In a policy briefing at the Federation Council, Vitaly Prokaev, who serves as the Deputy Head of the Tax Policy Department within the Russian Ministry of Finance, signaled a potential move to confine the tax regime primarily to self employed individuals. This stance reflects a broader conversation about simplifying tax administration and focusing on a growing segment of the economy that operates outside the traditional payroll framework.
Self employed individuals currently face a favorable tax rate, paying 4 percent on income earned from services provided to private individuals, and 6 percent when services are directed to legal entities. This differentiated rate structure aims to align tax obligations with the typical cash flow and risk profile of self employed professionals who do not draw salaries through formal payrolls.
Russia has seen a sustained expansion of the self employed category, with registrations surpassing 6 million. This rapid growth highlights the tax regime’s role in formalizing informal work and expanding the reach of the tax system into areas previously outside formal accounting practices.
Earlier reports indicated a noticeable decline in consolidated budget revenues in September of 2022, with tax receipts down compared to March of the same year. The analysis, attributed to FinExpertiza based on data from the Federal Tax Service, pointed to a substantial drop in revenues during that period. The explanation emphasized factors such as a stronger national currency and lower hydrocarbon exports, alongside the impact of restrictive measures that affected economic activity. These macroeconomic dynamics helped shape the fiscal outlook and influenced discussions about tax policy adjustments, including the self employed framework.
Analysts observe that the self employed regime offers a practical mechanism to broaden the tax base while reducing compliance costs for individuals operating in non-traditional employment arrangements. The ongoing policy dialogue around this regime considers how to balance simplicity, oversight, and revenue stability in a rapidly evolving economic landscape, where currency fluctuations and global energy markets can exert notable influence on fiscal performance.