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How often do entrepreneurs encounter illegal businesses?
How often do entrepreneurs encounter illegal business? Every second entrepreneur has been involved in shadow business to some extent.
Almost half (51%) of entrepreneurs have encountered illegal business in their sector. This is evidenced by the data of the study of the Chamber of Commerce and Industry "National Business Indicators", writes the newspaper "Vedomosti".
Most businessmen believe that shadow business hinders the development of their companies. Another 27% said that the lost profit was "enormous." And only 13% admitted that illegal competitors in the market do not bother them at all.
Key characteristics of the shadow sector in the study include lack of registration and licensing, non-payment of taxes and grey wages. In other words, it is closer to managerial responsibility, and the concept of shadow business is much broader, say Vedomosti experts. This also includes trade in weapons, drugs and counterfeit goods, i.e. all operations that are related to crime and are outside the sphere of state control and accounting.
If we talk about illegal business from the point of view of administrative violations, as analyzed in the study, then the head of the NDV group of companies, Alexander Khrustalev, says that illegal business has practically disappeared in recent years.
On the other hand, the head of the law firm "Urvista", entrepreneur and member of the small and medium entrepreneurship organization "Opora Rossii" Alexey Petropolsky believes that in the current economic realities it is difficult not to engage in illegal business. And it seems wrong to even call it that.
At the same time, some business representatives are forced to conduct informal business "in the shadows," say Vedomosti experts. The reason is that the tax burden is increasing. From 2025, the profit tax rate will increase from the current 20% to 25%. Moreover, the number of self-employed people is increasing, with whom competition is almost impossible. For beauty salons, the problem is the growth of the market of people who are not registered at all or pay minimal taxes, says Alena Avraamova, owner of the Moscow Fairy of Beauty beauty salon.
— It’s a big problem. We really need employees now. And they’re not ready to come to the salon and work in public. Yes, they do. Thanks to people like that, we suffer. - Why don’t you want to go? It turned out that the income was low. - Yes, I have a low income. Usually, they avoid taxes. They don’t break through anything and don’t pay anything. That’s why our beauty salons suffer from this. - The risk is high. We also have a pet salon. Groomers also work from home. - Yes, and they take [clients] with them. Previously, the owner would come, work, and go door to door, creating a client base. Now we’ve officially started hiring people and everything is whitewashed and people are not interested in this. In order for everything to be compensated, the prices in the salon must be very high and now people are starting to count their money and budget. Employees want to go for a manicure for 5,000. They don’t want to come to the salon and pay $25,000 for a manicure. Because they have their own proportions and they are interested in acting independently based on that. From 25,000 people you get 40%, but you take home 100%.
In addition to the increased tax burden, experts cite excessive regulation as another reason for entering the shadow zone. According to the Union of Users of the Digital World platform, in the taxi industry, for example, more than 70% of drivers will not be able to comply with the requirements of the new law.
According to the entrepreneurs interviewed by Vedomosti, preference for legal companies is necessary for companies to emerge from the shadows. For example, reducing fines and easing the administrative burden.