The Ministry of Finance proposed raising VAT to 22%: opinions of Kirov entrepreneurs

      The Russian Finance Ministry has proposed raising the value-added tax (VAT) rate from the current 20% to 22%. Amendments to the Tax Code are planned to take effect on January 1, 2026, the ministry’s press service said.

      Additional revenues from the tax increase will be directed primarily to funding defense and security. At the same time, the preferential 10% rate will be retained for socially significant goods — food, medicines, children’s products and medical supplies.

      The Finance Ministry explained that the initiative is part of a package of bills on the 2026–2028 budget, as well as amendments to the current 2025 budget law.

      Opinions of Kirov entrepreneurs

      According to Kirov Region business ombudsman Andrey Vavilov, the “balance” of the tax burden that had been achieved in recent years is now being broken, and this could lead to negative consequences. Vavilov notes that any rate can be “drawn” on paper, but the real ability of companies and people to pay differs — many are already feeling the strain. If the tax rises, some entrepreneurs will be forced to cut staff, close down or shift payments into the shadow economy.

      According to Denis Erokhin, a deputy of the Kirov City Duma, in the current economic situation, when utility and food prices are rising and small and medium-sized businesses are “barely alive,” this is especially hard for entrepreneurs and citizens. In his view, taxes can be raised only in “stable times,” and now this will lead to businesses going underground and the spread of off-the-books wages. Erokhin stressed that taxes should be “comfortable,” so that it is easier to pay them than to look for ways to avoid them.

      Notably, Ruslan Tsukanov, chairman of the regional branch of the Russian Union of Industrialists and Entrepreneurs in the Kirov Region, said he is not ready to comment on the news at this time, as it is necessary to observe what will happen.