The Federal Law No. 425-FZ on major amendments to the Tax Code of the Russian Federation has been signed

The main changes that will be introduced on January 1, 2026, by the Law “On Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation”:

• Increase in the VAT rate from 20 to 22 percent;
• Abolition of preferential insurance contribution rates for small and medium-sized businesses in certain industries;
• Invoices for sales against advance payments received will now have to include the date and number of the advance payment order, as well as the date and number of the advance payment invoice;

For organizations and individual entrepreneurs applying the simplified tax system:

• The income threshold allowing them to avoid paying VAT will be reduced. In 2025, this threshold is 60 million rubles, and from 2026, it will be reduced to 20 million rubles. If income for 2025 exceeds 20 million rubles, then from 2026, the company on the simplified tax system will become a VAT payer.

The reduction in the maximum income threshold allowing companies on the simplified tax system to avoid paying VAT will take place in stages as follows:

• in 2026 – 20 million rubles,
• in 2027 – 15 million rubles,
• in 2028 – 10 million rubles.

• The income limit for applying the simplified tax system will be increased from 450 million to 490.5 million rubles, and the limit on the value of fixed assets will be increased from 200 million to 218 million rubles. If these values are exceeded, the company will lose its right to the simplified tax system starting from the first day of the month in which the specified income exceeded the limit (clause 4 of Article 346.13 of the Tax Code of the Russian Federation).
• The maximum amount of income for the first nine months of 2026, which will allow the transition to the simplified tax system from January 1, 2027, will be increased from 337.5 million to 367.875 million rubles.
• Organizations on the simplified tax system that have become VAT payers for the first time and have switched to applying special VAT rates of 5% or 7% will be able to refuse to apply them before the expiry of the three-year period provided for in clause 8 of Article 164 of the Tax Code of the Russian Federation. The refusal may be declared no later than the end of four quarters from the period for which the VAT return with a tax rate of 5% or 7% was first submitted (clause 9 of Article 164 of the Tax Code of the Russian Federation);
• Organizations on the simplified tax system that have become VAT payers for the first time and have not submitted a return for the quarter falling within the period from January 1 to December 31, 2026, will be exempt from paying a fine under clause 1 of Article 119 of the Tax Code of the Russian Federation for failure to submit a return;
• For companies on the simplified tax system whose taxable income is “income minus expenses,” the list of expenses that can be taken into account for the purpose of reducing taxable income has been expanded.
  For example, it will be permitted to include in expenses any reasonable and documented costs (clause 45, paragraph 1, Article 346.16 of the Tax Code of the Russian Federation), i.e., expenses that are not directly specified in Article 346.16 of the Tax Code of the Russian Federation.
• The authorities of the constituent entities of the Russian Federation will be able to reduce tax rates under the simplified tax system and introduce tax holidays only for companies engaged in priority types of economic activity (paragraph 2 of clause 1 and paragraph 2 of clause 2 of Article 346.20 of the Tax Code of the Russian Federation). The list of such activities is approved by a separate resolution of the Government of the Russian Federation.