Tax Authority to Waive Penalties for MSP Reporting Errors in First Period

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Russian Federal Tax Service (FNS) head Danil Egоров briefed Russian President Vladimir Putin on the dynamics of business activity and how companies are adapting to updated tax rules. According to Egоров, by the end of 2025, the number of legal entities and individual entrepreneurs increased by 200,000, exceeding 8 million.

Revised VAT

One of the main changes in the tax system was the adjustment of value-added tax (VAT) parameters. Both the basic VAT rate and the revenue threshold at which the obligation to pay it arises have been updated. Businesses now have the option to apply the standard rate with the right to a tax deduction or opt for a preferential rate of 5% or 7% without the deduction mechanism. The tax service estimates that these changes will affect around 7% of taxpayers, primarily those operating under the simplified taxation system.

Auto-UST

FNS chief also highlighted the development of the automated simplified taxation system (Auto-UST). The experiment with its implementation began in 2022, and since 2025, the regime has effectively become available nationwide. The mechanism involves automatic tax calculation based on data from cash registers and bank transactions, relieving entrepreneurs from filing tax returns. In January, there were temporary delays in data transmission as the system expanded, but operations have now stabilized. Currently, around 360,000 entrepreneurs are connected to Auto-UST.

Marketplaces

Significant attention is being paid to cooperation with major online platforms. A large portion of marketplace sellers use the simplified taxation system. Through data exchange with large digital platforms, the FNS gains the ability to promptly inform sellers about potential tax risks and prevent violations.

Support for SMEs and Startups

To ease the transition period, the service has launched a large-scale consultative campaign. More than three thousand seminars have been held for entrepreneurs and industry associations, and explanatory materials on applying VAT have been prepared. Additionally, small and medium-sized enterprises (SMEs) are not subject to penalties for late submission of their first VAT declarations. Businesses are provided with targeted support measures, including payment deferrals and installment plans.