Tax Pressure Mounts: Up to 30% of Small Businesses in Russia May Shut Down

Up to 30% of small businesses in Russia, including sole proprietors, could shut down in the medium term, according to economist Nikolai Kulbaka, a candidate of economic sciences. His comments were reported by Govorit Moskva radio station.

The expert noted that the situation for a significant portion of small businesses has deteriorated amid growing pressure. This includes an increase in the fiscal burden on companies and individual entrepreneurs.

Rising Pressure and Shrinking Margins

Against this backdrop, the only realistic way for many small businesses to survive the crisis may be to move into the shadow economy, the analyst explained. The outcome of the ongoing confrontation between authorities and entrepreneurs remains unclear, but Kulbaka believes it will continue in the foreseeable future.

"Current estimates suggest that up to 30 percent of small businesses will close," the economist stated.

Tax Changes Hit Small Enterprises

Since the beginning of the year, Russia has increased its value-added tax (VAT) rate from 20% to 22%. At the same time, the revenue threshold for mandatory VAT payments for small businesses has been reduced threefold-from 60 million to 20 million rubles.

By 2028, the threshold is expected to be cut in half again, to 10 million rubles. As a result, some logistics companies have already been forced to raise their service tariffs in order to stay afloat, according to Sergey Katyrin, head of the Chamber of Commerce and Industry.

Business Sentiment Turns Negative

The tax changes have fueled growing concern within Russia's business community. According to a study by the business association Opora Russia, the overwhelming majority of domestic companies reported a worsening situation in the internal market in early 2026 compared to 2025.

Notably, nearly all survey participants represented small, medium, and micro-sized businesses, while the remaining respondents were registered as individual entrepreneurs and self-employed workers.

These trends highlight mounting pressure on the backbone of the Russian economy, raising questions about sustainability and the future structure of the country's business environment.