TL;DR
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Delovaya Rossiya has submitted more than 50 economic proposals, including ending some tax options used by small businesses and sole proprietors, changing VAT thresholds, and abolishing the patent tax system. The proposals are under review, and Russia’s Finance Ministry says they require further study; no adoption decision has been announced.
Delovaya Rossiya, one of Russia’s largest business associations, has proposed ending several tax breaks used by small businesses and sole proprietors as part of a package of more than 50 economic reforms sent to government agencies, RBC reported. The measures include eliminating two simplified-tax options from 2027, changing value-added tax rules and abolishing the patent tax system; the government has not announced a decision to adopt them.
Among the proposals is scrapping the “income” option under Russia’s simplified tax system, known as USN, and the automated simplified system, AvtoUSN, from 2027. Businesses using the income option pay tax on total revenue at 6% under USN or 8% under AvtoUSN. Yevgeniya Memruk, head of the Union of Accountants and Tax Consultants, told RBC that these options are often used by businesses with revenues of 10 million to 20 million rubles and relatively high profit margins.
Memruk warned that moving such firms to other tax arrangements could leave them with a tax base at least 2.5 times larger, potentially making some businesses unprofitable and forcing them to close. That is her assessment, not a confirmed outcome. Russia’s simplified tax system is still used by nearly 3.5 million entrepreneurs, according to the report.
Delovaya Rossiya also proposes applying a uniform VAT revenue threshold of 20 million rubles to businesses across special tax regimes starting in 2027. Under current rules described in the report, AvtoUSN users can avoid VAT up to 60 million rubles in revenue. Sberbank said earlier this year that the number of its business and individual entrepreneur clients on AvtoUSN rose sixfold in one month after the threshold for businesses on regular USN was lowered to 20 million rubles. The report gives that comparison as a one-month change; it does not provide a longer-term baseline.
Other proposals would remove regional governments’ authority to lower USN rates, abolish the patent tax system, require social insurance contributions from people earning most of their income from interest and dividends, and tax gifts and inheritances. Publicly traded company shares would be exempt from the proposed gift and inheritance taxes.
Tax Changes Could Reach Millions
The proposals could affect small firms’ costs and the tax choices available to entrepreneurs across Russia. Eliminating the income-based options would particularly affect businesses whose expenses are low relative to revenue, while a common VAT threshold could make AvtoUSN less attractive to firms that currently qualify for its higher threshold.
Changes to regional tax-setting powers could also reduce local governments’ ability to use lower rates to attract businesses. Abolishing the patent system would affect sole proprietors in areas including trucking, independent retail, and personal and household services. Memruk told RBC that nearly 1.5 million entrepreneurs use the patent system. The report also says abolishing it could reduce regional budget revenue.
The debate is tied to the government’s stated concern about abuse of special regimes, such as firms splitting operations or misrepresenting their status to reduce taxes. Experts cited by RBC acknowledge such abuse exists, but Memruk argues the proposed response would reach legitimate users as well as offenders. The scale of any resulting impact would depend on the final rules, if any are adopted.
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How the Tax Regimes Work
Under the USN income option, eligible businesses pay tax on total revenue rather than calculating tax after deducting expenses. Regional governments currently can lower the rate from 6% to as little as 1% for that option. Under USN’s “income minus expenses” option, the rate can be reduced from 15% to as little as 5%.
The patent tax system lets sole proprietors pay a fixed tax amount calculated using assumed income. The amount is not directly increased by higher actual earnings. The eligibility revenue threshold was cut to 20 million rubles in 2026 and is scheduled to fall to 10 million by 2028, according to the report. Delovaya Rossiya’s proposal goes further by calling for the system’s abolition.
The association says special regimes can be exploited by businesses that disguise their size or divide operations to stay below thresholds. Its chairman, Alexey Repik, has argued that companies posing as small businesses distort competition. The proposals were reported ahead of the association’s October 15 forum, which President Vladimir Putin was expected to attend.
“Higher taxes today are better than sky-high rates forever.”
— Alexey Repik, as reported by The Bell
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No Adoption Decision Yet
The proposals remain recommendations, and their final wording and prospects are unknown. RBC reported that relevant government agencies received them and that the Finance Ministry had considered them, but the ministry said they require further comprehensive study. No timetable for a decision or draft legislation was specified in the source material.
It is also unclear which, if any, proposals the government might take forward, whether implementation dates would change, or how any new rules would handle existing businesses. The association’s claims about abuse of special regimes and the possible effects on compliant firms are arguments in the policy debate, not established estimates of the consequences of a law.
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Review Before Any Legislation
Delovaya Rossiya’s reform program was due to be presented at its October 15 forum, which Putin was also expected to attend. Government agencies are reviewing the package, with the Finance Ministry saying further study is needed. The next clear development would be an official decision to reject, revise or advance proposals, followed—if the government chooses to proceed—by published legislative measures. Until then, the tax changes remain proposals.
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Key Questions
Has Russia decided to end small-business tax breaks?
No. Delovaya Rossiya has proposed changes, but the source report says the government has not announced that it will adopt them. The Finance Ministry said the proposals need further study.
Which tax options could be removed?
The proposals call for eliminating the income option under USN and AvtoUSN from 2027, as well as abolishing the patent tax system. These are proposals, not enacted changes.
What VAT change is being proposed?
Delovaya Rossiya proposes a 20 million ruble revenue threshold for VAT across special tax regimes from 2027. The report says AvtoUSN users currently have a 60 million ruble threshold for avoiding VAT.
Why does the association support tighter rules?
Chairman Alexey Repik says some companies pose as small businesses or otherwise exploit special tax arrangements, distorting competition. Experts cited in the report agree that abuse exists but warn that broad changes could also affect businesses using the regimes in good faith.
When could the proposed changes take effect?
The proposal names 2027 for several changes, including eliminating two income-based tax options and applying a common VAT threshold. No implementation date was specified for every proposal, and none has been approved.
Source: rss
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