible to change it during the tax period and in such a way as cessation of business activity and re-registration in the same tax period. Let us give one of the latest examples on this issue.
All judicial authorities, including the Constitutional Court, supported the decision of the tax authority regarding the conclusions about an unlawful change in the object of taxation in the following case (Determination dated July 19, 2016 No. 1459-O). An individual entrepreneur used the simplified tax system with the object of taxation “income” in 2012. On June 21, 2012, in accordance with his will, registration as an individual entrepreneur was terminated, and on June 29, 2012, he was again registered as an individual entrepreneur and filed an application for the application of the simplified tax system with the object of taxation “income reduced by the amount of expenses.” Based on the results of the on-site tax audit for 2012, the tax authority collected the amount of tax, penalties and a fine in connection with an unlawful change in the object of taxation during the tax period.
The Constitutional Court indicated that the prohibition on changing the object of taxation during the tax period equally applies to all taxpayers using the simplified tax system.
How to choose: pros and cons of different taxation objects under the simplified tax system
So, ch. 26.2 of the Tax Code of the Russian Federation offers taxpayers a choice of two objects of taxation: “income” and “income minus expenses”. Before answering the question of which object of taxation is preferable, let us ask ourselves what goal we are pursuing in this case. The goal is obvious and clear: minimizing tax payments.
Thus, the existing results of financial and economic activities for the nine months of 2020 - income received, expenses, amounts of insurance premiums, trading fees - must be analyzed from the point of view of their impact on the final result - the amount of tax payable for the tax period. For newly registered organizations or individual entrepreneurs, the choice of taxation object will have to be made based not on actual data, but on the figures of the business plan.
To help the “simplified” people, we have compiled a comparative table of two objects of taxation. It highlights points that need to be paid special attention to.
Index
| Object of taxation “income” | Object of taxation “income minus expenses” | |
| Income | Income is taken into account, determined in the manner established by paragraphs 1 and 2 of Art. 248 Tax Code of the Russian Federation. Income referred to in Art. is not taken into account. 251 of the Tax Code of the Russian Federation, as well as subject to income tax and personal income tax (Article 346.15 of the Tax Code of the Russian Federation) | |
| Expenses | Not taken into account | The expenses indicated in the list and actually paid are taken into account (Articles 346.16, 346.17 of the Tax Code of the Russian Federation) |
| Insurance premiums | Reduce the amount of tax, but not more than 50%. Individual entrepreneurs who do not make payments to employees reduce tax on the entire amount of insurance premiums | Taken into account in expenses (clause 7, clause 1, article 346.16 of the Tax Code of the Russian Federation) |
| Trade fee | Reduces the amount of tax calculated for the object of taxation from the specified type of business activity | Taken into account in expenses (clause 22, clause 1, article 346.16 of the Tax Code of the Russian Federation) |
| Losses | Not taken into account | Reduces the tax base based on the results of the tax period |
| The tax base | Monetary expression of income | Monetary value of income reduced by expenses |
| Tax rate | 6 %; laws of constituent entities of the Russian Federation can establish tax rates ranging from 1 to 6% depending on the categories of taxpayers; 0% – “tax holiday” for individual entrepreneurs | 15 %; The laws of the constituent entities of the Russian Federation may establish differentiated tax rates ranging from 5 to 15% depending on the categories of taxpayers. According to the laws of the Republic of Crimea and the city of Sevastopol in 2017 - 2021, the rate may be reduced to 3%; 0% – “tax holiday” for individual entrepreneurs |
| Minimum tax | Not paid | Paid at the end of the tax period if it exceeds the amount of tax calculated in accordance with the general procedure |
| Maintaining a book of income and expenses | Necessarily | Necessarily |
| Documentary evidence of income and expenses to determine the tax base under the simplified tax system | Mandatory, except for expenses | Necessarily |
The procedure for accounting for income under the simplified taxation system does not depend on the selected object of taxation. But under the simplified tax system there is a special procedure for accounting for expenses (only for the object “income minus expenses”):
- a “closed” list of expenses established by Art. 346.16 Tax Code of the Russian Federation;
- the expenses taken into account must meet the criteria specified in paragraph 1 of Art. 252 of the Tax Code of the Russian Federation (to be justified and documented);
- the features of accounting for certain types of expenses are indicated;
- Taxpayer expenses are recognized as expenses after they are actually paid.
