Major Russian business group proposes ending tax breaks for small businesses
The business association Delovaya Rossiya has put forward more than 50 economic reforms, including scrapping several small-business tax regimes and the patent system. The Kremlin may agree because the state needs extra revenue to fund the war.
Delovaya Rossiya, one of Russia's largest and most influential business associations, has submitted more than 50 economic reform proposals to the authorities, according to the Russian outlet RBC. Many would work against the interests of small businesses, potentially affecting hundreds of thousands of entrepreneurs. The program is due to be presented at the association's forum on October 15, which President Vladimir Putin is also expected to attend.
What is proposed
Starting in 2027, the group wants to scrap the "income" option under the simplified tax system (USN) and the automated simplified system (AvtoUSN). Under it, businesses pay tax on total revenue: 6% for USN and 8% for AvtoUSN. Yevgeniya Memruk, head of the Union of Accountants and Tax Consultants, said these options are used by small, high-margin businesses with revenue of 10 to 20 million rubles. Moving to other regimes would leave them with a tax base at least two and a half times larger, and some would become unprofitable.
Another proposal would set a single value-added tax (VAT) threshold of 20 million rubles across all special regimes, including AvtoUSN. At present AvtoUSN allows businesses to avoid VAT up to 60 million rubles, which prompted a mass switch to it earlier this year. Regions would also lose the right to cut USN rates at their discretion; the rates can currently fall to as low as 1% or 5%, depending on the option. The association also backs abolishing the patent tax system (PSN), used by nearly 1.5 million entrepreneurs, and introducing taxes on inheritances and gifts, with shares of publicly traded companies exempt.
Why the Kremlin might agree
Association chairman Alexey Repik argues that unscrupulous entrepreneurs abuse special regimes, for example by artificially splitting their businesses. Experts accept the problem is real but say the proposals target the regimes themselves rather than offenders. The government needs additional revenue to fund the war without widening the budget deficit, which has already reached 3.2% of GDP, or 7.3 trillion rubles, in 2026. The Finance Ministry said the proposals require further study. After the RBC report, Repik said the tax proposals had only a very tenuous connection to the agenda.
