Amendments to Russian tax legislation providing for an increase in the VAT rate and other changes have been approved

On November 28, 2025, Federal Law No. 425-FZ “On Amendments to Parts One and Two of the Tax Code of the Russian Federation, Certain Legislative Acts of the Russian Federation, and the Recognition of Certain Legislative Acts (Certain Provisions of Legislative Acts) of the Russian Federation as No Longer Valid” was adopted.

During the review of draft law No. 1026190-8, a number of initially strict provisions considered in the first reading were significantly revised by the State Duma Committee on Budget and Taxes before the second reading.

Below are the most significant amendments included in the final text of the law.

A gradual reduction in the income limit for the simplified tax system, which requires VAT to be paid: instead of the initially planned sharp reduction from RUB 60 million to RUB 10 million from 2026, a phased transition has been approved: RUB 20 million (in 2025), RUB 15 million (in 2026), RUB 10 million (from 2027).

Retention of VAT exemptions for Russian software: the proposal to abolish VAT exemptions for transactions involving rights to Russian software and databases was completely excluded from the draft law.

Support for small businesses: During the discussions, initiatives were put forward to impose a moratorium on penalties for those paying VAT under the simplified tax system for the first time, to relax the rules for changing the simplified tax rate, and to expand the list of expenses covered by the simplified tax system.

Following three readings, Federal Law No. 425 of November 28, 2025, was signed into law, confirming the following key changes to the Russian Federation’s taxation system.

1. VAT rate increase and other VAT amendments

• The standard VAT rate has been increased from 20% to 22% (a number of products have retained the preferential rate of 10%).
• The VAT exemption for transactions involving rights to Russian software has been retained.
• A moratorium on penalties for new VAT payers for the first late filing of a return has been introduced.
• The Russian Federation is recognized as the place of sale of mining infrastructure rental services to foreign organizations, which entails the obligation to pay VAT.
• VAT exemptions for certain banking transactions are being abolished: from 2026, acquiring, processing, and some payment services will be subject to 22% VAT.

2. Technological fee

• A new federal payment has been introduced – a technology fee on electronic components (modules) and products containing them.
• The levy is regulated outside the Tax Code of the Russian Federation (Law “On Industrial Policy”). Rates and lists of goods will be approved by the Government of the Russian Federation. The levy will be collected by the Federal Tax Service, and the procedure will be explained by the Ministry of Industry and Trade.
• The expected start date for collection is September 2026.

3. Tax administration (tightening of controls)

• Extraterritoriality of desk audits has been introduced: audits may be conducted by an inspection body specially authorized by the Federal Tax Service, rather than the one to which the reports are submitted. At the same time, documents may be submitted to one’s own inspection body during the audit.
• Tax authorities have been granted the right to seize and inspect documents during additional tax control measures (after the audit).
• The criteria for recognizing transactions as controlled for transfer pricing purposes have been expanded (e.g., transactions with counterparties from countries with an income tax rate of ≤15%).
• The special procedure for calculating penalties (at an increased rate from the 31st to the 90th day of delay) has been extended until 2026.

4. Income tax and international taxation

• The limit for carrying forward losses from previous years (no more than 50% of the tax base) has been extended until December 31, 2030.
• The carryforward of expenses and deductions to a later period in which the tax rate has increased will not be retroactive.
• Debts related to fines, penalties, and other sanctions confirmed by a court decision are classified as doubtful debts.
• The rules for forming a reserve for costly capital repairs have been clarified: it should not be carried out during the three previous tax periods.
• A new condition has been introduced for the exemption of profits of controlled foreign companies (CFCs) of the holding type from taxation in the Russian Federation: the income tax rate in the country of registration of the controlled foreign company (the country of incorporation of the CFC) must be at least 15%.
• Organizations recognized as foreign agents (or with a share of their participation of 10% or more) are deprived of the right to reduced income tax rates and benefits.
• Various exemptions from withholding tax have been extended under the suspension of international treaties (DTA).

5. Social payments

• For IT companies, the rates will change from 2026: 15% within the maximum base amount, 7.6% above it.
• For most SMEs, the contribution rate will increase from a reduced 15% to a total of 30% on payments exceeding 1.5 times the minimum wage.
• Two new conditions will be introduced for SMEs to apply reduced insurance contribution rates: the main OKVED (Russian Classification of Economic Activities) of the organization or individual entrepreneur must be included in the list established by the Russian Government, and the share of income from the preferential type of activity must be at least 70%.

6. Personal Income Tax

• The application of the progressive scale (13%/15%) to payments calculated from average earnings has been extended to the part relating to northern coefficients.
• Gifts in the form of securities and derivatives are taxable (except for gifts between close relatives).
• Tax non-residents who had foreign agent status are deprived of the right to reduced rates and deductions.
• Gambling organizers (bookmakers, totalizators) become tax agents for individuals’ income up to RUB 15,000.

7. Special regimes (simplified taxation system and simplified taxation system)

• A phased reduction in income limits has been established (see above), above which:
  • the simplified tax system (STS) is subject to VAT;
  • the right to apply the simplified tax system (STS) is lost.

8. Excise taxes and mineral extraction tax

• Excise tax rates have been increased on a wide range of excisable goods.
• A new procedure for calculating the Kkg indicator for gas (differentiation by subsoil areas) has been introduced in the mineral extraction tax, a new object has appeared—toll processing of oil abroad, and the Urals quotation formula for oil has been changed.
• A refundable excise tax has been introduced for oil refiners modernizing their plants and for toll processing of oil abroad.

9. Other significant changes

• Tax on gambling has become federal, regulated by the new chapter of the Tax Code of the Russian Federation (25.5), with new rules and rates established.
• Procedures for taxpayers have been simplified: registration certificates have been abolished, document exchange via State Services has been expanded, and the obligation to submit declarations at the location of each separate division has been abolished.
• The amount of the reduction in fines in mitigating circumstances has been limited to no more than 10 times.

Conclusion

The amendments to Russian tax legislation adopted by Law No. 425-FZ are extensive and comprehensive, affecting virtually all major taxes and aspects of tax administration.

A transition period has been provided: businesses, especially small and medium-sized ones, will have a smoother adjustment period for key changes (USN limits, preservation of benefits for software).

Despite the softening of some initial initiatives during the discussion process, the changes will require serious and timely adaptation from businesses.

Important areas for companies to analyze and recommendations:

1. Revision of financial models in connection with the increase in VAT to 22% and changes in insurance contribution rates for the IT sector.
2. Conducting a tax audit and analysis of compliance with the limits on the simplified tax system and the patent system for the coming years, and planning a possible transition to VAT and the general taxation system.
3. Reviewing contracts for VAT terms and conditions, providing for the possibility of price changes in connection with the rate increase.
4. Assessing international taxation risks, especially for structures with CFCs, and compliance with the new criterion (rate ≥15%).
5. Preparing for tighter tax control in the context of extraterritorial audits and expanded transfer pricing rules.
6. Monitoring of subordinate legislation on technological fees, new lists of benefits and rates to be approved by the Russian Government.
7. Analyzing payroll expenses: assessing how the increase in insurance contributions will affect the business.

Link: http://publication.pravo.gov.ru/document/0001202511280017