Russia has increased taxes to support military spending, affecting small businesses, and some entrepreneurs are considering closing down or moving into the informal economy.

Russia has recently implemented a series of tax increases to consolidate its finances in the context of the war in Ukraine, particularly affecting small businesses. The new tax regime, which includes a reduction in the revenue threshold for VAT exemption, will come into effect in 2026, and estimates suggest that approximately 700,000 entrepreneurs, or one-tenth of the small business sector, will be affected. The fiscal measures, including an increase in the general VAT rate from 20% to 22%, are intended to generate additional revenue to cover military expenses, but entrepreneurs fear that these additional costs will severely impact their businesses.

Representative bodies for small businesses, such as Opora, have called for adjustments to the tax proposals, emphasizing that they will lead to the closure of many businesses and an increase in the informal economy. The Minister of Finance has stated that he is open to adjustments but has not provided clear details. Entrepreneurs, who already feel pressured by costs, are urging the government to focus on taxing large companies, not small ones.