Russia’s number of closed individual enterprises (IE) almost doubled in the first half of 2021 compared with the same period last year, according to a study carried out by the FinExpertiza international audit and consulting network based on the Russian Federal Tax Service’s data.
The experts noted that some 545,800 individual enterprises were shut down in Russia in the six months of 2021, which was almost twice as many as in the first half of the 2020 COVID-19 year. Russia’s number of closed individual businesses reached an eight-year record high, the previous one was seen only in January-June 2013, TASS reports.
The number of individual businesses, which came to a halt, has surged in the last six months in absolutely all regions. The enterprises in Chechnya, in Russia’s North Caucasus (the number of closed businesses climbed 3.5 times over the past year), the Dagestan Region (by 3.3 times) and the Chukotka Autonomous Region in the Russian Far East (by 2.5 times) were less viable.
Meanwhile, some regions demonstrated rapid growth in terms of entrepreneurial initiative. In the Karachay-Cherkess Republic, the number of registered individual businesses rose by 2.3 times over the past year, in the Tuva and Kalmykia Regions, the figure increased by 2.1 times, in the North Ossetia-Alania Region - by 82.9%, year-on-year.
According to the Federal Tax Service, as of July 1, 2021, Russia recorded 3.14 mln individual entrepreneurs. In the first half of the year, as many as 545,800 individual entrepreneurs left the market, some 1.8 times more (82.8%) than in the first half of 2020. The previous high of 594,200 closed businesses was reported in 2013.
The number of closed individual enterprises surged in January - June 2021 in all Russian regions. For example, in the Primorsky Region, the figure rose by 2.4 times (9,200 IEs were shut down), in Moscow, it climbed by 2.3 times (47,800 IEs) and in Russia’s second largest city St. Petersburg, the number of closed individual enterprises also surged by 2.3 times (27,000 IEs).
Russia’s number of IEs, which stopped their work surpassed the number of opened ones by 135,500. However, seven regions demonstrated a net positive increase, including the Altai Region (619 IEs closed, 923 opened), Crimea (6,851 closed, 7,130 opened) as well as the Tuva Region (943 closed, 1,058 opened).
Most Russian IEs shut down in the first half of 2021 (51.4% or 281,800) decided to exit the market on their own initiative.
As many as 47.1% or 258,300 were excluded from the register of IEs by the decision of the registering authority.
The third reason for the IEs’ closures is the death of the business owner. In the first half of 2021, some 6,700 individual entrepreneurs died (1.2% of the total number of shut down micro-businesses), which is 25% less than last year.
Other reasons for the IEs’ closure accounted for insignificant shares: some 842 businesses or 0.2% were closed due to bankruptcy, as many as 310 or 0.1% companies were owned by foreigners, who left Russia, while only eight IEs were forcibly shut down by a court decision.
