Russia's Federal Tax Service (FTS) has issued a release regarding the application of reduced social security contribution rates for the catering services industry from 1 January 2022 as provided by Federal Law No. 305-FZ of 2 July 2021. With the release, guidance letter BS-4-11/14783@ is provided containing further detail.

The letter explains that the reduced social security contributions provided for SMEs will apply for taxpayers with more than 250 employees whose main activity is the provision of catering services, provided certain conditions are met. For this purpose, such taxpayers are required to meet the same conditions that apply for the VAT exemption for catering services from 1 January 2022, also provided by Federal Law No. 305-FZ. The exemption from VAT, and accordingly the right to reduced social security contributions, apply for taxpayers providing public catering services through public catering facilities (restaurants, cafes, bars, fast food outlets, buffets, cafeterias, canteens, snack bars, and other similar public catering facilities), as well as public catering services outside the facilities at the place chosen by the customer (field service), subject to the following conditions:

• The total annual income of the taxpayer providing catering services did not exceed RUB 2 billion in the preceding year;
• The share of income from catering services was at least 70% of the total annual income in the preceding year; and
• The average monthly amount of payments and other remunerations paid in favor of individuals (employees) is not lower than the average monthly wage in the relevant Russian region in the preceding year (this condition applies from 1 January 2024).

The letter concludes that catering businesses are eligible to apply the reduced social security contribution rates in 2022 and 2023 if the above conditions are met, with the exception of the average monthly wage condition. From 2024, all conditions must be met.