VAT increase from 20% to 22%, 2026
Federal Law No. 425-FZ of 28 November 2025 raises Russia’s standard rate of value added tax (НДС) from 20% to 22% from 1 January 2026, while keeping the 10% reduced rate on socially significant goods (food, medicines, children’s goods). The Ministry of Finance, which proposed it in September 2025 as part of the budget package, says the measure is aimed first of all at financing defence and security. The same law lowers the income threshold above which businesses on the simplified tax system (УСН) must pay VAT, from 60 million roubles to 20 million; a law of July 2026 keeps that threshold at 20 million for several more years. The Bank of Russia attributes January 2026’s jump in prices mainly to the pass-through of the VAT increase, which it describes as a one-off.
Key points
At a glance
Reference text
Федеральный закон «О внесении изменений в части первую и вторую Налогового кодекса Российской Федерации, отдельные законодательные акты Российской Федерации и признании утратившими силу законодательных актов (отдельных положений законодательных актов) Российской Федерации» (Federal Law amending parts one and two of the Tax Code of the Russian Federation and certain legislative acts, and repealing certain legislative acts or provisions)[1]
No. 425-ФЗ · November 28, 2025
Read the text ↗Carried by
- Anton Siluanov (Антон Силуанов)[3][4]Minister of Finance; his ministry submitted the budget package including the Tax Code amendments to the Government, and he presented the tax package to the State Duma at first reading · 2025 · Initiator
- Vladimir Putin (Владимир Путин)[1]President of the Russian Federation, signed Federal Law No. 425-FZ on 28 November 2025 · 2025 · Initiator
- Vladimir Putin (Владимир Путин)[2]President of the Russian Federation, signed Federal Law No. 228-FZ of 4 July 2026, which keeps the simplified-tax VAT threshold at 20 million roubles for longer · 2026 · Amendment
Stated objective
The Tax Code changes are « aimed, first of all, at financing defence and security »; the budget package as a whole is meant to meet « the needs of the special military operation », finance the national projects and fulfil social obligations to citizens, while the 10% rate is kept for all socially significant goods. Lowering the simplified-tax VAT threshold is presented as a way to curb the splitting of businesses to minimise tax and to « whiten » the economy.[3][4]
According to the Ministry of Finance (budget package of 24 September 2025 and first-reading presentation of 22 October 2025)
Main measures
- Standard VAT rate raised from 20% to 22% (article 164, paragraph 3 of the Tax Code), for supplies made from 1 January 2026.[1][5]
- The 10% reduced rate is kept for socially significant goods listed in article 164, paragraph 2 of the Tax Code (food, medicines and medical products, children’s goods and others).[3][5]
- Transition: the date of supply decides the rate. Supplies made from 1 January 2026 bear 22% even if paid in full in 2025; supplies made before that date keep 20%, including later price corrections; advances received in 2026 are taxed at the calculated rate of 22/122.[5]
- Simplified tax system (УСН): the income threshold above which businesses lose their VAT exemption is cut from 60 million roubles to 20 million for 2025 income, then 15 million for 2026 and 10 million for 2027 and later; law 228-FZ of July 2026 then keeps 20 million for 2025-2028 income, with 15 million for 2029 and 10 million for 2030.[1][2][5]
- The same law also amends many other provisions of parts one and two of the Tax Code and other federal laws; as presented by the Ministry of Finance, the bill also covered a gambling tax and profit tax for bookmakers, insurance-contribution rates for small and medium-sized businesses and the indexation of excise duties.[1][4]
In data
2025 and 2026
| Rate | Until 31 Dec. 2025 | From 1 Jan. 2026 |
|---|---|---|
| Standard rate | 20% | 22% |
| Reduced rate (food, medicines, children’s goods…) | 10% | 10% |
Scale starts at 0%
Inflation (CPI)
8.7%
2025
The Bank of Russia attributes most of January 2026’s price jump to the VAT pass-through and describes it as a one-off rise in the price level.
Mandatory levies
10.9% GDP
2024
The VAT increase is meant to raise revenue; annual tax-to-GDP data are published with a lag.
Budget balance
-1% GDP
2025
Timeline
- Announced
The Ministry of Finance submits the budget package to the Government, including a VAT increase to 22%[3]
State Duma deputies criticise the proposal[9](secondary source)
Interviewed by RTVI on the day it was announced, deputies of the KPRF and A Just Russia factions forecast higher prices and a weaker economy; an LDPR deputy asked for a full assessment of the consequences and targeted food aid.
- Under debate
The State Duma adopts the Tax Code amendments at first reading[4]
Bank of Russia expects a temporary rise in inflationary pressure linked to the coming VAT increase[6]
In its key-rate decision, it expects current inflationary pressure to rise temporarily at the end of 2025 and the start of 2026, partly through price adjustment and inflation expectations reacting to the VAT increase, with disinflation resuming afterwards.
The State Duma passes the law[1]
The Federation Council approves the law[1]
- Adopted
Federal Law No. 425-FZ signed and officially published[1]
Passed by the State Duma on 20 November 2025 and approved by the Federation Council on 26 November 2025.
