What happened?
Delovaya Rossiya, one of Russia’s largest and most influential business associations, has proposed more than 50 economic reforms to the authorities, RBC reported. Many clearly run counter to small businesses’ interests.
The association wants to scrap tax regimes that benefit small businesses and sole proprietors, bar regional governments from lowering taxes at their discretion, eliminate the patent tax system, and tax gifts and inheritances.
- The organization proposes eliminating the “income” option under the simplified tax system (USN) and the automated simplified tax system (AvtoUSN) as early as 2027. Businesses using these options pay tax on their total revenue at a rate of 6% under USN or 8% under AvtoUSN. Yevgeniya Memruk, head of the Union of Accountants and Tax Consultants, told RBC that these options are used by smaller businesses with high profit margins — meaning their expenses are low relative to their income — and revenues of 10 million to 20 million rubles. Their success depends largely on their owners’ labor and expertise. Switching to other tax regimes would leave them with a tax base at least two and a half times as large, making many businesses unprofitable and forcing them to close, she warned.
- Another proposal would set a uniform revenue threshold for value-added tax (VAT) across all special tax regimes, including AvtoUSN, starting that same year. Businesses would have to pay VAT if their revenue exceeded 20 million rubles in the previous calendar year. Under AvtoUSN, businesses can still avoid paying VAT up to a threshold of 60 million rubles. This has already prompted a mass shift to that system: Sberbank said early this year, for example, that the number of its individual entrepreneur and corporate clients using AvtoUSN had jumped sixfold in a single month — just as the threshold for businesses using “regular” USN was lowered to 20 million rubles. The proposal would effectively defeat the purpose of AvtoUSN. Nearly 3.5 million entrepreneurs in Russia still use the simplified tax system.
- Also starting in 2027, Delovaya Rossiya proposes stripping regional governments of the right to lower USN tax rates at their discretion. Regional authorities can currently cut the rate from 6% to as little as 1% under the “income” option discussed above, and from 15% to as little as 5% under the “income minus expenses” option. Removing that power could make regions that attract businesses through favorable tax terms less attractive to investors.
- The association also advocates abolishing the patent tax system (PSN). Under this system, sole proprietors pay a fixed amount of tax, calculated by the state based on assumed income, to operate their businesses. The benefit of paying a fixed amount is that higher actual earnings do not increase a business’s tax burden. In 2026, the annual revenue threshold for eligibility was also cut to 20 million rubles. By 2028, it will fall to 10 million. This has already made the system less popular, but eliminating it altogether would affect a substantial number of entrepreneurs in trucking, independent retail, and personal and household services, Memruk told RBC. Nearly 1.5 million entrepreneurs across the country still use PSN. Abolishing it would also reduce regional budget revenues.
- Other major proposals include requiring social insurance contributions from people who earn most of their income from interest and dividends, as well as taxing inheritances and gifts. Shares in publicly traded companies would be exempt from both inheritance and gift taxes.
Those are some strange proposals… But why is Delovaya Rossiya working against the interests of Russia’s businesses?
The association offers a simple rationale for these unpopular proposals, one also advanced by officials responsible for tax policy: Unscrupulous entrepreneurs exploit special tax regimes by, for example, artificially splitting up their businesses or posing as self-employed workers to reduce their tax burden. “Companies posing as small businesses” distort market competition, the organization’s chairman, Alexey Repik, said.
Repik’s own background also helps explain the association’s lobbying. The founder of pharmaceutical corporation R-Pharm, he is known as a businessman loyal to the state and close to Vladimir Putin’s family. As The Bell reported, Putin received Repik at the Kremlin just a day before Delovaya Rossiya presented its proposals, and the businessman made clear his desire to be useful to the authorities. He said that “higher taxes today are better than sky-high rates forever” and that “a Russian entrepreneur isn’t someone out to make a quick profit, but a patriot.”
Experts acknowledge that abuse of special tax regimes is a real problem. But rather than targeting individual offenders, Delovaya Rossiya’s proposals target “the regimes themselves, which most small businesses use in good faith” across Russia, Memruk told RBC.
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Still, these are only proposals for now, right? Maybe they won’t be adopted at all…
That’s true. So far, all we know is that the reform program will be presented at Delovaya Rossiya’s forum on October 15, which Vladimir Putin is also expected to attend, and that the proposals have been sent to the relevant government agencies for review. Russia’s Finance Ministry, for one, has already considered them. A ministry representative told RBC that they still “require further comprehensive study.”
We don’t know whether the proposals will be adopted. Delovaya Rossiya’s proposals have become law on several previous occasions. The authorities have an incentive to agree to the plan this time, too: The government needs additional revenue to keep the war going while preventing the federal budget deficit from growing. The government plans to limit the deficit to 2.2% of GDP in 2027 (5.5 trillion rubles) and an average of 2% in 2028–2029. In 2026, however, it has already reached 3.2% of GDP (7.3 trillion rubles).
“Adjustments” that would force businesses to pay more tax could help meet those targets. Exactly how much Delovaya Rossiya’s proposals would bring in is unknown. But the amount would be at least tens of billions of rubles: United Russia lawmakers estimated that abandoning further cuts to the revenue threshold above which businesses must pay VAT — a decision made at Putin’s insistence — would cost 51 billion rubles in 2027 and 100 billion rubles a year in 2028–2029.
For the changes to take effect at the start of 2027, as Delovaya Rossiya proposes, the law would have to be published by the end of November 2026. That would leave entrepreneurs only about a month to switch tax regimes.
After RBC’s report was published, Delovaya Rossiya issued a press release in which Repik said the tax proposals had “only a very tenuous connection to the agenda” and that the organization was not proposing to end experimental tax regimes ahead of schedule. In response to this denial, Pyotr Kanayev, head of RBC’s integrated newsroom, published the text of the proposals, which RBC had obtained, on his Telegram channel.
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