The authorities’ decision to increase the tax burden on small and medium-sized enterprises (SMEs) to fund the war budget has backfired. Instead of the expected revenue growth, the treasury faced a sharp decline in receipts during the first quarter of 2026.
Statistics of the Decline:
- Ministry of Finance Data: In January–March 2026, total tax revenues from businesses and individuals on special tax regimes decreased by 22.2% year-on-year. This was reported by Elena Lebedinskaya, Director of the Tax Revenue Department at the Ministry of Finance (without providing absolute figures).
- Federal Tax Service (FTS) Data: According to tax service reports reviewed by Vedomosti, the figure fell by 16% to 537.2 billion rubles.
- Impact on Regions: Revenues from special regimes predominantly fund regional budgets, which are now under significant financial strain.
Changes Implemented Since January 1, 2026: The government introduced a series of harsh measures, expecting to generate an additional 200 billion rubles:
- VAT Increase: The rate rose from 20% to 22%.
- Abolition of Benefits: Businesses lost several preferences regarding social insurance contributions.
- Strike Against the “Simplified System”: The annual revenue threshold for the Simplified Taxation System (STS/USN)—which allows operating without paying VAT—was slashed threefold, from 60 million to 20 million rubles.
Analytical Summary
The situation in the first quarter of 2026 clearly demonstrates the “Laffer Curve” in action: excessive fiscal pressure has led to the degradation of the tax base rather than budget replenishment. Small businesses, faced with soaring costs and the requirement to pay VAT on revenues as low as 20 million rubles, have begun migrating to the “shadow economy,” splitting their businesses, or closing down entirely.
Key Takeaways:
- Ministry of Finance Miscalculation: The bet on an extra 200 billion rubles failed. On the contrary, the budget lost about a fifth of its usual SME revenue. Lowering the STS threshold to 20 million rubles effectively made the simplified system inaccessible for the majority of viable small enterprises.
- Regional Crisis: Since taxes from special regimes (STS, patent system, self-employed tax) flow into the subjects of the Russian Federation, the regions will be the first to feel the shortage of funds for social programs and infrastructure.
- Structural Shift: Increasing VAT to 22% and canceling contribution benefits amid inflation became a breaking point for many entrepreneurs.
Instead of providing a financial boost to the state, the 2026 tax reform triggered a contraction of the private sector. If this trend continues, authorities will either have to revise the STS thresholds or prepare for a further decline in tax collection amidst the stagnation of small entrepreneurship.