Crushed by war taxes: Russia prepares to massively close small businesses
Russia is facing a wave of small businesses closing due to increased tax burdens and rising operational costs arising from war-related economic policies.
Participants in the market suggest that the process of small businesses exiting the market has accelerated due to the tripling of the income threshold from which entrepreneurs are required to pay VAT. Under these new conditions, it is anticipated that between 250,000 and 300,000 small and medium-sized enterprises could close down by 2026, representing about 4.4% of all such entities in the country. This includes various small businesses such as cafes, shoe manufacturers, delivery companies, bakeries, and similar enterprises.
The implications of these closures could lead to a significant increase in the prices of goods and services for end consumers, as small businesses will attempt to offset rising costs. Earlier, Tatiana Ilyushnikova, the Deputy Head of the Russian Ministry of Economic Development, indicated that due to government innovations, the tax burden on small and medium-sized enterprises will nearly triple from 3% to 8-9% of income. This substantial increase may lead many businesses to face significant financial difficulties or even losses.