The government and regions have been tasked with "cleaning up" the Russian economy next year, President Vladimir Putin announced at a meeting of the Council for National Projects and Strategic Development.

"In connection with the VAT increase, we need to ensure that nothing goes into the shadows, that everything operates legally, and that the corresponding revenues flow into the budget," Putin said, addressing officials and ministers in the Kremlin.

According to Putin, the authorities must eliminate the "illegal circulation" of goods in retail and online stores, "tighten controls over the circulation of cash," and "drastically reduce illegal employment."

The next tax reform will begin in Russia in 2026, which, according to the Finance Ministry's estimates, should generate 2.3 trillion rubles in additional revenues for the budget. The VAT rate will increase to 22%, a record high since 1992, generating 1.2 trillion rubles in new taxes for the government.

The annual income threshold for the simplified tax system will be lowered to 20 million rubles: those earning higher revenues will begin paying VAT—200 billion rubles per year, according to the Finance Ministry's estimates. Furthermore, a "technological levy" on equipment and electronics will go into effect in September 2026, from which the authorities expect to generate another 200 billion rubles over three years.

Currently, according to the Finance Ministry's estimates, approximately 10-12% of the Russian economy, with a turnover of approximately 25 trillion rubles per year, operates in the shadow economy, without paying taxes to the budget. Deputy Prime Minister Alexander Novak told Putin that the government's plan will reduce this share by 1.5% of GDP over three years. He added that this will generate 1 trillion rubles in additional taxes annually, starting in 2027.

"The plan consists of the following six sections, covering sectors where the problem of legalization is most acute: trade within the EAEU, the domestic goods market, the labor market, the circulation of cash and digital currencies, illegal lending, and the tobacco and nicotine-containing product market," Novak explained.

source: The Moscow Times https://archive.is/UZEmQ