Here you need to analyze the costs for inclusion in expenses under the simplified tax system: not all costs can be taken into account in expenses, and also, in order for them to become expenses, the costs must be paid. The availability and cost of fixed assets play an important role: in the case of the acquisition of expensive fixed assets, it may be advisable to use the object of taxation “income minus expenses”. Often these factors become decisive when choosing an object of taxation.
For the sake of fairness, let us recall that when the object of taxation is “income minus expenses,” the “simplifier” has the right to take into account in expenses the amount of the difference between the amount of the minimum tax paid and the amount of tax calculated in the general manner (clause 6 of Article 346.18 of the Tax Code of the Russian Federation), as well as reduce the tax base for the amount of loss received based on the results of previous tax periods with the same object of taxation (clause 7 of Article 346.18), which also allows minimizing the amount of tax payable at the end of the tax period.
An important advantage in favor of choosing the object of taxation “income” is the fact that the amount of tax can be reduced by half if the amount of paid insurance premiums and other payments is significant in accordance with clause 3.1 of Art. 346.21 of the Tax Code of the Russian Federation, as well as the amount of paid trade tax can be deducted from the tax amount.
As for supporting documents, there is an opinion that “simplified” people who apply the object of taxation “income” may not take into account “expenses” documents in any way and may not have them at all. But this is a misconception, since in addition to the tax paid under the simplified tax system, simplified tax agents perform the functions of tax agents for personal income tax, and are also payers of insurance premiums. In addition, documents confirming expenses are needed, for example, for settlements with counterparties.
From the above it follows that the determining factors when choosing an object of taxation under the simplified tax system are the type of activity being carried out and the specific types of expenses that occur.
Let us note another important point: today the subjects of the Russian Federation have been given broad rights to establish lower tax rates under the simplified tax system both for the object of taxation “income minus expenses” and for the object “income”, which they use. It is advisable to study regional legislation for adopted laws: perhaps the specific conditions for doing business in the region will allow the use of lower tax rates, thereby reducing tax payments.
Changes in accounting policies for tax accounting purposes
The applied object of taxation must be reflected in the accounting policy for the purposes of “simplified” tax accounting. If a decision is made to change the object of taxation, it is necessary to amend the accounting policy.
Accounting policies for tax accounting purposes under the simplified tax system can be adopted annually, since the tax period is a calendar year. Based on preferences, you can either adopt a new accounting policy for tax purposes next year, indicating a new object of taxation, or make changes to the current one, noting, for example, that from 2020 the object of taxation “income minus expenses” is applied (in 2020 the object "income"). Changes made to the accounting policy or a new version of it are approved by order of the head of the business entity.
How to change a taxable object?
What specifically needs to be done to apply a different object of taxation from 2020? Just take one step - notify the tax authority of your decision before December 31, 2020 (clause 2 of Article 346.14 of the Tax Code of the Russian Federation).
The notification can be submitted in any form. Let us remind you that the recommended form 26.2‑6 “Notification of a change in the object of taxation” was approved by Order of the Federal Tax Service of Russia No. ММВ-7-3 / [email protected] The notification indicates the object of taxation selected from 2020.
The notification can be submitted either in person or by mail. It is recommended to have confirmation that this notification has been submitted - this is either a mark on the second copy of the notification affixed by the territorial tax authority, or a receipt for mailing with a list of the contents.
Let us note that in this case there is no need to expect any response from the tax authorities, that is, the tax authorities will not send any confirmation of receipt of a notification or permission to change the object of taxation to the “simplified” person.
"Simplified" tax authorities can apply to the tax authority to confirm the fact of application of the simplified taxation system. In this case, the tax authorities will respond by sending an information letter to the taxpayer (form 26.2‑7), also approved by Order of the Federal Tax Service of Russia No. ММВ-7-3/ [email protected] The said letter indicates the date the taxpayer submitted the application to switch to the simplified tax system, reflected information about the submission (non-submission) of tax returns in connection with the application of the simplified tax system for tax periods in which the taxpayer applied a special tax regime. But the form of this letter does not provide for the reflection of information about the object of taxation applied by the taxpayer, therefore the “simplified” person will not receive an answer to the question about changing the object of taxation.
