Authorities Push Sole Traders to street

The new Tax Code is to ruin the business absolutely.

The Ministry of Finance announced the amendments to the Tax Code, which are to enter into force from January 2018. Among the innovations there is the obligation of individuals and sole traders to provide, within 30 days from the date of opening, the information on accounts abroad, and the marginal rates of the single tax on sole traders and individuals.

Judging by some limiting values spelled out in the draft, the rates might grow.

The authorities repeatedly dipped their hand in sole traders’ pocket in difficult times. Charter97.org asked leader of the entrepreneurial organization Perspective Anatol Shumchanka to tell about the reaction of the Belarusian business, struggling to survive, to the changes in the legislation.

– Will Belarusian entrepreneurs stay afloat after such tax "surprises" from the authorities?

– If we talk about taxes, then even a slight increase will have a painful impact on entrepreneurs. These are the harsh realities of the Belarusian business.

The draft provides for the expansion of the upper limits of the single tax on sole traders. It is very important for sole traders to react to the changes at the local level. The rates are discussed by the so-called local "councils of deputies". The mechanism works in the following way: the tax authorities pass the legislative amendments to the "deputies", and those approve them in their turn. Within my recollection, this rate has been decreased only once, I do not think that the same thing will happen this time.

The authorities are starting to forget that there are also laws of the market economy that one cannot just invent. People simply cannot spend more money on goods than they do, the purchasing power of Belarusians is at zero. Go to the markets at weekends – they are empty.

How will Belarusian businessmen react? Everything is very simple: when the tax rises, the cost of the goods rises as well, but the purchasing power of the population remains at the same level. The Belarusian economy suffers very much because of the lack of trade and healthy competition.

If these limits are risen – apparently, the authorities think that sole traders have money.

– What is behind the tax initiative to oblige individuals and sole traders to provide information about accounts abroad within 30 days from the date of opening?

– I can say that the Belarusian legislation does not make any concessions for the people, who work with non-cash settlements, work with foreign countries. Here the problem lies in the tax duties. An entrepreneur has to give huge sums for the customs clearance of goods. This leads to the fact that there are huge difficulties so as to bring good goods from abroad. The quality of the goods, the diversity could be the emphasis, but the authorities don’t keep our options open.

If you want to stay afloat, you have to look for cheaper goods, go to the Russian Federation’s markets, which are filled with goods of dubious quality from China. And at the same time, it's unclear where from the entrepreneurs from Central Asia deliver goods to our market. This phenomenon especially wreaks havoc on the regions. They work without documents, without certificates, cash registers and registration of hired labor. Here you have the "healthy" competition.

So now for the sole traders, it's time to self-organize and defend their rights, if they want to survive. They have no other choice but to protest.

According to official statistics, in 2014, the number of micro, small and medium-sized organizations engaged in private business in Belarus was 114,208, in 2016, there were 107,382. In particular, in 2014, there were recorded 2,416 medium-sized organizations in the country, in 2016, there were only 2315 of them. The number of micro and small organizations declined for this period from 111 792 to 105 067.

At the same time, the number of sole traders in Belarus decreased from 248 952 people to 235 995 people, that is, it decreased by almost 13 thousand sole traders.