The Tax Tie: how can a small business survive with an increasing fiscal burden
Small and medium-sized businesses in Russia are going through a stage of structural transformation, adapting to changes in the tax system, said Deputy Minister of Economic Development Tatyana Ilyushnikova. The calculations of the Ministry of Economic Development promise profits, but experts are arguing about the risks of mass closures of small businesses and rising prices. SME owners told how difficult it is for them to survive with the growing tax burden up to 8-9% of revenue, and shared their adaptation strategies, from cost optimization to maintaining social responsibility. All the details are in the Izvestia article.
Transformation of expenses and income
The SME sector (small and medium-sized businesses) is being reconfigured to meet the new tax realities. Tatyana Ilyushnikova, Deputy Head of the Ministry of Economic Development, explained that the meaning of the current changes lies in the correlation of workload with the real economic results of enterprises. The abolition of the single imputed income tax (UTII) and the introduction of new regimes give businesses the opportunity to choose, said a representative of the Ministry of Economy.
Businesses are being offered an experiment in working without VAT for industry salaries or simplified payment with VAT. For example, for bakeries like Lyuberetskaya, whose owner spoke with Russian President Vladimir Putin at a recent press conference, six options were calculated, and all with a positive result. According to the deputy minister, the tax burden will increase from 3% to 8-9% of revenue, but the financial result will remain profitable.
However, the risks for catering and small business in general are assessed quite highly, says Albert Bakhtizin, member of the State Council Commission, Director of the Central Research Institute of the Russian Academy of Sciences.
—For the same small bakeries and cafes, profits are usually only a few percent of revenue, even in stable economies, so even a small increase in mandatory payments quickly eats up all profits," he says, noting that small firms in such conditions adapt to the threshold and then reduce their activities.
The calculations of the ministry are partially confirmed by practice, says Denis Maksimov, the owner of the Mashenka bakery near Moscow.
— I agree with Deputy Minister Tatyana Ilyushnikova, when choosing any type of taxation, our business model remains profitable, - he emphasizes.
Stability test
Tax pressures reveal weak business models. The transition period requires adaptation, and it is clear that all small businesses are looking for internal reserves to maintain profitability. According to entrepreneurs, the profits of bakeries and various small businesses remain under threat of a decline in demand. The reality is that salaries and raw materials eat up margins, Maximov notes.
— The only question is that the profit itself has sharply decreased after the tax changes, which, in turn, is unlikely to withstand any decline in demand and a reduction in revenue, - explains the businessman.
Denis Maksimov emphasizes that social responsibility holds down prices for certain goods, and control precludes going into the shadows.
— I think a price adjustment in demand is inevitable, but the cost of social groups of goods, such as bread, rarely rises in our bakeries. We understand our social responsibility when pricing this group of goods," says the entrepreneur.
From the life of small businesses
The small production of felt boots at the Gatchina industrial Plant eloquently illustrates the risks of the real sector of the economy. According to Chairman of the Board of the enterprise Hovhannes Gadyan, the load of 8-9% creates discomfort with low turnover and expensive raw materials. Such conditions, according to the Izvestia interlocutor, create a risk zone.
"If we include a new VAT and an increase in insurance premiums in the cost of a pair of felt boots or insoles, our products will no longer be available to pensioners in the region and the same participants in their work," he warns.
But Gruzovichkof's partners are actively adapting to the new reality, facing tough choices when increasing payments, says Andrey Pasechnikov, the executive director of the service.
— A shift from 3% to 8-9% of turnover forces you to change prices, processes, or resources. The growing revenue burden is not just a line in the report, but the need to review pricing, optimize processes, or reallocate resources," the Izvestia source emphasizes.
According to him, it is now more difficult for those who relied on simplified regimes without deep analytics — they need time and expert support. As for salary increases for the sake of benefits, balance is important here, a company representative believes.
— If wage growth outstrips productivity growth, the owner is faced with a choice between maintaining staff and financial stability. We see that the most successful enterprises solve this problem not through layoffs, but through investments in automation and retraining of employees — that is, through increased efficiency," says Pasechnikov.
Survival threshold
The critical level for catering, freight transportation or the production of felt boots comes pretty quickly. A burden equal to profit slows down development and leads to savings, emphasizes Albert Bakhtizin, Corresponding Member of the Russian Academy of Sciences.
The cost structure of a typical bakery or small cafe is narrow. The wage fund (HRF) costs 25-30%, raw materials and rent — 30-35%. Any external changes push you into negative territory.
"Increasing the total tax burden for such businesses by up to 8-9% reduces the delta that allows businesses to be economically sustainable," said Dmitry Knatko, Associate Professor at the Higher School of Economics. — Many companies can go into negative territory in the event of any major changes. For example, due to rising prices for flour, electricity, an increase in the cost of renting commercial real estate, or even due to seasonal reductions in demand.
At the same time, the established lower limit of annual income of 20 million rubles, after which VAT begins to accrue, accelerates the closure of microenterprises. And the trend is already visible, member of the General Council of Delovaya Rossiya, entrepreneur Oleg Nikolaev, draws attention. In 2026, 250-300 thousand such companies will leave the market, he predicts.
The expert is convinced that the optimal VAT threshold is 40-60 million rubles of revenue per year, that is, about 100 thousand rubles per day for a medium—sized business.
The overall picture is complicated by regional differences — revenues and costs vary, says Vladimir Buev, Director General of the National Institute for System Research on Entrepreneurship.
— Everyone has different difficulties: "typical" for Moscow does not work in other places. For different regions, cities, and even for different locations in the same city, there is a different situation in terms of survival opportunities," the expert says.
Threats from salary benefits
The requirement of average industry salaries has the opposite effect in small businesses. Large networks can withstand it, small ones reduce their hours or transfer them to a part-time job, Albert Bakhtizin explains.
In this case, production is faced with a doubling of production costs, and without resources it is a dead end, believes Hovhannes Gadyan.
— To raise the salary to the industry average (95 thousand rubles) means to increase the wage fund by almost 50%. But there is no money for this," the businessman states.
HR approaches are changing towards intangible incentives and outsourcing, and the shadow economy is still under control, says Mikhail Tuzov, Director of Analytics at Adviros HR company.
— A massive transition to "gray" payment schemes is unlikely: in 2026, the government is pursuing the goal of reducing the shadow economy by strengthening control, — he emphasizes.
At the same time, cost optimization is focused on risk and profit, and legality is not always a priority, says Alexei Krylov, an expert on the financial market and investments at the Council of the Chamber of Commerce and Industry of the Russian Federation (CCI). Small businesses, in his opinion, will strive to optimize costs even in the most adverse conditions.
Prices will hit consumers
A positive financial result masks the transfer of costs to the buyer, says Albert Bakhtizin.
The choice of strategy is influenced by competition and demand sensitivity, says the head of the Popular Front. Analytics" by Olga Pozdnyakova. In most cases, when the fiscal burden increases, enterprises raise prices for end consumers to offset their costs, she agrees.
The cost chain is growing everywhere — without administrative intervention, an increase in cost is inevitable, Vladimir Buev is convinced.
— After all, the price of any product includes not only taxes, but an increase in the cost of the entire chain: grain and other bread ingredients, electricity, transportation, etc., — he emphasizes.
Business first exhausts reserves, but then adjusts the market. The price increase for the end consumer in this case is a natural, but not an instant effect, Andrei Pasechnikov is sure.
— If the load continues to grow without counter measures, the choice remains difficult: price, quality or scale, — concludes the entrepreneur.
Izvestia sent a request to the Ministry of Economic Development. No response has been received at the time of publication.
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