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Is foreign economic activity of an individual entrepreneur possible? Many domestic entrepreneurs are interested in this issue. In many ways, commercial activity is associated with the supply of products from the manufacturer to the consumer. This also applies to individual entrepreneurs whose activities involve the manufacture of various goods suitable for sale in our homeland, as well as for export to countries near and far abroad, since for the normal development of business it is necessary to look for additional sales opportunities.
But here the question arises, can an individual entrepreneur conduct foreign economic activity? To deal with this dilemma, you need to learn as much as possible about this type of service. Therefore, we will further analyze this issue in more detail.
Individual entrepreneur and foreign economic activity
Can an individual entrepreneur engage in foreign economic activity? In connection with the desire of the majority of citizens to open their own business and start doing business, many provisions have appeared in the legal framework of our state that are aimed at creating favorable conditions for this. Particularly much attention was paid to representatives of small businesses, since if there is not too much initial capital, it is very difficult to effectively develop the chosen commercial direction.
Several rather convenient taxation systems have been developed that allow not only to reduce interest rates, but also to get rid of the need to pay a whole set of various taxes that are mandatory for owners of larger organizations. In addition, we were given the opportunity to engage in various types of trade on the territory of the state, and, if we have certain documents, to supply our products outside of it.
This made it possible to significantly expand the range of opportunities for individual entrepreneurs who are engaged in the supply of agricultural products, the manufacture of souvenirs, and the transportation of goods from neighboring countries with subsequent sale in Russia.
In addition, this way of doing business is suitable for all taxation systems that are provided for individual entrepreneurs by current legislation. In its provisions there is also foreign economic activity.
An individual entrepreneur has the right to conduct business relations with foreign partners, providing the services they need or delivering their products to their trading areas. The implementation of this procedure is detailed in Article 10 of the Federal Law “On the Fundamentals of State Regulation of Foreign Trade Activities”.
It says that any citizen of the country has the right to engage in foreign economic activity if he has the appropriate registration in one of the federal districts or entities that have issued a permit to engage in entrepreneurial activity in accordance with the regulatory legal framework of the state.
This gives the right to carry out export transportation to most countries of the world, and, if desired, to supply imported products. At the same time, if an individual entrepreneur is a VAT (value added tax) payer, then, in accordance with the law, its reimbursement is carried out by state financial institutions in the volumes and terms provided for by the current regulatory and legal documents.
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Foreign economic activity for individual entrepreneurs
The basic rules of this type of commercial activity are to conduct a deal with representatives of a foreign company, while complying with the terms of the drawn up agreement and taking into account the requirements of the legal acts of both parties.
As for the economic feasibility of this operation for an individual entrepreneur, this definition implies compliance with several main provisions, which include the following:
- Such a transaction is based on the principle of absolute self-financing and self-sufficiency, including when performing foreign exchange transactions. The export-import agreement is based on the principle of cost accounting.
- The volume of the deal to be made should be based on the resources at our disposal. These may well include material, intellectual and monetary opportunities.
- Before conducting such a transaction, it is necessary to make a full and thorough analysis of the conditions that the current market offers, take into account the features of other proposals and perform a feasibility study. This will avoid the occurrence of unforeseen situations associated with risks.
- A transaction that involves contact with companies located outside of our country must be carried out in compliance with bilateral government agreements, international laws and regulations that are in force on the territory of all parties to this process.
In most cases, doing business with other countries for small businesses involves a significant number of risky situations in which there is a danger of losing profits from the transaction. This may be a consequence of the legislative features of the country in which the partner is located. Therefore, most businessmen prefer to apply to law firms that specialize in international law and provide their services when concluding transactions.
Is it possible to keep records on the IP USN in foreign economic activity?
Answer
Organizations and individual entrepreneurs who are not entitled to apply the simplified system are listed in paragraph 3 of Article 346.12 of the Tax Code of the Russian Federation. Among them, entrepreneurs engaged in foreign economic activity are not indicated. It means that engaging in foreign economic activity, you can apply the simplified tax system.
