Russia is set to increase its standard VAT rate from 20% to 22% starting in 2026

Russia is set to increase its standard VAT rate from 20% to 22% starting in 2026, as part of a broader fiscal strategy to address a growing budget deficit driven by defense and security spending. Here are the key details: [themoscowtimes.com]

Summary of the VAT Rate Change

• New Standard Rate: 22% (up from 20%)
• Effective Date: Expected from January 1, 2026
• Reason: To cover a budget shortfall exacerbated by reduced oil revenues, sanctions, and increased military expenditures.
• Expected Revenue Impact: Estimated to generate 1.3 trillion rubles annually (approx. $15.5 billion). [themoscowtimes.com]

Reduced VAT Rate

• The 10% reduced VAT rate will remain for essential goods such as:
  • Bread
  • Dairy
  • Meat
  • Medicines
  • Children’s products

Impact on Businesses

• The threshold for VAT exemption under the simplified tax system will be lowered from RUB 60 million to RUB 10 million, aiming to prevent tax avoidance through business fragmentation. [konsugroup.com]
• Businesses with revenues between:
  • RUB 60–250 million will pay VAT at 5%
  • RUB 250–450 million will pay VAT at 7%
  • Above RUB 450 million, businesses must switch to the general taxation system. [awaragroup.com]

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Lawmakers Approve First Reading of Bill Raising VAT Rate to 22% and Expanding Tax Changes

• The State Duma approved in the first reading a bill to increase the standard VAT rate from 20% to 22%, while keeping a reduced 10% rate for socially significant goods.
• The bill includes lowering the VAT threshold for simplified tax system users and introduces measures to encourage businesses to switch to the general tax regime.
• New federal taxes and rates are set for the gambling industry, and preferential rates are maintained for priority sectors, with new general rates for others.
• Additional measures include mandatory insurance contributions for company heads, extended reduced rates for NGOs, and restrictions on tax benefits for foreign agents.
• The bill also expands tax preferences for families with children, SVO participants, and their families, and introduces changes to excise duties and investment tax deductions.

Source: garant.ru

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Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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