The Federal Tax Service publishes guidance on the transition to 22%[5]
The date of supply, not of payment, determines the rate; it recommends the approach already used for the 2019 VAT increase.
Bank of Russia: January’s price jump mainly reflects the VAT increase[7]
Governor Elvira Nabiullina says the pass-through was stronger and more concentrated in January than after the similar increase of 2019, as most companies passed the tax on at the start of the year, and calls it a one-off rise in the price level rather than the start of a trend.
Annual inflation rises to 6% in January 2026[8]
According to the Bank of Russia, seasonally adjusted price growth accelerated mainly because of one-off factors: the VAT increase, excise duties, the recycling fee on cars and the indexation of regulated tariffs.
A Just Russia deputies table a bill to return the rate to 20%[10](secondary source)
Bill No. 1220509-8, tabled by a group led by faction leader Sergei Mironov, would amend article 164 of the Tax Code to restore the 20% standard rate.
Law No. 228-FZ keeps the simplified-tax VAT threshold at 20 million roubles for longer[2]
Passed by the State Duma on 24 June and approved by the Federation Council on 1 July 2026, it replaces the schedule of law 425-FZ (20 million for 2025, 15 million for 2026, 10 million for 2027) with 20 million for 2025-2028, 15 million for 2029 and 10 million for 2030; in force on publication.
The debate
Citoyen takes no position: arguments are reported as their authors put them.
According to its supporters
- The Ministry of Finance says the revenue from the VAT increase is intended first of all to finance defence and security, within a budget for 2026-2028 that it describes as balanced and sustainable and that also covers social obligations and the national projects.[3][4]
- The ministry stresses that only the standard rate changes: the 10% rate is kept for all socially significant goods, such as food, medicines and medical products and children’s goods.[3]
- On the simplified-tax threshold, the ministry argues that a lower threshold fights schemes that split businesses to minimise tax, evens out conditions between tax regimes, and lets SMEs on the general regime deduct the VAT they are invoiced, easing their work with large companies.[3][4]
According to its opponents
- Nikolai Arefyev (KPRF), first deputy chair of the Duma economic policy committee, argued that the list of socially significant goods is too short, so clothing, footwear and some foods will become dearer, with the increase cascading through inputs, pushing up the key rate and the cost of credit; he proposed « taking » the money from oligarchs instead.[9](secondary source)
- Valery Gartung (A Just Russia), chair of the Duma competition committee, called the increase to 22% « a dead end », arguing that the economy already struggles to grow at 20% and that revenue should be sought elsewhere, for example in the oil and gas sector and by controlling natural monopolies.[9](secondary source)
- In the explanatory note to their April 2026 bill, A Just Russia deputies argue that VAT is in fact paid by buyers, that the increase drives up inflation, citing a Bank of Russia estimate of about 1 point while expecting a larger rise for a wide range of everyday goods, and that higher tax burdens usually reduce collection and enlarge the shadow economy; returning to 20% would, in their view, protect real incomes.[10](secondary source)
Indicators to watch
- Inflation (CPI) · FMISee the card →
- Tax revenue, % of GDP · Banque mondialeSee the card →
- Budget balance, % of GDP · FMISee the card →
- VAT receipts of the federal budget · Minfin / ФНСno Citoyen card yet
Sources
- [1]Федеральный закон от 28.11.2025 № 425-ФЗ «О внесении изменений в части первую и вторую Налогового кодекса Российской Федерации, отдельные законодательные акты Российской Федерации и признании утратившими силу законодательных актов (отдельных положений законодательных актов) Российской Федерации» –Официальный интернет-портал правовой информации (publication.pravo.gov.ru), November 28, 2025
- [2]Федеральный закон от 04.07.2026 № 228-ФЗ «О внесении изменений в статью 145 части второй Налогового кодекса Российской Федерации» –Официальный интернет-портал правовой информации (publication.pravo.gov.ru), July 4, 2026
- [3]Минфин России внес в Правительство РФ бюджетный пакет –Министерство финансов Российской Федерации, September 24, 2025
- [4]Госдумой РФ в первом чтении принят проект поправок в Налоговый кодекс –Министерство финансов Российской Федерации, October 22, 2025
- [5]Как исчислять НДС по новым правилам с 2026 года –ФНС России (УФНС России по Приморскому краю), December 17, 2025
- [6]Банк России принял решение снизить ключевую ставку на 50 б.п., до 16,50% годовых –Банк России, October 24, 2025
- [7]Заявление Председателя Банка России Эльвиры Набиуллиной по итогам заседания Совета директоров Банка России 13 февраля 2026 года –Банк России, February 13, 2026
- [8]Годовая инфляция в январе 2026 года повысилась до 6% –Банк России, February 18, 2026
- [9]Рост цен и падение экономики предрекли депутаты после повышения НДС –RTVI, September 24, 2025 · secondary source
- [10]Депутаты предложили отменить ставку НДС в 22% –Парламентская газета, April 29, 2026 · secondary source
- [11]Федеральный закон от 03.08.2018 г. № 303-ФЗ (Federal Law No. 303-FZ of 3 August 2018), art. 1 and art. 5 –President of Russia (kremlin.ru), August 3, 2018