However, in order to use the simplified scheme, entrepreneurs will need to fulfill several conditions: pay off debts and settle a number of formalities.
Now, due to the difficulties in closing a company, it is more profitable for an entrepreneur to “quit” a legal entity and not carry out all the procedures established by law. This leads to the fact that the company is liquidated by the tax service itself. According to the Federal Tax Service, in 2021, at the initiative of the founders, 54.6 thousand commercial legal entities were liquidated, and according to the decision of the tax service, 89.6 thousand were administratively liquidated (due to the actual lack of activity). That is, the tax service liquidates companies more often than themselves owners.
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“Often small business owners do not have the resources to carry out the liquidation procedure on their own, and engaging consultants to properly complete the liquidation of a legal entity can be expensive for them,” explains Boris Romanov, lawyer at S&K Vertical.
However, if you simply “leave” the legal entity, then the Federal Tax Service should notice this and liquidate the company forcibly. The tax authority makes a decision on exclusion from the Unified State Register of Legal Entities if the legal entity did not submit reports and did not perform operations on at least one of its bank accounts during the year.
The main disadvantage of administrative liquidation is that it is fraught with unpleasant consequences for the owners of an “abandoned” business. According to the law, the founders and heads of organizations will not be able to register new legal entities for three years, and in addition, they can be held administratively liable for failure to provide information about the legal entity, failure to submit reports, not to mention reputational risks.
Some inactive enterprises continue to create the appearance of activity, submitting zero reporting and conducting single transactions on accounts, adds Boris Romanov. This is usually done when a legal entity plans to resume operations, use the organization for a new business, or sell a stake.
What do they propose to change
The developers of the bill expect that the amendments will reduce the number of procedures that an SME entity needs to go through to close a business, save on them, and also save entrepreneurs from undesirable consequences in the event of an administrative liquidation of a company. This should reduce the administrative burden on the tax authorities.
To close a business in a simplified manner, an entrepreneur will need to submit an application to the Federal Tax Service in person, electronically using an electronic signature or through a notary.
In order for the tax authority to make a satisfactory decision on exclusion from the Unified State Register of Legal Entities, seven conditions will need to be met simultaneously, follows from the draft amendments. The legal entity must:
- be included in the register of small and medium-sized businesses;
- not be a VAT payer or exempt from its calculation and payment;
- have no debts to creditors, for payments to employees and for the payment of mandatory payments;
- not have unfulfilled obligations based on the results of a tax audit;
- not be in the process of liquidation, reorganization, bankruptcy, reduction of the authorized capital;
- not have real estate and vehicles;
- not have an entry in the Unified State Register of Legal Entities about the inaccuracy of information about the legal entity.
As follows from the planned amendments, after the publication of the decision on the forthcoming exclusion of a legal entity from the register, third parties (for example, creditors) whose interests are affected will have three months to file objections.
Evaluation of new rules
According to Andrey Shubin, Executive Director of Opora Rossii, who took part in the development of the amendments, business has been waiting for a simple and clear liquidation procedure for a long time. “As we know, entrepreneurial activity is always risky, and there is always a chance of failure, so a simple liquidation procedure for legal entities is necessary,” he told RBC.
The less the state requires documents from businesses, the better, business ombudsman Boris Titov agrees. “In cases where the liquidated organization or individual entrepreneur is “clean”, they do not have any debts, they should not be required to go through a full cycle. The bill is based on the principle “not to ask the business what the state already knows about”. Business makes an application for a simplified procedure, and the Federal Tax Service itself will check whether the application is true from its own sources, ”says the Ombudsman for Entrepreneurs.
The amendments are extremely relevant for small and medium-sized businesses, because it is this category of legal entities that often quickly terminates an inactive business in order to no longer engage in it, says Natalya Balaeva, an expert at the Kontur.Normative service. In her opinion, the seven conditions that the authorities will impose on businesses are quite justified and aimed at protecting stakeholders. “Therefore, for example, criteria are being introduced for the inadmissibility of a decrease in the authorized capital and the absence of real estate. A liquidated legal entity has a procedure for the succession of property rights, while an already inactive one does not have such a procedure. Therefore, it is important that there is no property recognized as nobody’s,” she points out.
The requirement for the absence of real estate and vehicles registered on a legal entity is redundant, Dmitry Kletochkin, partner of the law firm Rustam Kurmaev and Partners, disagrees. “It could be replaced by an obligation to present, if such property exists, a notarial agreement between the participants in the company on the fate of this property after the liquidation of the legal entity,” he suggests.