"Russia's Ministry of Finance indicated that federal budget income from oil and gas taxes fell by 24% in 2025, totalling 8.48 trillion rubles (£80.5bn), highlighting the impact of declining energy revenues on the economy. Declining gas exports and price pressures have contributed to what analysts describe as the weakest energy revenue performance in five years."
"The annual sales threshold for mandatory VAT registration has been lowered from 60 million rubles to 20 million rubles (£191,000) in 2025. It will further decrease to 10 million rubles (£95,000) by 2028, directly affecting small and medium enterprises and their strategic planning."
"In response, authorities have implemented comprehensive tax reforms that raise the burden on businesses and consumers, highlighting the crucial role of policymakers and business leaders in managing these significant fiscal adjustments shaping the economic landscape. Key changes include a 2% increase in VAT and a significant reduction in the revenue threshold that triggers VAT liability."
Russia faces intensifying economic pressure as oil and gas revenues, historically the federal budget's foundation, have declined significantly due to lower global crude prices and Western sanctions. Federal budget income from oil and gas taxes fell 24% in 2025 to 8.48 trillion rubles, representing the weakest energy revenue performance in five years. The widening budget deficit and plateauing military spending have forced policymakers to implement comprehensive tax reforms. Key changes include a 2% VAT increase and substantially lowered VAT registration thresholds, reducing the annual sales requirement from 60 million rubles to 20 million rubles in 2025, with further decreases to 10 million rubles by 2028. These reforms directly impact small and medium enterprises operating under the patent taxation system, now facing minimum 6% tax and 5% VAT obligations.
#russian-fiscal-policy #energy-revenue-decline #tax-reforms #small-business-impact #economic-sanctions
Read at London Business News | Londonlovesbusiness.com
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