A Major Russian Business Association Has Proposed Sweeping Away Tax Breaks For Small Businesses. Here’s What Would Change — And Why The Kremlin Might Agree.

TL;DR

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Delovaya Rossiya has submitted more than 50 economic proposals to Russian authorities, including ending tax options used by small businesses and sole proprietors. The proposals are not adopted policy: the Finance Ministry says they need further study, and their fate remains uncertain.

Delovaya Rossiya, one of Russia’s largest business associations, has proposed ending or narrowing several tax breaks used by small businesses and sole proprietors, according to RBC’s reporting cited by Meduza. The package includes changes that could take effect from 2027, but the proposals remain under government review and have not been adopted.

The association has submitted more than 50 economic proposals to government agencies. Among them is ending the “income” option under Russia’s simplified tax system (USN) and the automated simplified tax system (AvtoUSN) from 2027. Under the current income-based options, businesses pay tax on total revenue at a rate of 6% under USN or 8% under AvtoUSN.

Another proposal would apply a common 20 million-ruble VAT threshold across special tax regimes from 2027, based on revenue in the previous calendar year. AvtoUSN currently allows eligible businesses to avoid VAT until revenue reaches 60 million rubles. Delovaya Rossiya also wants to remove regional governments’ discretion to lower USN rates, and to abolish the patent tax system used by sole proprietors.

The package also includes requiring social insurance contributions from people who receive most of their income from interest and dividends, and taxing gifts and inheritances. Shares in publicly traded companies would be exempt from the proposed gift and inheritance taxes. The details and potential effects of these measures have not been confirmed as government policy.

Potential Costs for Small Firms

The proposals could affect businesses that currently rely on simplified tax calculations, regional rate reductions, or fixed patent payments. Nearly 3.5 million entrepreneurs use the simplified tax system, while about 1.5 million use the patent system, according to the source report. Those figures describe current use, not the number of firms that would necessarily face closure or higher bills.

Yevgeniya Memruk, head of the Union of Accountants and Tax Consultants, told RBC that the income-based USN and AvtoUSN options are used by smaller businesses with high profit margins and revenues of 10 million to 20 million rubles. She warned that shifting such businesses to other regimes could substantially increase their taxable base and make some operations unprofitable. That is an expert assessment, not an official forecast of closures.

A uniform VAT threshold could also reduce AvtoUSN’s appeal for businesses whose revenue is above 20 million rubles but below its current 60 million-ruble threshold. Sberbank said earlier this year that the number of its business and individual entrepreneur clients using AvtoUSN had risen sixfold in a single month, as the VAT threshold for businesses on regular USN was lowered to 20 million rubles. The proposal would change the rules behind that shift.

Why the Tax Rules Are Targeted

Delovaya Rossiya says the tax changes are intended to address abuse of special regimes. The association argues that some businesses reduce their tax burden by artificially splitting operations or presenting workers as self-employed. Its chairman, Alexey Repik, described such operations as companies posing as small businesses, according to the source report.

Experts cited by RBC acknowledge that abuse exists, but Memruk argued that the package targets the tax regimes themselves, which many small firms use legitimately, rather than focusing on individual offenders. The two positions reflect the central dispute: whether broad changes are justified by the risk of avoidance and how much they would burden compliant businesses.

Meduza’s report, citing The Bell, said Repik met Putin at the Kremlin a day before the association presented its proposals and had said he wanted to be useful to the authorities. Repik is the founder of pharmaceutical company R-Pharm. The proposals’ political prospects are still uncertain; the meeting and the association’s relationship with officials do not establish that the government will adopt the plan.

““Companies posing as small businesses” distort market competition.”

— Alexey Repik, Delovaya Rossiya chairman, as reported by Meduza

Adoption and Final Details Remain Open

There is no confirmed decision to enact the proposals. The Finance Ministry told RBC that the recommendations need further comprehensive study, and the source material does not say whether other government agencies support them or when they might reach a formal legislative stage.

The precise design of the measures, any exceptions, and the transition arrangements for affected firms are also unclear. The reported potential consequences for business viability come from Memruk’s assessment; they are not quantified in an official impact analysis in the available reporting. Delovaya Rossiya has had proposals become law in the past, according to Meduza, but that history does not establish the outcome of this package.

Forum Presentation and Government Review

Delovaya Rossiya is due to present its reform program at a forum on October 15, which Putin is expected to attend. The proposals have also been sent to relevant government agencies, and the Finance Ministry has already reviewed them at an initial stage, saying further study is required.

The next clear developments will be whether officials revise, reject, or advance any of the recommendations and whether a specific legislative proposal emerges. Until then, the suggested 2027 start dates and other tax changes remain part of an association’s proposal, not confirmed changes to Russia’s tax rules.

Key Questions

Has Russia decided to end small-business tax breaks?

No. Delovaya Rossiya has proposed changes, but the government has not announced that they will become law. The Finance Ministry told RBC that the proposals require further study.

Which tax systems could be affected?

The proposals target the income-based options under USN and AvtoUSN, the patent tax system for sole proprietors, regional discretion to lower USN rates, and VAT thresholds across special regimes.

When could the proposed changes begin?

Some proposals, including ending the income-based USN and AvtoUSN options and applying a common VAT threshold, are described as starting in 2027. Those dates are proposed, not confirmed implementation dates.

Why does Delovaya Rossiya support the changes?

The association says some businesses exploit special regimes to reduce taxes, including by splitting operations or misclassifying workers. Experts cited in the report say abuse is a real issue but warn that broad changes could also affect businesses using the regimes legitimately.

Source: rss