The Ministry of Justice has prepared draft amendments to the Criminal Code establishing criminal liability for the illegal registration of persons as individual entrepreneurs. Such IEs can be used in tax evasion schemes and cash-in schemes. At the same time, the front persons, on whom the IE is registered, will have a chance to avoid punishment if they commit such a crime for the first time and cooperate with the investigation.

Alexander Dmitriev, the head of TC criminal and legal protection of business, commented on the legislative initiative in the article «Kommersant».

The expert noted that the use of IE in schemes to optimize the tax base and cashing out is common. Logistics services, cleaning, retail, construction - in these industries are found IE and LLC, which were registered with the tax authorities without the purpose of doing business. But the business, which is subsequently sued for the use of such schemes, is often not aware that its counterparty is registered on a front person. 

According to TC's lawyer, everyone has the right to a second chance, but often people who register a sole proprietorship without the purpose of entrepreneurial activity do so knowingly. And when questions arise to them within the framework of a criminal investigation, where front persons were involved and received income from this activity, they willingly cooperate with the investigation and give confessions, involving new defendants.

There are no risks for sole proprietorships that comply with tax legislation, carry out real entrepreneurial activities and execute all the necessary regulatory documents. But if an individual entrepreneur is tempted to make money by participating in an optimization scheme or cashing out funds, criminal prosecution will follow if law enforcement authorities detect such schemes.