A major package of amendments to the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code), draft federal law No. 1026190-8, may come into force on January 1, 2026. The law passed its first reading on October 22, 2025, and on November 10, revised amendments for the second reading were published, and it is these current changes that I have taken into account in this article.

I am Anton Kartsev, CEO and founder of Flysk ^{[advertisement removed by mod.]}

Therefore, I understand how important it is for a business to stay informed about all significant changes. And if you run a small business or are a sole proprietor on the Simplified Tax System (STS), be prepared, because there will be many changes, and some of them may affect your income.

Who will be affected

Sole proprietors and LLCs on the STS whose income is close to the limits
Entrepreneurs who are currently exempt from VAT
Businesses that benefit from tax breaks or reduced tax burdens
Clients of marketing agencies and services
Companies dealing with goods and services where VAT affects pricing

What changes are planned

Here's what's changing, in simple terms. These changes will be important for sole proprietors on the STS. Although the bill is still being finalized, the general plan is already clear to all of us.

1. Increase in the standard VAT rate

The draft initially proposed increasing the VAT rate from 20% to 22%. After November 10, this point remains in the draft, but its status is 'not finalized.' This means the rate may increase, but the final decision will be made in the final version of the law. Nevertheless: If the VAT rate is increased, goods and services subject to VAT will become more expensive, which is a logical consequence of VAT.

If a business on the STS decides to switch to VAT, then:

net profit will decrease unless prices are raised,
or prices will have to be increased to maintain profitability.
2028 — threshold ≈ 10 million ₽

2. Changes to the income threshold for mandatory VAT payment under the STS

A phased reduction of the threshold is being introduced:

2026 — threshold ≈ 20 million ₽
2027 — threshold ≈ 15 million ₽
2028 — threshold ≈ 10 million ₽

This means there will be no sharp drop in the limit to 10 million, which is good, as it gives businesses a 2-year smooth transition period and time to adapt. We appreciate that!

But I can already imagine that accountants and lawyers are now starting to work on optimization, because businesses need to recalculate their financial models for the next 3 years, see where the largest turnovers are, and figure out how to optimize their tax burden in the future. This is a big and difficult task.

3. Reduction of benefits and tightening of conditions

Previously, it was proposed to completely abolish the VAT exemption for Russian software, databases, and related rights. But after the November 10 updates, the conditions were softened, and now the benefit may be retained for a transitional period instead of being abolished immediately.

What this means:

SaaS services, CRMs, and software developers may temporarily retain their VAT exemption.
Consequently, the increase in the cost of licenses, subscriptions, and implementations may be postponed.
The transition to VAT, if introduced, will be gradual.

What this means for me and for Flysk:

For me, this is good news because the likelihood of a sharp increase in the prices of CRM licenses and implementation services by 2026 has decreased. However, a partial restriction of benefits in the future is still being discussed. But that's in the future...

Some benefits may still be canceled or narrowed, but not to the extent originally planned.
Increased tax control remains—this applies to all IT companies and services.

4. Insurance contributions

From January 1, 2026, they plan to introduce a single maximum base for insurance contributions, which is approximately 2.98 million ₽.
Insurance contributions will increase and benefits will be removed, which means a higher payroll fund and higher employee costs.
Competitors who adapt faster will gain an advantage - that's a fact.
There will be less free cash in the business - fewer opportunities to invest and expand marketing.

What this means:
This means that after reaching this limit, the company stops paying contributions on the 'excess,' but the full rate will apply up to this threshold.

Preferential rates for small businesses may be completely abolished or revised. Initially, a complete abolition of the 15% benefit (instead of 30%) was discussed, but after November 10, the discussion is still ongoing and a final decision has not yet been made.
Insurance contributions will increase and benefits will be removed, which means a higher payroll fund and higher employee costs.
Competitors who adapt faster will gain an advantage - that's a fact.
There will be less free cash in the business - fewer opportunities to invest and expand marketing.

5. STS and patents

Previously, it was planned to immediately lower the limit to 10 million ₽, which could have abruptly removed a huge number of entrepreneurs from the patent system.

And now, after the November 10 changes, the decision has been softened, and there will be no sharp drop in the limits, as I wrote in the point above.

Some of the restrictions they initially wanted to introduce (for example, removing trade or certain services from the Patent Tax System) were removed in the second reading. This means that some entrepreneurs can breathe a sigh of relief and will remain on the patent system.

6. I foresee the main question - when will it come into force?

The project is planned to be introduced on January 1, 2026. The final text will be adopted after the next reading.

I decided to prepare a calculation example for when a business becomes a VAT payer

Let's say the same sole proprietor switches to STS + VAT. The average margin before VAT was 15% of revenue. After the introduction of a 22% VAT rate, the company is forced to either raise prices or increase its profit margin.

If the price is not increased, the margin falls. Here's how you can roughly calculate how much you'll lose:

New profitability = old profitability – 22% (if VAT is included in the price).
For example: 15% – 22% = –7% — the business becomes unprofitable if no measures are taken.

