Draft legislation challenges Russia’s 2026 VAT increase, but there is currently no indication of government backing for a rate reversal
Russian opposition lawmakers have proposed cutting the standard VAT rate from 22% back to 20% from 1 January 2027, just one year after the higher rate took effect.
Draft Law No. 1331250-8 was submitted to the State Duma on 2 September 2026 by deputies led by Sergey Mironov of the opposition A Just Russia party. It is therefore not currently a Russian government or Finance Ministry proposal, making its prospects of adoption uncertain.
The bill nevertheless represents an early political challenge to one of Russia’s most significant recent tax-raising measures.
Reversing the 2026 VAT increase
Russia increased its standard VAT rate from 20% to 22% on 1 January 2026 as part of a wider package designed to increase federal revenues. The existing reduced VAT rates of 10% and 0% were left unchanged.
The new bill would simply reverse that headline increase, restoring the standard rate to 20% from January 2027 while retaining the existing reduced rates.
Its sponsors argue that the higher VAT rate increases costs across manufacturing, supply chains, trade and services, with part of the additional burden ultimately being passed through to consumers in higher prices.
RUB 60 million small business VAT threshold
The proposal also seeks to reverse another element of Russia’s recent VAT reforms.
Businesses operating under the simplified taxation regime are currently brought into VAT once their revenues exceed RUB 20 million. Under existing legislation, this threshold is scheduled to fall further to RUB 15 million in 2027 and RUB 10 million subsequently.
The opposition bill instead proposes raising the VAT threshold to RUB 60 million, significantly reducing the number of smaller businesses required to calculate and pay VAT.
Is a Russian VAT cut likely?
At this stage, businesses should not plan on a return to the 20% VAT rate.
The proposal originates from opposition deputies rather than the government, while the 22% rate forms part of Russia’s wider strategy to raise tax revenues. Reversing it would therefore require the government to surrender a substantial new source of federal revenue.
The significance of the bill is instead that the 22% VAT rate is already facing political pressure less than a year after its introduction.
