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A veritable revolt and wave of outrage among small businesses is brewing in Russia . Against the backdrop of war and record military spending, the Kremlin is introducing massive tax increases, which entrepreneurs say could literally strangle small businesses. According to Reuters , the government’s decision has sent shockwaves through the business community, with small businesses warning of mass closures, job losses, and a growing shadow economy.
Starting in 2026, a new tax system will come into effect in Russia, reducing the VAT exemption threshold from 60 million rubles to 10 million. Now, even small companies will be required to pay higher taxes, maintain accounting records, and hire specialists to handle complex calculations.
This will affect approximately 700,000 entrepreneurs— one in ten small business owners. "This is a shock for everyone who has survived years of instability. For many, this will be the end," noted the organization’s head, Sergei Borisov.
A third of the businessmen surveyed have already announced they will close. Another third will go underground, ceasing to pay taxes altogether. Economists warn that raising rates won’t generate the expected revenues but could trigger a cascade of social problems. "They won’t raise much money, but they will destroy small businesses and employment," explains T-Bank Chief Economist Sofia Donetsk. Today, small businesses account for a fifth of Russia’s GDP and employ 31 million people. However, as Reuters notes, Putin’s attempt to "squeeze the maximum" out of the economy will lead to massive job losses and entrepreneurs closing their shops and workshops. The Kremlin is striving to fill the military budget at any cost. According to the Ministry of Finance’s estimates, the new system will generate approximately 200 billion rubles. However, experts have already calculated that the costs of implementing the new regulations alone will exceed 420 billion—twice the potential profit. As economist Evgeny Kogan noted: “For a cow to produce a lot of milk, it needs to be provided with all the conditions for good grazing on a green lawn.” ". But the Kremlin chose the opposite strategy.
As a reminder, media previously reported that the Russian State Duma acknowledged a severe economic crisis in Russia. State Duma deputy Mikhail Delyagin openly stated that the country is experiencing a rapid economic collapse, while official statistics conceal the scale of the crisis.
" The Russian economy has been driven to a desperate state. If you look not at official reports, but at business reports, it’s monstrous. Agricultural machinery production fell by a quarter in the first half of the year… And this is despite last year not being the best. The coal industry is in dire straits. Basically, wherever you look, there are difficulties and problems.
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