However, there is one caveat. He touches VAT which you will have to pay when importing goods. The fact is that organizations and entrepreneurs using the simplified tax system are VAT payers on transactions related to the importation of goods into Russia (clauses 2 and 3 of article 346.11 of the Tax Code of the Russian Federation).
but you will not be able to accept the paid VAT for deduction(signature 1, clause 2, article 171 of the Tax Code of the Russian Federation). VAT paid on import at customs, you will be able to include:
- when importing fixed assets - in their value (subclause 3, clause 2, article 170 of the Tax Code of the Russian Federation);
- when importing goods, raw materials and supplies:
- in the cost of goods, raw materials and materials, if you apply the simplified tax system with the object of taxation of income (subparagraph 3, paragraph 2, article 170 of the Tax Code of the Russian Federation);
as part of expenses if you pay a simplified tax on the difference between income and expenses (subclause 8, clause 1, article 346.16 of the Tax Code of the Russian Federation).
According to the Civil Code, an individual entrepreneur (IP) can do what commercial organizations are allowed to do, with the exception of those activities for which other laws impose some restrictions.
Types of activities that may not be engaged in IP:
- Production and sale of alcohol
- Manufacture and sale of weapons, ammunition, military equipment
- Production and sale of pyrotechnics belonging to the 4th and 5th class (the fourth class of pyrotechnics includes those that can harm a person at a distance of up to 20 meters, for example, professional fireworks. The fifth class is when fragments or a shock wave may be present in pyrotechnics.)
- Development, production, testing and repair of aviation equipment
- Banking activities
- All kinds of asset management in the securities markets (including cannot create mutual funds, non-state pension funds, etc.)
- Organization and conduct of gambling
- Private security activities
- For some reason - the sale of electricity
- Manufacturing of medicines
How are the types of activities prescribed when registering an individual entrepreneur?
Is it necessary for an individual entrepreneur to register different areas of activity during registration - for example, an individual entrepreneur plans to promote websites at the initial stage, and in the future to create an online store and sell spare parts for cameras, lenses and household appliances?
The number of types of activities for an individual entrepreneur during registration is prescribed about 10, and then comes a phrase like "as well as any other activity not prohibited by law." As a rule, the first to indicate the types of activities that the entrepreneur is really going to engage in, and the rest - the most common, so to speak in reserve. For example, 51.70 - "Other wholesale trade", 52.61 - "Retail trade by orders", 52.61.2 - "Retail trade carried out through teleshops and computer networks", etc.
No matter how intertwined the activities prescribed during registration are, this is normal, but it means legal. There is nothing wrong with the fact that an individual entrepreneur will do what is not indicated during registration - if this does not contradict the law. The only problems that may arise are if you come across a picky client who demands from the individual entrepreneur an extract from the Unified State Register of Individual Entrepreneurs, does not see there the type of activity that you are going to do with him and starts asking unnecessary questions. In this case, you need to competently and correctly answer the client's questions, problems are usually solved.
Can an individual entrepreneur import goods from abroad?
Yes, it can, but there are some caveats.
The import of goods from abroad is a foreign economic activity.
VAT must be charged on the value of imported goods and paid accordingly.
You need to know that foreign economic activity is a huge number of documents and regular scheduled tax audits.
If an individual entrepreneur is having difficulty maintaining documentation, he can consider working with logistics companies. Any logistics company, except for the delivery of goods from abroad, as a rule, can offer customs clearance. Any goods can be bought inside Russia from a Russian legal entity, while no foreign economic activity will arise. It is only necessary to ensure that logisticians issue invoices not from a one-day company, but from a normal organization.
Question:
An individual entrepreneur without employees applies the simplified tax system. Engaged in the sale and maintenance of software. The software manufacturer is a third-party organization, the individual entrepreneur is a dealer.
An individual entrepreneur has a potential client from Belarus who wants to purchase software and some services for setting it up. For now, the deal is one-time.
Can an individual entrepreneur carry out such transactions with clients from Belarus? What are the characteristics of such contracts? In what currency are transactions made? Do I need a separate checking account for such transactions? What steps need to be taken to complete this deal?
Answer:
Can I carry out such transactions at all?
IP has the right to cooperate with foreign customers and buyers, including from Belarus, is not prohibited.
What are the characteristics of such contracts?
The issue of drawing up a contract refers to legal issues and is not included in the regulation of the consulting service, unfortunately, I cannot provide you with full advice on this issue. On the issue of concluding a contract, it is advisable to consult with a lawyer specializing in contract law for foreign economic activity.
In what currency are transactions made?
At any. You can accept payments in rubles, you can in another currency, there are no restrictions.
Do I need a separate checking account for such transactions?
