Government approves tougher penalties for shell entrepreneurs

The Government Commission on Legislative Activity has approved the amendments to the Criminal Code (CC) prepared by the Ministry of Justice. This was reported by Izvestiya sources in the Cabinet of Ministers. It is envisaged to toughen punishment for illegal registration of individuals as individual entrepreneurs through front persons, illegal use of documents for registration of individuals.

The amendments are aimed at increasing the level of criminal legal protection of legal relations in the economic sphere related to the state registration of legal entities and individuals as individual entrepreneurs, said Igor Cherepanov, Deputy Chairman of the Board of the Association of Lawyers of Russia.

"As the analysis of the Federal Tax Service data from 2014 to 2018 showed, individual entrepreneurs and legal entities were registered on average annually almost 1.2 million, of which individual entrepreneurs accounted for 59.3%, legal entities - 40.7%. At the same time, from 2019 to 2023, an average of just over a million were registered annually," he explained.

Over the ten years, he said, there has been a gradual transformation of the organizational and legal form of business entities, with the registration of individual entrepreneurs increasing and the number of cases of registration of legal entities decreasing.

At the same time, criminal legal prohibitions established in Article 173.1 and Article 173.2 of the Criminal Code apply only to actions related to the illegal formation of legal entities.

"At the same time, individual entrepreneurs are endowed with similar rights in the sphere of entrepreneurial activity as legal entities, and they are not subject to a number of restrictions in terms of disposition of funds when cashing them out. As a result, the details of individual entrepreneurs are widely used in the commission of crimes related to illegal banking, tax evasion and concealment of property, tax deductions, bankruptcy, money laundering," - said Cherepanov.

Therefore, the bill proposes to amend the Criminal Code, aimed at establishing criminal liability for actions related to the illegal registration of individuals as individual entrepreneurs.

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According to Cherepanov, in practice there are difficulties with the identification and prosecution of organizers of crimes committed in complicity. Often in criminal cases of the category under consideration, only front persons are brought to responsibility.

"This circumstance is mainly due to the fact that the front persons are not interested in cooperating with the preliminary investigation bodies, because in case of giving testimony that exposes the accomplices of the crime, the deed will entail increased measures of responsibility as a result of imputation of the qualifying feature "commission of an act by a group of persons by prior conspiracy", - he said.

The bill proposes to specify a condition in the form of active contribution to the disclosure and (or) investigation of such a crime, including the identification and prosecution of other accomplices, supplementing the note of the article of the Criminal Code with a special basis for exemption from criminal liability of front persons who committed the crime for the first time.

Earlier, on November 28, it was reported that in the Russian Federation the number of those employed in the sphere of small and medium-sized enterprises has increased one and a half times since 2019, when the national project to support it was launched. In 2023, the number of those working in this sector reached 31.45 million - this includes sole proprietorships and self-employed, follows from the report of the Ministry of Economic Affairs "On the state of small and medium-sized entrepreneurship in Russia and measures for its development in 2019-2023".