With enactment of Part 2 of the Tax Code of the Russian Federation (hereinafter - the TC RF) Chapter 24 of the Code regulating issues of a uniform social tax (contribution) payment has come into effect.

      In accordance with Article 234 of the TC RF the uniform social tax (contribution) (hereinafter - «the tax») is a tax (contribution), entered into public non-budgetary funds: the Pension Fund of RF, the Social Insurance Fund of RF, and compulsory health insurance funds of RF, and assigned to raising capital for realization of the citizens’ right to a statutory pension and social security, and medical aid.

      Article 235 of the TC RF defines a taxpayer. In particular, the taxpayers are organizations - employers effecting payments to hired personnel.

      Article 236 of the TC RF specifies the object of taxation for calculation of the tax amount, and the tax base is determined pursuant to Article 237 of the TC RF. Article 238 of the TC RF specifies the amounts which are tax-free, and Article 239 of the TC RF specifies tax privileges.

      Section 1, Art. 241 of the TC RF sets forth the ascending tax scale established according to the principle: the larger tax base per every single employee - the lesser tax rate.

      In particular, if the tax base per every single employee exceeds 600,000 Rubles in the cumulative sum calculated from the beginning of a year, the taxpayer must pay to all the above non-budgetary funds the aggregate amount of 105,600 Rubles plus by 2 percent of the amount exceeding 600,000 Rubles.

      If the taxpayer finds it possible to pay 600,000 Rubles to the employee already in January 2001, he will avoid tax payment at higher rates (20 or 10 percent on each payment depending on the amount of the tax base). Having paid to an employee the amount of 600,000 Rubles the taxpayer must pay to all non-budgetary funds the aggregate amount of 105,600 Rubles, which makes up 17,6 percent of 600,000 Rubles or approximately 1,47 percent per month if calculated for a year. In this case the employer will pay to the Pension Fund of RF 2 percent of further payments to the employee. When implementing this scheme it should be taken into account that pursuant to section 2, Art. 241 of the TC RF in the event at the time of effecting advance tax payments the tax base amount accumulated from the beginning of the year as an average per every employee and calculated in accordance with paragraph 1 of this section becomes less than the amount equaling to 4,200 Rubles multiplied by the number of months expired in the current fiscal period, these taxpayers pay the tax at the rates provided for by section 1 of the Article, the tax base per every single employee being up to 100,000 Rubles (35.6 percent in the aggregate to all the funds), regardless of the actual tax base amount per every single employee.

      During 2001 the rates provided for by section 1, Art. 241 of the TC RF are applied by the taxpayers specified in sub-section 1, section 1, Art. 235 of the TC RF (including organizations - employers), with due regard for respective interim provisions stipulated by Article 245 of the TC RF. Article 245 of the TC RF sets forth that the said tax rates are to be applied by these taxpayers provided the actual amount of payments calculated on the average per one employee and taken as the base for calculating insurance contributions to the Pension Fund of RF in the second half of 2000 exceeded 25,000 Rubles. When calculating the actual amount of payments computed on the average per one employee and taken as the base for calculating contributions to public non-budgetary funds, payments to 10 percent of employees earning the highest income are not taken into account if the taxpayer employs more than 30 persons, and if the taxpayer employs up to 30 persons - then payments to 30 percent of employees earning the highest income are not taken into account.


       The taxpayers specified in subsection 1, section 2, Art. 235 of the TC RF (including organizations - employers), which do not comply with the above criterion, pay the tax at the rates established by section 1, Article 241, the tax base per every employee being less than 100,000 Rubles (35.6 percent in the aggregate to all the funds), regardless of the actual amount of the tax base per every employee.

      Starting with 2002 the criteria set forth by section 2, Art. 241 of the TC RF will come into force, wherein it is stipulated that the rates provided for by section 1 of that Article are to be applied by the taxpayers listed in subsection 1, section 1, Art. 235 of the Code (including organizations - employers) on condition that during the previous fiscal period the average amount of the tax base per one employee exceeded 50,000 Rubles. In case the taxpayer has been transacting his business for a term less than one fiscal period, but at least for three months, the tax base amount on the average per one employee accumulated in the last quarter of a year is multiplied by four for the purpose of calculating its total amount. If the taxpayer employs more than 30 persons, payments to 10 percent of employees earning the highest income are not taken into account in calculation of the average tax base amount per one employee, and if the taxpayer employs up to 30 persons - then payments to 30 percent of employees earning the highest income are not taken into account. The taxpayers who do not comply with the criterion set forth by part 1 of this section pay the tax at the rates provided for by section 1 of that Article, the tax base amount per every employee being up to 100,000 Rubles (35.6 percent in the aggregate to all funds), regardless of the actual tax base amount per every single employee.