Significant Changes to Tax Legislation in 2026 Regarding VAT, the Simplified Tax System, and the Patent Tax System

Changes to the VAT Rate

As of January 1, 2026, the basic value-added tax rate will increase from 20% to 22%. The new rate applies to goods (works, services) and property rights for all shipments completed from that date forward, regardless of the contract date.

Simplified Tax System: Reduction of Thresholds

Reduction of the income threshold above which users of the simplified tax system are exempt from VAT.

While the threshold is 60 million rubles in 2025, it will be reduced to 20 million rubles in 2026, with further reductions in subsequent years (15 million rubles in 2027 and 10 million rubles in 2028).

In 2026, if revenue exceeds 20 million rubles, taxpayers will begin paying VAT at a rate of 5%. If revenue exceeds 272.5 million rubles, the VAT rate increases to 7% and applies up to a maximum of 490.5 million rubles.

If the threshold is exceeded in a given month, the obligation to pay VAT arises on the first day of the following month, requiring constant monitoring of revenue.

Therefore, the introduction of VAT will increase the tax burden and complicate tax accounting. Many businesses and sole proprietors will have to file tax returns, issue invoices, and maintain records of purchases and sales.

Patent Taxation System: Reduction of Thresholds While Maintaining Types of Activity

The patent taxation system also introduces a gradual reduction of the maximum revenue threshold: in 2026, from 60 million rubles (in 2025) to 20 million rubles. In 2027, the threshold will be 15 million rubles; from 2028 onward, it will be 10 million rubles.

Important! When issuing a patent, the tax authorities will consider the previous year's income.

However, the Patent Tax System (PTS) remains applicable to fixed retail businesses and freight transport.

It is important to note that combining the Simplified Tax System (STS) and the PTS combines the income from both systems. Exceeding the threshold results in the loss of the patent right, tax recalculation, and transition to the PTS with VAT payment.

If a sole trader exceeds the 20 million ruble threshold in 2025 (whether by combining the STS and PTS or operating solely under the PTS), they must immediately submit a notification of transition to the PTS or General Tax System (GTS). This notification must be submitted before December 31, 2025.

Why is this crucial?

If the required notification is not submitted, the tax authorities will automatically transfer the sole proprietor to the GTS. Under the GTS, the tax burden is significantly higher, and the business will be required to maintain full accounting records in accordance with all GTS regulations. When adopting the simplified tax system, sole proprietors will be required to apply VAT (since the VAT exemption threshold is the same as the threshold for the patent tax system).

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