FBK Legal Partner Eduard Giulbasarov on Tax Regime Changes for Self-Employed

According to RBC, the pilot tax regime for the self-employed is set to last until 2028, and the authorities are already working on a new concept to replace it. RBC explored what this new concept might look like and why the tax rate is very likely to be increased.

FBK Legal Partner Eduard Giulbasarov notes:
‘A tax rate increase and the introduction of social insurance contributions, if implemented gradually and moderately, are unlikely to scare off the main self-employment tax payers, as there are virtually no alternatives to this regime. Should the tax rise, it is reasonable to expand the maximum income threshold for the self-employed so that we compensate for the budget revenue decrease and avoid creating unnecessary barriers.

The risk of these workers going underground arises if there is a sharp, simultaneous increase in mandatory payments and a complication of reporting. The main advantage of the tax is the minimal administrative load and reporting simplicity, which should not be changed. The basic concept of the tax, built on self-declaration and minimal scrutiny, should remain intact.

Thus, a soft increase in the tax burden is expected, preserving the simplicity of the regime and the gradual introduction of possible social insurance contributions. This also underscores the need for a well-thought-out approach to avoid provoking the self-employed to start operating off the books’.