This text is an automatic translation from Русский. It was generated by AI and may contain inaccuracies.
Read original →
This text is an automatic translation from Русский. It was generated by AI and may contain inaccuracies.
Read original →The government has eased conditions for lowering the simplified tax threshold for small businesses—the transition is now extended until 2028. Expert Olga Snigur explains how to choose the right VAT rate, avoid mistakes, and adapt to the new rules.
At a government meeting, Mikhail Mishustin promised tosoftenthe original plans to lower the threshold for the simplified tax system (UСН) for small and medium-sized businesses (SMEs) to 10 million rubles in annual revenue, proposing a phased transition instead. This decision came in response to business requests for time to adapt to the new conditions. The reduction will now be gradual: to 20 million rubles in 2026, then to 15 million rubles in 2027, and finally to 10 million rubles in 2028. This approach is also supported by business startup and tax consultant Olga Snigur.
"This is certainly better than dropping straight to 10 million. But it will force many small entrepreneurs to close their businesses. It's not just about VAT, but also about lowering the revenue threshold for using the patent system. The tax burden for individual entrepreneurs who previously used patents will increase sharply (by tens of times). Not everyone will be able to adapt," Olga noted.
It's important to understand that this measure is primarily aimed at combating the artificial fragmentation of businesses to maintain special tax regimes. Today, the Federal Tax Service's analytics, which includes checking connections through shared resources, personnel, and IT traces, effectively identifies such schemes. The new rules create fairer and more transparent conditions for all market participants. Moreover, for businesses facing VAT payments for the first time, the government offers two scenarios to choose from for the first year: the standard 20% rate with the right to deduct "input" VAT, or a preferential rate of 5–7% without deductions. So which is better to choose?
"There's no universal answer here," the expert emphasizes. "The choice should be based on careful calculation. If your cost structure has a high share of purchases from VAT payers (for example, wholesale goods supplies, equipment), then the full rate (20%) with deductions will likely be more advantageous. For the services sector with a high payroll component and minimal input VAT, the preferential rate (5-7%) often looks more attractive, as it simplifies accounting and reduces the price burden on clients."
Counterparty behavior will also be a key factor. Companies working primarily with VAT payers will likely have to choose the general system to remain "transparent" to them and not lose competitiveness.
As part of business support during the transition period, the government is introducing a moratorium on penalties and providing the right to "change one's mind"—to adjust the applied regime. This is an important measure that reduces regulatory stress and allows conscientious entrepreneurs to correct mistakes without consequences.
"The moratorium is a clear signal to businesses: you have time to figure things out and do everything right. However, it's important to understand that what's being softened are the sanctions, not the attention of regulatory authorities. Desk audits, risk-oriented models, and comprehensive data analytics remain fully in effect," Snigur notes.
Among the common mistakes made by entrepreneurs encountering VAT for the first time, she highlights:
The increase in the VAT rate to 22% for certain businesses and the transition of small companies to the general taxation system (OSNO) will undoubtedly affect pricing. However, comparisons with 2019 aren't appropriate.
"Back then, the changes primarily affected large businesses. Now a significant segment of small entrepreneurship is being impacted. For end consumers, the effect may be more noticeable, since VAT is essentially passed on to individuals. Large B2B players will weather this period more smoothly," the expert explains.
At the same time, the government is maintaining targeted support measures for strategically important sectors. A prime example is the preservation of VAT exemptions for sales of Russian software.
"For developers with 'payroll-based' cost structures, this is a genuinely effective benefit. It provides a clear margin boost, especially in the B2C segment. We can expect the government to continue applying this targeted, balanced approach going forward, preserving benefits for industries critical to technological sovereignty," Olga emphasizes.
The government under Mikhail Mishustin is betting on business support: instead of abrupt changes—a smooth transition period, and instead of immediate penalties—time to adapt. This course toward partnership between authorities and entrepreneurs not only softens the short-term consequences of new regulations, but also lays the foundation for sustainable economic development, ensuring a balance between the state's fiscal interests and the needs of the business environment.