Criminal liability for non-payment of social insurance contributions by legal entities

By Elena Rybnikova, Head of Quality Control and Methodology Department

Federal Law No. 250-FZ, which provides for criminal liability for failure to pay social insurance contributions, entered into force on August 10, 2017. Individuals, legal entities and individual entrepreneurs are subject to this new law. Below we have reviewed the liability for legal entities in more detail.

How was it before?

Before the entry into force of Federal Law No. 250-FZ, the risks incurred by businesses for late payment of social insurance contributions were negligible (a fine of 1/300 of the refinancing rate). Companies used to accrue and file reports on social insurance contributions, but they actually deferred their payment to state authorities, and as a result, the amount owed by companies for social insurance contributions and personal income tax was estimated at hundreds of billions of rubles for 2015 only.

The graph below shows the amounts owed by companies for social insurance contributions and personal income tax in 2011 and in 2015.

задолженность в бюджет en.png

What has changed?

The funds had no leverage on payers so the government decided to transfer the rights and obligations to administer social insurance contributions to the Federal Tax Service. The Russian Tax Code was amended to change the status of social insurance contributions, and they are now treated as tax payments.

The Federal Tax Service received a database of debtors owing social insurance contributions and invited companies to file applications for debt restructuring. Chapter 9 of the Russian Tax Code sets out how the deferment of tax payment (installment plan) should be granted.

The table below shows amounts of unpaid taxes, levies and social insurance contributions as well as the types of liability for legal entities:

Payment
Period Amount Ответственность
Large amount of taxes, levies, social insurance contributions
For 3 consecutive financial years Over RUB 5,000,000 if the share of unpaid taxes, levies, social insurance contributions exceeds 25% of the total payable amounts of taxes, levies, social insurance contributions
From a fine of RUB 100,000 up to imprisonment for up to 2 years
Over RUB 15,000,000
Particularly large amount of taxes, levies, social insurance contributions
For 3 consecutive financial years Over RUB 15,000,000 if the share of unpaid taxes, levies, social insurance contributions exceeds 50% of the total payable amounts of taxes, levies, social insurance contributions

From a fine of RUB 200,000 up to imprisonment for up to 6 years

Over RUB 45,000,000

Recommendation

  • Company heads should conduct an analysis of social insurance contribution and tax arrears.
  • All outstanding tax debts should be paid off.
  • An application for debt restructuring should be submitted to the Federal Tax Service if the owed amounts of social insurance contributions cannot be repaid all at once.

How can we help?

  • We analyze outstanding debts.
  • We assist with the preparation of the debt restructuring application.
  • We advise on issues of prosecution for non-payment of social insurance contributions.

For more information, please send a request to marketing@intercomp.ru