Business Criticizes Bill Proposing Delay in VAT Threshold Reduction

11:31; 11 June 2026 year

### Russian Bill Proposes Three-Year Freeze on VAT Threshold for Small Businesses, Excludes Patent Taxpayers A bill has been introduced in the Russian State Duma that proposes a three-year freeze on the revenue threshold for small businesses operating under the simplified tax system (UTS), after which they would be required to pay value-added tax (VAT). However, business representatives have highlighted a significant drawback: the proposed tax relief does not apply to businesses operating under the patent taxation system (PTS), according to [Forbes](https://www.forbes.ru/finansy/562774-asimmetria-podhodov-cto-ne-tak-s-proektom-zamorozki-poroga-po-uplate-nds). The draft bill was prepared in response to an instruction from President Vladimir Putin, who at the St. Pyotrsburg International Economic Forum (SPIEF) in 2026 proposed maintaining the VAT threshold at 20 million rubles and postponing its further reduction. According to the bill, the current limit for companies under the simplified tax system will remain in place until 2030, after which it will be reduced to 15 million rubles, and from 2031 onwards, to 10 million rubles. The Ministry of Finance estimates that the proposed freeze will allow more than 360,000 small and medium-sized enterprises to avoid paying VAT in the coming years. However, the federal budget may lose over 250 billion rubles in revenue over the three-year period. The main grievances from the business community stem from the fact that similar tax relief measures are not provided for the patent taxation system. Representatives of the Chamber of Commerce and Industry, "Delovaya Rossiya" (Business Russia), and other experts argue that this approach is unfair, as both UTS and PTS are designed for similar categories of small businesses. They argue that maintaining the current schedule for reducing the threshold for patent holders will force thousands of individual entrepreneurs to choose between limiting their business growth, switching to more complex tax regimes, or increasing administrative costs. Additionally, experts warn of the risk of a mass migration of entrepreneurs from the patent system to the simplified tax system, which could lead to distortions in the tax system and a reduction in regional budget revenues. Despite criticism of certain provisions in the bill, business representatives generally welcome the decision to freeze the VAT threshold for three years. They believe that the measure will allow companies to adapt to new tax conditions, reduce pressure on small businesses, and give entrepreneurs additional time for financial planning. At the same time, experts emphasize that the problem is systemic. In the context of inflation, rising wages, and increasing costs, the current threshold of 20 million rubles is gradually losing its economic relevance, and therefore requires not only a temporary freeze but also regular adjustments.

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