Government proposes tax changes as it plans the 2026 budget

A rise in the standard VAT rate from 20% to 22%. The bill keeps in place the 10% reduced rate for socially significant goods such as food, medicines and medical products, children’s goods and other goods listed in clause 2 of Article 164 of the Tax Code.

A reduction from 60 million rubles to 10 million rubles of the income threshold for taxpayers using the simplified taxation system (“STS”) above which they become liable to calculate and pay VAT.

The annulment of subsection 26 of clause 2 of Article 149 of the Tax Code, which provides a VAT exemption for the sale of rights to software and databases included in the Unified Register of Russian Software and Databases (“the Register”).

The introduction of a number of amendments to Article 149 of the Tax Code barring the application of VAT exemptions in relation to certain operations, including bank card processing operations and operations of payment system operators involving the collection, processing and provision of data on bank card transactions.

The amendment of VAT rules relating to mining infrastructure leasing services.

The treatment of sales of ores, concentrates and scrap containing precious metals by taxpayers that mine precious metals to refining entities licensed to engage in precious metal refining as subject to 0% VAT provided that there is appropriate documentation to support that rate. This means that from 1 January 2026 such operations would not be exempt from VAT under Article 149 of the Tax Code.

The treatment of payment (partial payment) made under a contract for the purchase of a utility digital right that was concluded through an investment platform as payment (advance payment) towards future supplies of goods (work, services, exclusive rights) for VAT purposes.

Indexation of excise duty rates for 2026-2027 (ethyl alcohol; wine and spirit products; alcohol-containing products; tobacco and nicotine-containing products; sugar-containing beverages).

Modification and determination of parameters of tax deductions for excise duty on wine products.

Abolition of the requirement for manufacturers of spirits and/or alcohol-containing products to make an advance payment of excise duty on those products.

Notional value of the average wholesale price of jet fuel, gasoline and diesel fuel fixed for 2028.

Adjustment of the method of determination of the indicators TSneft and TS in view of changes in the rules for the calculation of the price of Russian oil.

Amendment of the parameters for the acceptable deviation of actual domestic wholesale prices for motor fuel from the established values.

Termination of the 5-year ownership relief for shares in foreign companies.

Previously, income received by a tax resident of Russia from the sale (redemption) of shares in Russian and foreign companies was exempt from PIT provided that, at the time of the transaction, the shares in question had been owned by the individual for more than five years.

From 1 January 2026 that relief will apply only to shares and ownership interests in Russian companies.

Establishment of rules for the tax deduction of expenses for the acquisition of an equity interest in a company where that equity interest is acquired as a result of the re-organization of another company.

The deductibility of the above expenses is regulated by clauses 4 to 6 of Article 227 of the Tax Code.

For example, where re-organization takes place in the form of a merger, acquisition or change of legal form, the value of shares received by shareholders of the company being re-organized in the newly established companies or the acquiring company will be taken to be equal to the value of the converted shares in the company being re-organized as stated in the shareholder’s tax accounts as at the date of completion of the re-organization (in the case of acquisition – as at the date on which the cessation of the activities of each acquired legal entity is recorded in the Unified State Register of Legal Entities).

Adjustment of the treatment of the acquisition cost of securities and derivatives based on the value of those first purchased (the FIFO method) when they are sold – now, the deduction of expenses under the FIFO method may take place only within the framework of the relevant brokerage account.

Adjustment of the tax treatment of expenses upon the sale of property whose value was included in the taxpayer’s taxable income when the taxpayer acquired it.

Specifically, it is established that expenses may be taken into account in determining the tax base if expenses incurred in acquiring the property were not previously deducted – for instance where it is used in a business for which the simplified taxation system is applied.

Establishment of a limitation on the PIT exemption for all kinds of securities and derivatives received by way of a gift from individuals. Previously, only shares were covered by this rule.

Changes to the rules for determining the last day of the time limit for the payment of tax where it falls on a non-working day – the time limit will now be considered to end on the preceding working day.

Taxpayers will now be required by law to declare and pay PIT independently where tax is not fully withheld by a tax agent.

Previously, this obligation only arose if a tax agent did not withhold any tax.

Restrictions are imposed on the use of tax preferences by taxpayers that have the status of foreign agents.

Correction of past errors (misstatements) in the current period

Under the current wording of Article 54 of the Tax Code, taxpayers need not file a return stating the amount of tax refundable from the budget if errors (misstatements) have been made that have resulted in tax overpayments, but may instead make an appropriate adjustment in the current period.

Since, however, the tax rate rose from 20% to 25% from 2025, the later recognition of expenses in the context of a higher rate could result in losses to the budget. The Bill establishes a rule according to which errors (misstatements) identified in past periods cannot be recognized in the current period if the tax rate in the current period is higher. This change will make it more important for taxpayers to keep accurate records of expenses attributable to each period. In addition, if they discover prior year expenses they will have to incur additional costs for the preparation of amended returns. By the same token, tax authorities will be obliged to conduct desk audits upon receiving such returns.

Tax payment deadlines

There is an important change regarding the time limit for the payment of tax: if the payment deadline falls on a non-working day, tax must be paid by the preceding working day (rather than the following working day as before).

Tax monitoring 

Under the Bill, it would now be sufficient for one of the following criteria to be met in order to enter the monitoring system:

• tax payments ≥ RUB 80 million
• income ≥ RUB 800 million
• assets ≥ RUB 800 million

The tax authorities would have the right to seize documents and inspect premises.

The monitoring regime would be terminated in the event of the disruption of access to the taxpayer’s information systems.

Tax registration of foreign entities

Foreign companies paying income to individuals for services rendered via the internet (for example, payments to bloggers based in Russia) would be required to register for tax purposes in Russia. In this regard, a company would be required to register specifically for PIT purposes even if it is already registered as a VAT payer (for example, in connection with the provision of electronic services). The changes would take effect a month after the official publication of the law.