- President Putin signed a law raising Russia’s VAT from 20% to 22% starting next year.
- The VAT threshold for businesses will drop from 60 million to 10 million rubles, bringing more small businesses into the tax system.
- Businesses plan to pass the tax increase onto consumers, likely causing a modest rise in inflation.
- Essential goods like select foods, medicines, and children’s products will keep a reduced 10% VAT, but some milk-based products will now be taxed at 22%.
- The tax hike aims to address budget shortfalls from increased military spending and declining oil and gas revenues.
Source: themoscowtimes.com
Russia: Standard VAT Increase (20% → 22%)
Russia will enact a nationwide VAT rate increase from 20% to 22% on January 1, 2026. This 2-point hike applies to the standard VAT (which in Russia covers most goods and services). It’s a significant move aimed at shoring up state revenues amid a large budget deficit driven by military expenditures. Key details: [vatcalc.com]
- The proposal was put forward by the government in 2025 as part of budget amendments. On November 20, 2025, the State Duma (parliament’s lower house) approved the VAT increase to 22%. The Federation Council (upper house) and President are expected to ratify it, given government control. The law also lowers the VAT registration threshold over coming years (from RUB 60M to 10M) to broaden the tax base. [vatcalc.com]
- The VAT rise is projected to raise on the order of RUB 1 trillion extra revenue annually (≈0.5% of GDP). Russia last raised VAT from 18% to 20% in 2019; this new hike follows a similar rationale of fiscal necessity. [vatcalc.com]
- There was discussion of possibly exempting or keeping a lower rate for “socially important” essential goods (like basic food, children’s products) to mitigate consumer impact. However, as of approval, no specific new reduced rates were confirmed – so it’s expected to be a broad increase, with any compensatory measures handled outside the VAT system. [vatcalc.com]
For verification, Russia’s Ministry of Finance announced the Duma’s approval and major news services like Reuters reported on the planned tax hike. The change will be effective immediately on New Year’s Day 2026. [vatcalc.com]
- New standard rate: 22% (for most taxable sales). Reduced rates (e.g. 10% on certain food, medicines) presumably remain unchanged unless separately amended. [vatcalc.com]
- Old rate: 20% standard VAT.
- Status: Approved by Duma, final promulgation expected by end of 2025. [vatcalc.com]
- Join our Linkedin Group on ”VAT Rates – Legislative changes”, click HERE
- Global upcoming VAT rate changes – VATupdate
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