Russia raises VAT to 22%: businesses are preparing for the most significant tax reform in recent years

On January 1, 2026, one of the key fiscal changes will come into force in Russia — an increase in the base VAT rate from 20% to 22%. The law on the adjustment of the Tax Code was signed by President Vladimir Putin and became part of a large-scale tax reform aimed at strengthening fiscal sustainability.

The increase will affect all transactions taxed at the general rate. At the same time, preferential treatment remains unchanged: the 10% rate will continue to apply to socially important goods, and the 0% rate will continue to apply to export operations. Thus, the government maintains a mechanism for targeted support to the most sensitive industries and consumers.

The document also includes a number of amendments related to the application of the simplified taxation system: revenue thresholds and criteria for switching to the unified tax system have been clarified. Companies operating at the intersection of tax regimes should check their compliance with the new requirements in advance.

Experts note that an increase in VAT will inevitably increase the tax burden on businesses. For many companies, this will be an incentive to review pricing policies and cost structures. Some of the costs are likely to be shifted to the end user, which creates the risk of a moderate acceleration of inflation in early 2026.

However, the authorities emphasize that the rate change is aimed at ensuring additional budget revenues, which are planned to be used to finance defense, infrastructure and priority government programs. The Ministry of Finance estimates that the cumulative effect of the VAT increase in 2026-2028 will amount to 4.423 trillion rubles.

Adaptation will be a key task for businesses in the coming months. Companies need to review long-term contracts, update financial models for 2026, and reassess prices and margins. You should pay special attention to contracts that extend to the next tax period.