For a business with an annual revenue of 12 million ₽ and a margin of 15% (~1.8 million ₽ profit), the loss could be as follows:

If the margin drops to 8% (which is ~960 thousand ₽), the damage will be ~840 thousand ₽/year.
And that's ~7% of revenue and almost half of the profit.

Sounds scary, doesn't it?
If the business doesn't adapt, such losses await it in the future...

What other risks would I highlight:

Administrative costs will increase; switching to VAT means more accounting and more interaction with the Federal Tax Service.
Insurance contributions will increase and benefits will be removed, which means a higher payroll fund and higher employee costs.
Competitors who adapt faster will gain an advantage - that's a fact.
There will be less free cash in the business - fewer opportunities to invest and expand marketing.

For me, an important question is how this will affect the IT and digital services market

The cost of CRM implementations and SaaS licenses may increase by 10–20%, but not immediately, as the model has been softened here.
Agencies and integrators will face an increase in payroll expenses due to higher insurance contributions.
Freelancers and small agencies will be forced to raise prices to maintain their margins.
If the income limits for STS/PTS are exceeded, switch to other regimes: the General Tax System (GTS) or STS without benefits.

Let's talk about VAT and calculation formulas!

VAT rates, what I see here:

The current standard VAT rate is: 20%.
The draft (No. 1026190-8) proposes an increase to 22% from January 1, 2026.
At the same time, reduced rates (0%, 10%) are retained for certain categories of goods/services, and there may be fewer exemptions.
If the income limits for STS/PTS are exceeded, switch to other regimes: the General Tax System (GTS) or STS without benefits.
Thresholds and criteria: keep track of which tax regime you are on. If your income/activities change, you will likely need to switch.
Record-keeping: if you become a VAT payer, your accounting must be ready - invoices, purchase/sales ledgers, electronic document management. The requirements will become stricter.

Пример формулы расчетов на УСН с лимитом и НДС — Example of a calculation formula for STS with a limit and VAT

Important: for an accurate calculation, you will need to review your pricing structure, cost of goods sold, and the share of expenses, including administrative ones.

What is the payment procedure

If a sole proprietor/LLC becomes a VAT payer, they need to register as a VAT payer and file VAT returns (Articles 174–175 of the Tax Code of the Russian Federation).
STS payers continue to file STS returns and pay advance/final tax payments.
Insurance contributions - from January 1, 2026, a new maximum base and new rates will apply. This needs to be calculated in advance.
If the income limits for STS/PTS are exceeded, switch to other regimes: the General Tax System (GTS) or STS without benefits.
Thresholds and criteria: keep track of which tax regime you are on. If your income/activities change, you will likely need to switch.
Record-keeping: if you become a VAT payer, your accounting must be ready - invoices, purchase/sales ledgers, electronic document management. The requirements will become stricter.

I asked experts the main questions about the reform, and here's what I noted:

If a sole proprietor on the STS exceeds the limit, from what moment are they required to pay VAT?

Revenue in 2025 is more than 20 million ₽ → in 2026, we pay STS + VAT.
Revenue in 2025 is less than 20 million ₽, but exceeded the threshold in 2026 → in 2026, we pay STS + VAT from the month following the month the threshold was exceeded.
Revenue in 2026 is more than 15 million ₽ → in 2027, we pay STS + VAT.
Revenue in 2026 is less than 15 million ₽, but exceeded the threshold in 2027 → in 2027, we pay STS + VAT from the month following the month the threshold was exceeded.

Alexander Ryzhov - Lawyer, expert in digital law

According to new information, the limit will be 20 million rubles in 2026. VAT must be charged starting from the following month. Let's say the excess occurred in August. This means the first invoice with VAT should be issued in September. There is a small loophole here. If you have already exceeded the limit at the beginning of August, you can continue to sell as much as possible until the end of August without paying VAT. This recipe may not be suitable for companies with long-term contracts, but for those with short transactional sales, it will be a life hack and a saving.

Tatyana Demidova - Entrepreneur, economist, lawyer

The main thing is to focus on the revenue for 2025. If, based on the results of this year, it exceeds the limit that will be fixed in the Tax Code from 2026 (currently 60 million), then from January 1, 2026, the entrepreneur is recognized as a VAT payer. If the excess occurs in 2026, the obligation to calculate and pay VAT arises from the first day of the month following the month of the excess. The transition does not need to be specially registered, but to avoid penalties, it is important to keep accurate records of revenue and non-operating income.

Igor Pegov - Tax consultant, admin of the 'Taxes without PI' channel

What will happen to regional tax benefits and reduced rates after the reform comes into force?

We'll wait for the final text of the law, but everything points to the fact that regional benefits and reduced rates will be preserved only for priority industries. It's unlikely that trade will be included. There may be regional specifics, but most likely, the 'free-for-all' with rates for tax migrants will be over.

