State support may temporarily improve financial performance of some enterprises
In late July 2015, MAZ reported a net profit for the first time after continuous losses since early 2015. Its financial performance has improved mainly due to the support from the state (circa BYR 1 tillion). Otherwise, it would have reported losses again. Other large enterprises may fiddle with their factual financial performance data. The state funds will be spent on expansion of production and salaries. Amid growing budget deficit, minor budget items may be subjected to sequestration. Industry employment rates may somewhat improve. The authorities may seek to improve the state budget situation by increasing the burden on profitable enterprises and by making audit and inspections at enterprises more frequent.
The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.