Viktar Marhelau: The state makes too big demands for the individual entrepreneurs

Small and medium businesses are not prioritized by the state.

In the first half of 2016 tax officers paid audit visits to find violations among 98.5% of individual entrepreneurs in Minsk and among 99.8% of individual entrepreneurs in Vitebsk region. It turns out that 99% of individual entrepreneurs are law-breakers. How is that even possible?

The “EuroBelarus” Information Service addressed its questions to Viktar Marhelau, the Co-Chair of the Republican Confederation of Entrepreneurship.

 - In the course of planned checks violations were detected among 99% of individual entrepreneurs and among 50% of small businesses. Firstly, individual entrepreneurs have no time to work with the documents; and secondly, with such an approach violations can always be found – people do business to the detriment of documents circulation.

What can I say? In theory, documents can be brought in correspondence with the law; but in practice, this is almost impossible: if you start to fill in all the required papers, there would be no time to do business.

- That is, it is not the fault of employers, but a defect of the state, isn’t it?

- The state makes excessive demands on the individual entrepreneurs.

- Why?

- The state will name a thousand reasons: care about customers, state security, etc. It’s not so hard to fulfill certain demands for large businesses, hard for small businesses, and extremely hard for individual entrepreneurs. It is theoretically possible, but only in exchange for business.

- How can we fix this situation?

- Today there will be the first meeting of the working group on the development of entrepreneurship at the Ministry of Economy. There are no simple solutions. We simply need to get rid of all the administrative procedures and remove all the unnecessary requirements; and on the other hand, we need to give the employer a financial incentive so that (s)he aims at implementing the legislation. And when the whole package works, then the entrepreneur will be able to comply with the legislation by hiring an accountant, who can easily comply with the requirements.

- The percentage of violations in small businesses is more than 50%. Why do small businesses violate the law?

- The problems are the same. It’s very hard not to become a law-breaker. The controller will always find what to pick on: for example, dust can be a basis to write out a fine. There are state bodies that are impossible to pass without violations.

- In the neighboring countries, small and medium businesses provide 50% of GDP or more, whereas 99% of individual entrepreneurs and over 50% of small businesses in our country are called “law-breakers”. Such attitude towards business can be called sabotage in a civilized country...

- Small and medium enterprises are not prioritized by the state. The state prioritizes more than 70% of large companies, primarily state-owned that provide more than half of the GDP. Thus, it is in accordance with the rules of large enterprises that the state adapts.

The forecast of socio-economic development of the country in 2020 provides for the increase of the share of small and medium-sized businesses in the GDP to 40%; 35% is considered to be critical. If small and medium businesses will cross the 35% border, then the whole legislature is obliged to readjust in correspondence with the interests of this group.

The main question is how we do that.

We know how to do it. One should sacrifice power and property, because it's not so easy to reach these 40% under such control and supervision of the state. Moreover, the share of small and medium business will significantly drop. Over the last two years we see a tendency to reduce the share of small enterprises; microenterprises grow slightly due to the transition of individual entrepreneurs; there are few medium businesses, while the share of small businesses reduces.