September 2025 Tax digest: VAT increase, reform of the simplified tax system, and cancellation of IT benefits
September was a month of big tax news. The government announced plans to raise the VAT rate to 22% and significantly change the conditions for applying the simplified tax system. The revenue threshold for retaining the right to use the simplified tax system will be lowered from 60 million to 10 million rubles, which effectively means the end of the system and an increased burden on small businesses. At the same time, key benefits for IT companies will be abolished and new tax control mechanisms will be introduced.
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Topic of the month — tax increases
At the end of September, a large-scale bill was submitted to the State Duma, providing for more than 200 pages of changes to the Tax Code. The main innovations are:
• an increase in the VAT rate from 20% to 22%;
• a reduction in the revenue threshold for paying VAT under the simplified tax system from 60 million to 10 million rubles per year;
• cancellation of a significant portion of tax breaks for IT companies;
• increase in insurance contributions to 30% for small and medium-sized businesses.
All amendments will come into force on January 1, 2026, without a transition period.
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22% VAT and a new threshold for the simplified tax system
The main changes are an increase in VAT to 22% and a reduction in the revenue limit for the simplified tax system to 10 million rubles. For comparison: in 2024, the limit was 250 million rubles, meaning that in two years it will decrease 25 times.
The authorities explain these measures as a fight against business fragmentation and the need for a “smooth transition” of small companies to the general taxation system. However, according to experts, such changes will have the opposite effect: small businesses that are not ready to work with VAT and full accounting will be forced to either close or fragment even more actively.
Experts note that three categories of enterprises will be particularly vulnerable:
1. B2C businesses — retail, cafes, salons, fitness clubs, and any companies that work directly with individuals. A 2 percentage point increase in VAT will increase final prices by at least 5–7%, which will lead to a decrease in demand.
2. Companies with low input VAT — those that cannot offset the tax through deductions. For such organizations, the new rate will be a direct blow to profits.
3. Chain businesses and franchises, which the Federal Tax Service traditionally pays special attention to when monitoring fragmentation.
The reduction in the revenue threshold will affect not only the simplified tax system, but also the patent taxation system. Retail trade through stationary facilities and freight transportation will be excluded from the permitted types of activity — areas in which more than half of all entrepreneurs operating under a patent work.
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IT industry: zero rate cancellation and contribution increases
For IT companies, tax changes will be among the most significant. Starting January 1, 2026, the zero VAT rate on Russian software sales will be canceled, and insurance contributions will increase.
Previously, companies could take advantage of a comprehensive package of benefits: zero income tax rate, reduced contributions (7.6%), and VAT exemption when granting rights to use software.
Previously, companies could take advantage of a comprehensive package of benefits: zero income tax rate, reduced contributions (7.6%), and VAT exemption when granting rights to use software from the Russian registry. Now, all these preferences will be abolished.
The insurance contribution rate will increase to 15%, and transactions involving software licenses will be subject to VAT at a rate of 22%. According to experts, this will lead to increased costs for large buyers of software products, such as banks and insurance companies, which will not be able to deduct VAT and will be forced to include it in the cost.
Some IT companies will try to retain the concessions by participating in special technology zones or projects, but most market players will be forced to revise their financial models, cut costs, and reduce their payroll.
At the same time, experts note that the abolition of privileges will reduce the risks of reclassification of license agreements and increase the transparency of the industry. As a compromise solution, experts suggest considering the introduction of a reduced VAT rate (for example, 10%) for domestic software.
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Tax monitoring: from partnership to control
The bill changes the approach to tax monitoring, which was originally positioned as a voluntary alternative to field audits. Now, participation in monitoring will become widespread, and control will become more thorough.
The main change is the elimination of the requirement to meet all criteria (for revenue, assets, and taxes) . To participate, it will be sufficient to meet at least one of them. This will significantly increase the number of participants.
In addition, the Federal Tax Service will have the right to inspect the premises and seize documents from companies under monitoring. Thus, the format of cooperation is turning into an instrument of constant control.
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New rules for mitigating tax liability
The Federal Tax Service has revised its approach to applying mitigating circumstances when imposing fines. Now, fines cannot be reduced by more than 10 times regardless of the number of mitigating circumstances, even if previously the amount of the penalty could be reduced by tens of times.
In addition, “possible material difficulties” are no longer recognized as a mitigating factor if they are only expected in the future. These measures reflect a general trend toward stricter tax administration and a desire to increase tax collection.
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Taxation of self-employed individuals: experiment is close to being completed
The Ministry of Economic Development has proposed initiating discussions on an updated concept for the taxation of self-employed individuals before the conclusion of the current ten-year experiment, which is set to run until 2028.
It is expected that under the new conditions, the tax rate for the self-employed may approach personal income tax rates, and preferential regimes for individual entrepreneurs will be revised. The practice of using civil law contracts to replace labor relations is also likely to be restricted.
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International tax cooperation
Russia and the United Arab Emirates have signed a memorandum of understanding in the field of taxation. The document supplements the double taxation agreement, which will come into force in 2026, and provides for closer cooperation between tax authorities, including information exchange and joint digital initiatives.
Companies with a presence in the UAE should take these changes into account when structuring transactions and preparing reports, as the exchange of data between the tax authorities of the two countries will become more efficient.
Negotiations have also begun with Bahrain on the conclusion of a similar agreement, which will reduce withholding tax rates and increase the attractiveness of the jurisdiction for Russian holding structures.
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New regulation: withdrawal of a participant from an LLC under the simplified tax system
A bill has been passed that eliminates a gap in the taxation of transactions involving the withdrawal of a participant from an LLC. Now, the actual value of the participant’s share on the date of transfer of property is recognized as the company’s income. This means that such transactions can no longer be used as a tool for tax-free transfer of assets.
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The Federal Tax Service has restricted the submission of declarations via the Russian Post service
The tax service has prohibited the submission of declarations and calculations via the “Electronic Registered Letters” internet service. The reason is that the signing mechanism does not comply with the requirements of the Tax Code.
Experts note that this decision is aimed at increasing the transparency of administration and preventing abuse by companies using intermediary or “transit” reporting schemes.
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Other changes
The bill provides for the introduction of a state duty for entering information into the product labeling system. Formally, this is an administrative fee, but in fact, it is an additional burden on manufacturers and retailers.
Regions will lose the right to reduce USN rates: minimum thresholds will be set at the federal level. This should reduce the scale of so-called “tax migration” of companies between regions.
Among the few pieces of positive news is the simplification of the procedure for obtaining tax deferrals and instalments. Seasonal businesses will be eligible for these if their revenues have fallen by more than 50%. This will help reduce the risk of bankruptcies after additional tax assessments.
The September package of tax initiatives confirms the course towards tightening fiscal policy and increasing tax collection. For businesses, this is a signal to review their financial models, plan for the transition to a common taxation system, and adapt their processes to the new requirements.
