Introduction of the EPP: advantages and disadvantages. Opinion of an expert

Introduction of the EPP: advantages and disadvantages. Opinion of an expert

The UST is based on a tool that has been introduced for individuals in the Russian Federation. Its principle is quite simple: the taxpayer pays the amount and the tax authority sends it to the destination. However, for legal entities the payment scheme will be built more complicated, as there are more categories of taxes in business activities and other terms of payment. For example, advance payments of taxes are stipulated. Also, as part of their activities, companies often submit revised tax returns. In this case, to exclude the possibility of bringing the company to responsibility in the form of a fine, it is important that the tax and penalties were paid before the submission of a revised declaration.

The pilot project will be tested in 2022 from July 1 to December 31 on a voluntary basis, and companies will be able to apply for participation in the experiment from 1 to April 30, 2022. It may be sent in electronic form to the Federal Tax Service at the location of an organization or at the place of residence of an individual entrepreneur. It should be borne in mind that the application must be submitted no later than one month after the date of the signing of the joint reconciliation act. The format and form of the application have not yet been approved, but the Federal Tax Service promises to clarify it in the near future. 

The UTP will be a single method of making payments for legal entities, private entrepreneurs and individuals. It will provide an opportunity to make payments in the following areas: taxes, advance payments, insurance premiums for OPS, CMI and TPL, penalties, fines, interest and more. At the same time the order of payment offsets will be observed. First of all, for arrears, starting with arrears with an earlier date of occurrence and ending with a later date. Next, payments on taxes and contributions, for which the obligation to pay has already arisen, will be set off. 

In addition, organizations and businessmen who will switch to UTP will have an additional obligation to send a number of notifications: 

  • On the calculated amounts not later than 5 working days before the deadline for their transfer
  • Personal income tax not later than the 5th of the month following the month of payment of income to individuals.

For example, personal income tax from employees' salaries is transferred to the budget no later than the day that follows the day of payment of wages. For violating this procedure, the taxpayer faces the accrual of penalties for each day of delay. This means that if the final salary for January the employer calculates 10.02.2022, so that automatically the amount could be written off from the UTII, the notice should be submitted no later than 05.02.2022 (payment of income-January), and personal income tax must be written off no later than 11.02.2022 UTII system. For other taxes, the notice must be sent 5 business days prior to the statutory deadlines for payment of taxes. The form of notification is still approved by the Federal Tax Service.

As discussed by the FTS, UTP will be able to use not only the taxpayer himself, but also third parties - for him. However, a refund will not be available for them. A company or entrepreneur may return the balance of the UTP, which has not been credited by the tax authority against payments. The refund procedure will be as follows: 

  • the organization or entrepreneur will need to submit an application for a refund to the FIRS;
  • the FTA makes a decision on the refund or rejection within 10 working days and informs the taxpayer about the decision within 5 working days from the date the decision was made
  • The FTA must refund the money within 1 month of receiving the application. 

If the deadline for refunding is violated, the tax authority will have to pay interest based on the rate of the Central Bank for each day of delay. 

The payment mechanism will be set up quite simply - businesses will need to put money into an account, and for the payment they need to specify the amount and TIN. The balance of the account will be refundable, or you can pay taxes for another person by filing an application.

It is expected that UTP will be in demand by businesses, as the advantages of such a tool are quite numerous: 

  • There will be fewer errors when filling out payment instructions for CBC, OCTMO, payer status, and others. All the money would be credited to one account and then distributed by the tax inspectorate independently
  • Calculation of payments to the budget will be considerably simplified: only the taxpayer's taxpayer ID is to be indicated for the transfer of the single tax payment
  • There will be no need to make payments for current taxes. You can regularly transfer the single payment and simply monitor its balance
  • Owing to it, the load on information systems will be considerably reduced.

However, we can also highlight the disadvantages:

It is assumed that at the stage of introducing the innovation and transition to the Unified Taxpayer Identification System, companies will need time to adapt.

  • The burden on organizations in terms of the number of reporting documents, as well as the number of notifications on the amounts to be paid, will increase. Since there will be many types of payments under the Single Tax Payments, quite a few notifications will be required.
  • If the company or individual entrepreneur has any arrears with which the business does not agree or disputes the decision in court, then the money will still be deducted when making the single tax payment, and in the first instance.
  • Taxes will have to be calculated at least 5 days earlier. Difficulties may arise mainly regarding personal income tax because according to the legislation the deadline for payment is set for the next day after the payment of wages. For other taxes the deadline is not earlier than the 25th-28th of the month following the reporting period. For the accountant the 5-day reduction in the deadline for tax calculation will not play a role in this case
  • It is possible to switch to UTII only after a joint reconciliation without disagreement

Opinion of an expert

"The introduction of UTP will help to simplify tax payments, because taxpayers will not need to fill out payment orders and check the correctness of the necessary details, which is a big plus. It is also expected that the tax authority will simplify the procedure of reconciliation of taxes with the budget. Another advantage for business will be that the submission of advance tax calculation and filing notices to the tax authority will reduce the likelihood of late payments. However, it should not be ruled out that if there is a positive account balance, the tax authorities will be able to collect arrears faster on the results of tax audits", - concludes Julia Pavlova, senior tax consultant Tax Compliance.