Thus, if the taxpayer sent a notification to the tax authority about changing the object of taxation before December 31, 2017, then he has the right to apply the selected object of taxation from 2020 (Letter of the Federal Tax Service of Russia dated April 15, 2013 No. ED-2-3/261).
Form No. 26.2-6 (new)
Quite the opposite: you inform the Federal Tax Service of your intention to use the simplified tax system in the next calendar year. Previously, there was a notification form about the possibility of using a simplified taxation system - this form served as a response to the taxpayer’s application.
But it lost force back in 2002 by order of the Federal Tax Service of Russia N MMV-7-3 / Now there is no need to wait for permission from the tax authorities to use the “simplified code”. Send notification of the transition to the simplified tax system yourself.
If for this you need a sample of filling out the notification of transition to the simplified tax system-2020 (form 26.2-1), it can be found at the end of the article. There is also no need to confirm the right to use this regime.
If you do not meet the conditions, this will become clear after the first report, and only then will you have to be financially responsible for the deception.
Transitional provisions
Speaking about changing the object of taxation, we must not forget about the transitional provisions that are regulated by Art. 346.17 and 346.25 of the Tax Code of the Russian Federation. When a taxpayer switches from the taxable object “income” to the taxable object “income minus expenses”:
- expenses related to tax periods in which the object of taxation “income” was applied are not taken into account when calculating the tax base
- on the date of such transition, the residual value of fixed assets acquired during the period of application of the simplified tax system with the object of taxation “income” is not determined
Accordingly, when switching from the object of taxation “income minus expenses” to “income”, expenses related to the previous tax period are not taken into account when applying the object of taxation “income”.
* * *
As a rule, the determining factors when choosing an object of taxation under the simplified tax system are the type of activity being carried out and the specific types of expenses that occur. Depending on this, as well as on regional legislation, which may introduce differentiated tax rates under the simplified tax system, both the object of taxation “income” and “income minus expenses” can be selected.
“Simplers” have the right to change the object of taxation from the beginning of the tax period. Accordingly, in order to apply the new object of taxation from 2020, you must notify the tax authority of your decision before December 31, 2020. If the taxpayer sent a notification to the tax authority about a change in the object of taxation as established in paragraph 2 of Art. 346.14 of the Tax Code of the Russian Federation deadline, then he has the right to apply the selected object of taxation from the beginning of the year following the year of sending the specified notification.
Results
Existing taxpayers can change the applicable object of taxation from January 1 of the following year by submitting a corresponding notification to the tax office before December 31 of the current year.
Newly created taxpayers (both individual entrepreneurs and organizations) who wish to apply the simplified tax system from the beginning of their activities must submit a corresponding application to the INFS, which indicates the selected object of taxation.
The main thing is not to miss the 30-day deadline for filing it. You can find more complete information on the topic in ConsultantPlus. Full and free access to the system for 2 days.
Filling out form 26.2‑6 “Notification of changes in the object of taxation”
In the notification form, you need to enter information about the taxpayer - indicate the TIN, KPP (for legal entities), the name of the organization (or the full name of the individual entrepreneur).
Number of the tax office where the document is submitted.
The year from the beginning of which the object of taxation of the simplified tax system will change.
Below the number you should select the desired option for the object of taxation (income or income reduced by expenses).
At the bottom left you need to put “1” if the notification is submitted personally by the head of the organization or an individual entrepreneur. In this case, below is the name of the manager (for organizations), the phone number, signature and date.
If the notification is submitted by a representative of the taxpayer, then you should put “2”, indicate the full name of the representative and details of the power of attorney on the basis of which he acts. The power of attorney must be issued personally by the individual entrepreneur or the head of the organization.
As an example, we suggest filling out notification form 26.2-6 using the link below.
Why is it necessary?
This document is used if an entrepreneur applying the simplified tax system decides to change the object of taxation. Such situations arise if an entrepreneur is convinced that the object he has chosen is economically unprofitable for him or the organization has been restructured and the new management wants to change the object of tax payment.
With this document, the entrepreneur notifies the tax authorities at the place of registration of his desire to use another object.
