Business lives on: "business deaths" have fallen to their lowest level since 2012
In Russia, the "death rate of business" has decreased to a record low for 12 years, Izvestia has found out. According to the Federal Tax Service, between January and November 2024, 185,000 legal entities ceased operations. At the same time, 198 thousand new ones opened (and this is the minimum since the pandemic 2020). Companies adapted to the new conditions, occupying niches after the departure of foreigners and investing in import substitution. In addition, the authorities practically got rid of one-day firms. At the same time, however, it is increasingly difficult to start a new business when the key is high. How long enterprises in the country live on average and what it means for the economy - in the material of "Izvestia".
How legal entities are liquidated in Russia
In the first ten months of 2024 in Russia, 185.6 thousand legal entities ceased operations. This is a record low figure for January - November at least since 2012 (earlier data for the same period is not given), "Izvestia" calculated on the basis of statistics of the Federal Tax Service. The editorial board sent an inquiry to the tax service and the Ministry of Economic Development. Compared to last year, the number of closures decreased by 10%.
At the same time, 198.7 thousand new companies were registered in the country during the same period - the minimum since the pandemic 2020. In 2023, 8% more legal entities opened in January-November.
At the same time, according to the tax service, only in the last two years the "birth rate" of enterprises exceeded their "death rate" for the first time since 2015. In 2023 - by 6 thousand, in 2024 - by 13 thousand. In total, as of November 2024, there are 3.2 million legal entities in Russia.
According to the statistics of the Federal Tax Service, the majority of companies (78%) were liquidated this year, simply excluding them from the Unified State Register of Legal Entities (USRYUL) by decision of the tax authorities (and not because of bankruptcy or reorganization), said Ivan Ermokhin, a researcher at the Russia-OECD Center of the IPEI of the Presidential Academy. The main reasons are the provision of false information by the business to the authorities or recognition of the organization as inactive, he added.
Thus, the reduction in the number of closed companies is largely due to the fact that the registry has been cleaned up from one-day firms - they have become more effective in identifying them with the help of digital analysis systems, said Freedom Finance Global analyst Vladimir Chernov.
- Active work is now underway to reduce the number of fictitious companies. As a rule, one-day firms are used for money laundering, tax evasion and embezzlement of funds," explained Andrei Girinsky, Associate Professor at the PFUR Economics Department.
Even 15 years ago the share of one-day firms was more than 40%, recalled Alexei Kurasov, Head of Corporate Finance at Finam Financial Group. Taking into account the recent changes related to tax amnesty due to business splitting, the number of such companies may fall below 1%, the expert expects.
Why it is becoming unprofitable to close a business
According to the Federal Tax Service, the remaining 22% of companies liquidated in connection with bankruptcy, reorganization or closure by the legal entity's own decision. As Alexei Kurasov from Finam noted, the decrease in "business mortality" in Russia is also explained by the fact that it is now profitable to do business in our country.
Competition has decreased here, as many foreign companies have left Russia and freed up entire niches, the expert explained. In addition, due to high inflation, firms can raise the cost of final products.
In addition, in recent years, the government has been actively supporting small and medium-sized businesses, as well as manufacturing and IT enterprises due to the need to reduce dependence on imports, added Alexei Tarapovsky, founder of Anderida Financial Group.
On the other hand, Russia now has a record high key rate of 21%. This makes it difficult for businesses to invest in their development.
- At the same time, additional opportunities have opened up for new forms of financing, such as IPOs and digital financial assets. In addition, it is more and more often possible to sell shares in an enterprise more favorably than to liquidate it, - said Andrei Barkhota, PhD in Economics.
Indirectly, the excess of business "birth rate" over its "death rate" reflects that business has adapted to sanctions, high interest rates and restrictions on aggregate demand, the expert believes.
At the same time, the life expectancy of legal entities is also growing. In Russia, it averages nine years, said Dmitry Zavyalov, Head of the Department of Entrepreneurship and Logistics at Plekhanov Russian Economic University. He reminded: one of the goals of the new national project "Efficient and Competitive Economy" is to increase this indicator up to 13.
Vladimir Chernov from Freedom Finance Global estimates that construction enterprises and importing companies are the most frequently closed in Russia now. According to him, the former are shutting down due to a decrease in demand, while the latter are shutting down due to sanctions restrictions on settlements and deliveries. Mostly legal entities are opened in the field of e-commerce, retail, IT and logistics on the background of increased demand, the expert added.
At the same time, the total number of registrations of new legal entities is small because of the high key, the expert continued. He explained: with double-digit loan rates, the profitability of business tends to zero, so it is not profitable to open a business without initial capital in the current environment.
In addition, according to him, more and more small businesses are moving to IE, for which there is a more lenient legislation and taxation. And with the increase in corporate tax, this trend may continue. Another factor, as Alexei Kurasov from Finam noted, is the staffing famine, which makes it more and more difficult to recruit employees for a new business.
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