Russian Tax Service Intensifies Crackdown on Business Fragmentation with Preemptive Audits

13:30; 13 April 2026 year

### Russian Tax Authority Intensifies Crackdown on Business Fragmentation Schemes The Russian Federal Tax Service (FTS) has intensified its scrutiny of businesses, launching preventive checks aimed at curbing illegal tax optimization schemes, particularly those involving business fragmentation and disguised employment relationships, according to a report by the Russian business daily *Vedomosti*. Business owners across the country have reportedly started receiving notifications about potential violations and invitations to provide clarifications to tax authorities. Tax lawyers note that these warnings are not only being sent to existing companies but also to newly registered individual entrepreneurs who have not yet commenced business operations. The FTS has focused its attention primarily on small businesses that previously used the patent-based tax system. Following changes in tax legislation that came into effect in 2026, many entrepreneurs were forced to switch to the simplified tax system or the auto-Simplified Tax System (auto-USN), leading to an increase in their tax burden. Under the new rules, the patent system is now available only to entrepreneurs with an annual income of up to 20 million rubles. In several regions, the potential income used to calculate the cost of a patent has significantly increased. Additionally, the threshold for mandatory VAT payment has been lowered: companies and individual entrepreneurs with revenue exceeding 20 million rubles (previously 60 million) are now required to pay VAT. According to the Union of Accountants, notifications about the risks of business fragmentation have already been received by entrepreneurs in Moscow, the Moscow region, Tatarstan, Bashkortostan, Krasnodar Krai, Rostov Oblast, Crimea, Altai Krai, and other regions. Experts note that what was previously a sporadic practice has now become a centralized federal campaign. FTS algorithms detect potential violations based on formal indicators, such as family ties between entrepreneurs, shared employment history, or signs of affiliation. However, the system often fails to analyze actual business activities, resulting in notifications being sent even to closed individual entrepreneurs or those who have not yet started their businesses. Tax authorities use a wide range of digital data for analysis, including VAT control systems, fiscal data operator information, civil registry records, and employment contract databases. This allows inspectors to identify interconnected individuals without conducting on-site inspections. Legal experts have identified over 30 criteria that the tax service may use to suspect business fragmentation. These include engaging in the same type of business activity by multiple affiliated individual entrepreneurs or companies, using a common brand, sharing resources, lack of independence among legal entities, and formal redistribution of business among interdependent structures. The intensified control measures are linked to a sharp increase in new individual entrepreneur registrations at the end of last year. Against the backdrop of changes in tax regulations, the FTS observed a surge in the creation of new business structures, some of which, according to the authority, could have been used for artificial business fragmentation to reduce tax liabilities. Daniil Egorov, head of the FTS, previously stated that out of 140,000 new individual entrepreneurs registered recently, around 20,000 are considered to be at high risk of potential tax violations.

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