Igor Pegov - Tax consultant, admin of the 'Taxes without PI' channel

From 2026, regions will be restricted in setting reduced rates for the STS. A region will be able to lower the rate only for taxpayers engaged in specific types of activities and meeting certain criteria to be established by the Government (which do not exist yet).

Alexander Ryzhov - Lawyer, expert in digital law

How will the abolition of benefits for insurance contributions affect small businesses? Are there legal ways to reduce the burden?

There's nothing positive to say about an increased tax burden on the payroll fund. In the best-case scenario, small businesses will see their profitability decrease; in the worst-case, they will completely lose the battle for qualified personnel because they will have no advantages over medium and large businesses. There are no legal ways to reduce the tax burden on payroll taxes. The position of the tax authorities is simple: any tax reduction is an 'unjustified tax benefit' and, consequently, an illegal business purpose.

Igor Pegov - Tax consultant, admin of the 'Taxes without PI' channel

It will have a negative impact, especially at first. Many are already planning to go into the shadow economy. Small businesses pay taxes out of their own pocket, not the state's. And there is always not enough money for development. There are no legal ways to reduce the burden if a company has no benefits, for example, if it is not an IT company, not a Skolkovo resident, and has no other benefits. Converting employees to self-employed status or paying from card to card is illegal. For large amounts, you can even be imprisoned.

Tatyana Demidova - Entrepreneur, economist, lawyer

Will control from the Federal Tax Service intensify after the reform, especially regarding business fragmentation and VAT payment?

Yes, you should be prepared for a new wave of audits and inquiries. If you were previously too small for the tax authorities, you should now expect a decrease in the amounts that were previously below their radar. Especially in subsidized regions with traditionally low tax collection rates.

Alexander Ryzhov - Lawyer, expert in digital law

Of course, control will be tightened. At first, for about six months, they will give some leeway. They even want to pass an amendment so that if you violate something, you are only warned, not fined. But you must understand that the underpaid tax will be collected anyway. And then there will be strict control. It used to be believed that if a company was not on VAT, it would not be audited. Now, in 3 years, almost everyone will be 'on VAT.' They will be audited. Entrepreneurs, increase your tax literacy!

Tatyana Demidova - Entrepreneur, economist, lawyer

What should entrepreneurs do before the end of 2025 to prepare for the reform and minimize losses?

The increase in VAT, insurance contributions, and tighter control are signals for businesses to become more efficient. In the context of my legal profile, these could be the following points:

A reliable contract: so that the client pays for your downtime, is responsible for system security, understands the limits of your liability, and cannot terminate the contract without penalties.
Payment terms: post-payment should be factored into the price, taking into account the deferral.
Special conditions: if a client does not allow the project to be showcased, they should pay more.
Working with receivables: it should be uncomfortable for the client to delay payment; instances of late payment should justifiably lead to price increases.
Working with banks: an audit of preferential lending programs in your and neighboring regions.

If you are missing any of this, I advise you to start fixing the situation now.

Alexander Ryzhov - Lawyer, expert in digital law

Build a financial model! Whether with a financier, an accountant, through AI, or on your own with a back-of-the-envelope calculation. Calculate everything - at what price you will sell, how much profit will be left, what the taxes will be. If you're not good with numbers, find someone who is. Otherwise, there could be sad consequences.

Tatyana Demidova - Entrepreneur, economist, lawyer

Together with an accountant or tax consultant, calculate different taxation options and choose the one that really suits your business. Only a calculation of the actual tax burden will allow you to make the right decision on how to operate in 2026.

Igor Pegov - Tax consultant, admin of the 'Taxes without PI' channel

Recommendations from experts on when to start preparing

You should start now. For example, check if your standard contract contains a clause about VAT. The contract should clearly state that VAT is not included in the price, even if the contractor does not currently pay it. If it doesn't, the client may refuse to pay you the VAT amount if you become a VAT payer from January 2026. In that case, you will have to pay the VAT out of your own pocket. You should also look for an accountant who is familiar with the rules for calculating and paying VAT, or send your current accountant to relevant courses.

Alexander Ryzhov - Lawyer, expert in digital law

What I'll say in conclusion:

From January 1, 2026, the tax system will begin to change, but after November 10, it became clear that the transition will be smoother. But if you thought it was still a long way off and you could relax, don't think that anymore... The changes are just around the corner and could affect everyone.

Yes, the VAT threshold won't plummet to 10 million immediately, and businesses will be given a couple of years to adapt. Software benefits may only be retained temporarily, but the tax burden is still growing.

I believe that those who prepare in advance will preserve their profits, their clients, and will have everything under control. Now is the time to start analyzing, rethinking your approach, and preparing. Then the reform will not come as a blow to you.

In the comments, I suggest we discuss whether you have already started preparing or are waiting for the law to be passed?

Tax Reform 2026: Changes and New Income Limits for Sole Proprietors