Like in other countries, many companies in Russia suffer from the adverse effects of the coronavirus pandemic. The impact has been especially hard for medium and small businesses. On March 25, 2020, the President of the Russian Federation Vladimir Putin announced the first round of business support measures. Then, on April 15, 2020 President Putin put forward new package of relief measures to mitigate the effects of the COVID-19 pandemic. Both, the amount of funding and the nature of the measures came under criticism of the business community and economists. On May 11 President Putin unveiled a new package of measures for supporting the national economy under the restrictions introduced in connection with the continued spread of the coronavirus infection.
Companies in the most affected sectors of the economy
In addition to the measures adopted in April the new package envisions the launch of a new subsidised 2% loan program (with 85% of the loan secured by state guarantees). The program aims at supporting employment at organisations in the most affected sectors of the economy. The amount of the loan will be calculated using the formula “1 minimum wage amount per employee per month”, based on the duration of the program equal to six months. The loan repayment date is April 1, 2021. The interest is capitalised over the term of the loan. Should the company succeed in retaining the staff headcount at 90% of the current level, the principal and the interest will be written off. If the headcount remains at not less than 80%, half of the principal and the interest will be written off. The credit can be used to pay employee compensation, but also to repay the salary loan obtained under the April relief measures package.
Medium and small businesses in the most affected sectors of the economy
For medium and small businesses in the most affected sectors of the economy all tax obligations, except for VAT, and social contributions for the 2nd Quarter of 2020 will be completely written off.
The State is strengthening business support measures increasing the funding. However, these measures may prove insufficient to maintain employment and avoid bankruptcies of many businesses under the restrictions introduced in connection with the continued spread of the coronavirus infection in Russia.