The Finance Ministry and the Federal Tax Service have begun countering a scheme that, according to Izvestia, is used by small businesses to avoid taxes: entrepreneurs close and then re-register sole proprietorships in order to restart the calculation of VAT thresholds. This is happening amid tighter oversight of business and the authorities’ broader drive to bring the economy out of the shadows.
The reason is stricter rules for companies and sole proprietors using the simplified tax system. In 2025, they paid VAT when revenue exceeded 60 million rubles, but from 2026 that threshold was lowered to 20 million rubles. Businesses then began looking for ways to preserve the preferential regime.
In the first quarter of this year, more than 278,000 new sole proprietorships were registered in Russia, while about 236,000 were liquidated.
The authorities said that if re-registration was carried out specifically to avoid VAT, the entrepreneur could face additional tax assessments, late-payment interest and fines. If a sole proprietor on the patent system registers again, that person’s income will be aggregated for the entire year, and the thresholds will not start over.
Context
From January 1, 2026, the authorities raised VAT from 20% to 22%, abolished insurance-contribution benefits for businesses, and lowered the annual revenue threshold from 60 million to 20 million rubles that allows the use of the simplified tax system without paying VAT.
At the time, the Finance Ministry expected these measures to bring in an additional 200 billion rubles. In the end, however, budget revenues fell by nearly a quarter.