Reshetnikov outlines VAT adjustment options for Putin citing bakery case

A month ago during a hotline, the owner of the Moscow region bakery «Masha» complained to President Vladimir Putin about changes in the tax system and how they would complicate life for small businesses. On January 21, this issue was raised at a Russian government meeting, and former Perm Krai governor, now head of the Ministry of Economic Development Maxim Reshetnikov analyzed options for reducing the tax rate — using the example of that same «Masha» bakery.

From January 1, 2026, the VAT rate increased from 20% to 22%. Additionally, the threshold for using the simplified tax system was lowered: in 2026, the simplified system (USN) can be applied with annual revenue not exceeding 20 million rubles (approximately $200,000 at current rates), down from the previous limit of 60 million rubles (approximately $600,000 at current rates). Similarly, the annual income threshold for using the patent system was reduced — also from 60 to 20 million rubles.

In December, the owner of «Masha», Denis Maksimov, said during the hotline with Putin that he previously used a patent (i.e., the patent taxation system, PSN), but from 2026, this option disappears: he will have to pay taxes at the general rate. For this, he will need to hire an accountant, and the annual tax amount will end up being much higher than before. The entrepreneur proposed simply increasing the cost of the patent but retaining the ability to use this system.

At the meeting, the president reminded about this topic, and Maxim Reshetnikov proposed several options for reducing the rate that the bakery owner and other small business representatives could use.

“Currently, he operates in the catering sector. Such a business can benefit from VAT exemption provided that wages are paid at the average level for the industry in that region for the previous year,” stated the first possibility by the former Perm Krai governor.

The second option — one can obtain a preferential rate for insurance contributions: pay 15% instead of 20%. But for this, it is also necessary to raise employees« salaries to the regional average in that industry. Currently, it is significantly lower, Reshetnikov noted.

The third alternative — the bakery owner can change the OKVED (Russian Classification of Economic Activities), i.e., the type of activity. If he chooses «Food Production» instead of the catering sector, he will pay insurance contributions at a reduced rate of 7.6%.

“Moreover, specifically the owner of the «Masha» bakery can receive a benefit on the tax rate under the simplified system from the Moscow region,” clarified Maxim Reshetnikov. “Regions have such authority, and Moscow Oblast is one of those that have set a reduced tax rate for the «simplified system».”

Earlier we examined how the cost of iPhone will change due to the technology levy.