Support group: tax changes won't cause problems for businesses

Tax changes should not create problems for the manufacturing business, Vladimir Putin said on December 19 during the "Results of the Year", which were held in a direct line format, combined with a press conference. The government, which raised VAT to 22%, considered it an honest way to solve problems in the financial sector. However, the head of state stressed that such a measure would not last forever — the tax burden should decrease in the future. When fees can be reduced and how the authorities will support the business — in the Izvestia material.

How will the business be supported

The manufacturing business should not face new problems due to the tax changes that will take effect in 2026. This was announced on Friday, December 19, on a direct line by Russian President Vladimir Putin.

— The most honest and transparent way to solve problems was adopted — an increase in VAT (from 20% to 22% from January 1, 2026. — Ed.). The goal is to achieve a balanced budget, and this has generally been achieved, thanks to the adoption of this decision. There are a number of issues and the Cabinet should pay attention to them. When taxes rise, there is a temptation to avoid paying this tax," the head of state emphasized during his speech.

However, according to him, it is necessary that the tax increase be reflected in a real increase in income. Therefore, it is necessary to fight the shadow economy. This has been a challenge before, but it's even more urgent now.

At the same time, Vladimir Putin said that the increase in value-added tax in Russia would not last forever. It is planned to reduce it in the future. The President also stressed that everything must be done to ensure that the country's macroeconomics is solid and healthy. Izvestia sent a request to the Ministry of Energy and the Ministry of Finance on how the government will support the business.

Russia already has experience of increasing VAT by 2 percentage points — it was raised in 2019, Natalia Milchakova, a leading analyst at Freedom Finance Global, recalled. But after that, there were no serious fundamental problems for businesses, including small and medium-sized ones, or for the economy as a whole, or for the population, she recalled. Among the costs, there was only a short-term price increase in the first quarter, and later inflation began to slow down.

— In order to support businesses in the face of rising taxes, it is important not to excessively reduce the number of companies with tax benefits, especially when it comes to increasing VAT. A business cannot compensate for this tax by reducing costs, unlike, for example, income taxes or taxes included in the cost," the expert explained.

At the same time, the business itself calls the reduction of insurance premiums for employees as necessary support measures, added financial adviser and founder Rodin.Capital Alexey Rodin.

The authorities also subsidize interest rates, use a preferential lending mechanism and promote import substitution programs, said Ekaterina Kosareva, managing partner of the analytical agency VMT Consult. For the manufacturing sector as a whole, this means that tax changes are offset by measures that reduce costs and support demand.

In addition, fiscal decisions in recent years have been made under the influence of external pressure and the need to finance key government obligations, the expert noted. As the macroeconomic situation stabilizes and the economy adapts to new conditions, the government has the opportunity to partially adjust its tax policy.

According to the expert, the decline may take place gradually and not necessarily in the form of a direct return of rates to the previous level. Targeted measures are possible, for example, the expansion of tax deductions, the revision of thresholds for special regimes and the restoration of more preferential conditions for small and medium—sized businesses, Ekaterina Kosareva added.

VAT is unlikely to be reduced for at least the next five years, at least until the treasury deficit is significantly reduced, Natalia Milchakova believes. However, if oil prices return to around $100 per barrel and Russia regains a budget surplus, the government may return to discussing individual tax cuts.

— At the same time, VAT is most likely to be the last on this list. Such a tax is relatively easy to administer and consistently fills the budget. The income tax can be revised much earlier, either by reducing it or by introducing a differentiated rate," the expert explained.

In addition, other challenges have not gone away, which also add complexity to business development, Alexey Rodin is sure. According to him, we are talking about a shortage of equipment and infrastructure, an outflow of personnel (especially among technical specialists and workers), problems with the supply of imported equipment, as well as the "high cost" of loans with rising prices for purchased goods.

The President also commented on the issue of tightening the qualification for companies based on the simplified and patent taxation system from 2026. As he noted, the benefits in the field of individual entrepreneurs began to be used for gray and black imports, so the government had to make adjustments in the field of taxation.

Putin praised the work of the Central Bank

On December 19, at the last meeting of the year, the Bank of Russia lowered its key rate by 0.5 percentage points to 16%. The President stressed that the regulator operates independently and acts responsibly enough.

He recalled how he had repeatedly discussed with the leadership of the Bank of Russia and the government's economic unit that decisions needed to be made to target inflation. The difference between the real price increase (about 6%) and the key rate is one of the lines of criticism directed at the Central Bank. On the other hand, investment activity is decreasing (by 3.1% in the first three quarters).

But credit activity is still high. This makes it necessary for the Bank of Russia to act extremely carefully.

The task of ensuring a solid and healthy macroeconomics is directly related to the balance between budget revenues and the development of the real sector, emphasized Ekaterina Kosareva from VMT Consult. Sustainability is achieved not only by tax revenues, but also by the growth of production, investment and employment. That is why government policy is aimed at supporting industry, developing the domestic market and technological sovereignty.

In addition to domestic policy, the president spoke about the situation with frozen assets.:

— Theft is an inappropriate definition. Theft is a secret abduction, and we are trying to do it openly. This is a robbery. But why is it not working? Because the consequences can be severe for robbers. And what is it? First of all, it's not easy to do. After all, they didn't announce that they would just rob and take, but one of the ideas was to issue a loan secured by our funds.

Vladimir Putin warned that such actions could have serious consequences. According to him, this is not just a blow to the image, but a blow to confidence in the eurozone. Not only Russia, but also other states, keep their gold and foreign exchange reserves there. At the same time, the Russian Federation will defend its interests in the courts. "We will try to find a jurisdiction that will be independent of political decisions," the president concluded.