Russian Entrepreneurs Brace for Price Hikes Amid Tax Reforms – Survey Insights

A significant number of Russian business owners intend to increase prices in light of forthcoming tax hikes, while others are considering resorting to informal measures to mitigate the effects, as revealed by a survey conducted by the business association Opora Rossii.

Approximately 70% of the 13,000 entrepreneurs surveyed indicated they would raise the prices of their goods and services, while the remainder expressed plans to either operate informally or employ tax optimization strategies, according to the group’s executive director, Andrei Shubin, who spoke on Wednesday.

During a forum organized by the Russian Chamber of Commerce and Industry, Shubin noted that the predominant concern among entrepreneurs is the government’s failure to engage in meaningful dialogue with the business community regarding the creation of the new tax policy.

The federal budget draft currently under review by the State Duma suggests an increase in the value-added tax (VAT) rate from 20% to 22%, effective January 1, 2026.

Additionally, it proposes reducing the annual revenue threshold for VAT obligations from 60 million to 10 million rubles, effectively eliminating exemptions for many small businesses utilizing the simplified taxation system (STS).

As per the latest statistics from the Economic Development Ministry, there were 6.35 million small and medium-sized enterprises (SMEs) in Russia in 2023, with 96% classified as microbusinesses earning around 13 million rubles annually.

Data from the Federal Tax Service indicates that STS contributors paid 1.32 trillion rubles in taxes in 2024, with 4.48 million registered users of the system.

The VAT exemption threshold had already been reduced from 250 million to 60 million rubles in 2025.

Legislator Alexei Nechayev, leader of the New People party’s Duma faction, has called on Finance Minister Anton Siluanov to rethink the decision to cut the STS threshold further to 10 million rubles and to amend the budget proposal before its second reading.

In response to this request, officials began discussing a staggered approach to gradually lower the revenue threshold and transition businesses from STS to the standard tax regime, sources informed the RBC news website.

Under the revised proposal, the STS threshold would decrease to 30 million rubles in 2026, 20 million in 2027, and 10 million in 2028.

This adjustment is set to impact approximately 200,000 entrepreneurs next year and is anticipated to yield an additional 200 billion rubles (about $2.2 billion) for the state budget.