Global Daily Tax News, Russian Lawmakers Clear 2026-28 Budget Tax Hikes, (Nov 25, 2025)

Russia's lower house of parliament, the Duma, has voted in favor of raising the nation's value-added tax rate, as part of the nation's 2026-28 Budget.

Under the approved proposals, the rate will rise to 22 percent, up from 20 percent, from January 1, 2026.

Lawmakers also agreed with the Government's revised plans to considerably lower the value-added tax exemption threshold for small businesses. Initially, the Government had proposed to reduce the threshold from RUB60m to RUB10m next year but will now lower the threshold to RUB20m in 2026, RUB15m in 2027, and RUB10m in 2028.

Ahead of the parliamentary debate, the Government also decided to withdraw plans to introduce VAT on Russian software.

Other measures agreed for inclusion in the Budget include:

• A waiver of real property taxes in designated "state of emergency" areas;

• The introduction of a zero rate of VAT for mining companies selling ores, concentrates, and other industrial products to refineries for refining;

• An easing of value-added tax penalties for small businesses for first offences;

• New powers for local authorities to grant investment tax deductions from corporate tax; and

• Changes to the calculation of taxes on bookmakers.

In addition, the legislation includes proposals to amend the rules in the Russian Tax Code regarding personal income tax exemptions for the sale of residential property.

Currently, taxpayers have the right to a tax exemption on gains from the sale of housing if they have owned the property for more than five years, or more than three years and the property was the taxpayer's sole residence, or the property was acquired through inheritance, as a gift from a close relative, or as a result of privatization.

The amendments clarify that, for taxpayers to avail themselves of the exemption, the property must have been owned continuously by the taxpayer for the aforementioned periods prior to sale. The change is intended to formalize the requirement in law.

Further, the Government has proposed expanding the scope of another exemption from tax on gains where a family with two or more children sells a home to acquire another more expensive property to improve their living condition. The amendments provide that adult children with disabilities may be considered children for purposes of the exemption, if they are declared legally incompetent by a court. The exemption will also apply retrospectively to earlier sales of homes where a child with disabilities is born no later than April 30 of the following year.

Further, the legislation provides that, for a family to benefit from the exemption when acquiring a more expensive home, the family must not own more than 50 percent of another property with a cadastral value that exceeds the cadastral value of the property being purchased.