4.1 Entrepreneurship and Property
4.1.2. "Free" Registration
(Self-Registration) of Private Enterprises
Unresolved
Issues
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Abuses may occur under a system of self-registration.
There is
a general principle for combatting such abuse: the partners
of
individual enterprises (or full partnerships) should exercise
great care. For its part, the state (the tax inspectorate,
internal affairs department, etc.) should step up its control
(by compiling "black lists" of false certificates,
collaborating with state agencies of other regions, etc.).
However, one should realise that such infrastructure is
still
in its embryonic stage, and that mistakes may be made.
Individuals may currently establish several unlimited
companies. This should be prohibited. However, it is virtually
impossible to control at the registration stage. Such abuses
could be detected with the aid of tax auditing department,
including clandest ine operations.
The issue of social insurance for both
enterprise proprietors
and their employees (upon the signing of an appropriate
work
contract) remains unresolved. It is inadvisable to introduce
for individual enterprises (or full partnerships) the corresponding
de ductions stipulated for legal entities. This
problem should be solved by the parallel formation of private
insurance companies. The clear-cut application of tax breaks
is
most important: a simplified and preferential system for
paying
VAT, i.e., it should be gradually reduced for private
entrepreneurs; instead of excise taxes, the sale of licenses;
and a decrease in the profit tax base by transferring a
share
of the expenditures to enterprise expenses. It would be
expedient to consider the provision of tax credits to
proprietors of individual enterprises (and full partnerships),
at least a reduction in value-added tax, for the fir
st year or two after its registration.
Free registration should necessarily include
relevant decisions
by state arbitration bodies (the acceptance of claims for
and
against Certificate holders). It would be preferable to
maintain an advance agreement with commercial banks regarding
the opening of settlement accounts for unlimited companies,
and
the terms for any loans.
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