It all depends on your bank. Some banks have an automatic conversion service upon receipt of payment in foreign currency to the ruble current account of the individual entrepreneur. In some, in order to receive payment in foreign currency, it is required to open a foreign currency account. Therefore, you need to obtain information on this issue directly from the servicing bank.
What steps do I need to take to complete this deal?
When selling goods (software) abroad or providing services, including Belarus, no additional documents and reporting are required. The transaction is executed in the same way as when selling goods/services to Russian customers.
You conclude an agreement or issue an invoice for payment to the client, where you specify the details for the transfer. A foreign buyer pays for the goods / service (transfers money to the current account of the individual entrepreneur). You issue to the buyer consignment notes for the sold goods or an acceptance certificate for the software, an act for the provision of services.
In the case of receipt of payment from a foreign client in foreign currency, income must be reflected in the ruble equivalent on the date of receipt of payment from a foreign buyer.
At the same time, income denominated in foreign currency is taken into account in conjunction with income in rubles. To include income under the simplified tax system, you must first find out the exchange rate of the Central Bank of the Russian Federation on the date the currency was received on the transit currency account, convert the currency into rubles and make an entry in the Money section. The exchange rate of the Central Bank for each day can be clarified at the bank.
When a payment is received on the current account from a foreign counterparty, there is a possibility of currency control by the bank, i.e. the bank will need to provide documents confirming the transaction (contracts, invoices or acts). For more information on currency control, I recommend contacting your bank directly.
The service has not yet developed functionality for foreign counterparties. The development is in the plan, but unfortunately, I can’t tell you the exact timing of the implementation.
You can use this option:
- In the Counterparties tab, add a foreign partner, but specify all his data in the "Name" line.
- after that you will be able to generate primary documents with the counterparty in the service and enter the data in the Money tab.
I am attaching an example of reflection in the service of a foreign counterparty.
Unfortunately, I will not be able to advise you in detail on this issue, since it relates to export-import operations, and in accordance with the accounting regulations. consultations, answers on foreign economic activity in our section are not provided. Thank you for understanding.
Before answering the question of how to become a member of the FEA in Russia, you should first decide what is the FEA. Foreign economic activity (FEA) is the functions of an enterprise focused on the world market. In our case, FEA will be international trade (foreign trade activity).
FEA participants are both legal entities and individuals (IEs) engaged in foreign economic activity. VED participants can be:
- Importers - import to another country;
- Exporters - carry out export from another country;
- Intermediaries - assist in import and export;
- State - carries out regulation of foreign economic activity in the country;
- International organizations - carry out the regulation of foreign economic activity;
- Currency control agents - carry out control over compliance with acts of the currency legislation of Russia.
Russian legislation establishes that all persons have the right to import and export goods into the country. However, in order to speed up and simplify the customs clearance procedure, it is necessary to register as a participant in foreign economic activity and obtain a UK VED (account card for a participant in foreign economic activity). Such a card serves as a means of identifying a trader. It is also legally established that the absence of a UK FEA cannot be a reason for refusing customs clearance. But if it is available, it will not always be necessary to present the entire package of documents. It is enough only this card and the documents required for customs clearance of a particular batch of goods.
Registration of UK FEA
The procedure for issuing an account card is quite complicated and requires the preparation of a large number of documents. You can prepare everything yourself or seek help from a law firm. Upon presentation of all documents, the registration time should not exceed 5 calendar days.
The following documents are required for registration of UK FEA:
- Copy of the Charter;
- Certificate of state registration of the subject (OGRN);
- Certificate of registration with the tax authorities (KPP / TIN);
- Decision to Establish an LLC;
- A copy of an extract from the Unified State Register of Legal Entities;
- A copy of the certificate from the State Statistics Committee of the Russian Federation;
- Order on the appointment of the chief accountant;
- Original bank account opening certificates;
- Document on the appointment of the General Director;
- Copies of passports of the general director and chief accountant, certified by the seal of the organization;
- A lease agreement for premises at a legal address or a certificate of ownership.
All copies of documents must be notarized.
Can an individual entrepreneur with a simplified tax system receive goods from abroad and clear them through customs?
They must be presented at the customs post at the place of their state registration.
Before starting foreign economic activity on your own, you need to calculate the benefits of such an event and its feasibility, as well as all the nuances that you may encounter. It might be much more efficient to outsource this to another company.
