A vigorous debate has emerged over a presidential directive aimed at cutting insurance premiums for small and medium-sized enterprises (SMEs). The measure surfaced during a broader meeting focused on regional development, socio-economic support, and growth strategies.
From the Kremlin’s perspective, the plan calls for legislative changes to tax and duty laws to reduce insurance premium rates by a total of 15 percent for businesses registered under the combined SME registry. Russia currently lists about 5.9 million SMEs on that registry. In addition to the government, specialized commissions from the state council are expected to participate in implementing the directive, with a target completion date for the presidential order set around July 15.
Insurance premium rates
For registered companies and individual entrepreneurs, the standard insurance premium rate stands at 15 percent. This 15 percent is divided into 10 percent for compulsory pension insurance and 5 percent for compulsory health insurance. By contrast, the 2022 overall rate was 30 percent, with 22 percent allocated to pension insurance, 5.1 percent to health insurance, and 2.9 percent to coverage for temporary disability and maternity leave. The government is also considering raising the income threshold for entry into the SME registry. Current SME registration criteria rely on two main metrics: average monthly earnings and annual revenue. Micro-enterprises may employ up to 15 people, small enterprises up to 100, and medium enterprises up to 250. Annual income caps are set at 120 million rubles for micro-businesses and up to 2 billion rubles for medium-sized enterprises, with intermediate thresholds for small businesses around 800 million rubles.
Initially, the push to liberalize insurance rates was championed by the business ombudsman and supported by the Ministry of Economic Development. It began as a temporary measure for 2022. Now, on the president’s behalf, officials are reevaluating the option of applying a reduced tariff to the entire earnings base, without tying it to a minimum wage. Vera Kononova, deputy head of the analytical research department at the Institute for Comprehensive Strategic Studies, provided context for the institute’s assessment. She explained that the proposed measure would lower the tax burden on the portion of salary that exceeds the minimum wage, reducing liability from 30 percent to 15 percent for that segment. Given that the 2022 minimum wage was 13,890 rubles, the calculation suggests a monthly saving of about 2,084 rubles per employee if the new tariff is adopted. Kononova also described how the premium system is structured, with the minimum wage taxed at 30 percent and the remainder taxed at 15 percent, while the 15 percent share could apply to the total premium as a whole.
Average monthly salaries in the SME sector generally range from 30,000 to 35,000 rubles. If the proposed norm passes, it could reduce the employer’s monthly burden per employee by roughly 28 to 32 percent, according to expert analysis. Kononova emphasized that this shift would be especially noticeable for firms employing many low-paid workers, where the minimum wage forms a large portion of total compensation.
Better to Allocate Funds to Banking Reserves
The easing of insurance premiums has gained traction among business leaders. Anastasia Tatulova, founder of a family cafe chain, described the measure as a necessary baseline adjustment and urged for a longer-term solution. She noted that current conditions discourage long-term investment, with some ventures pivoting toward online storefronts for consumer electronics imports, while industrial projects require substantial upfront capital. Tatulova suggested that placing money in banks might be more attractive than risking high-cost investments during uncertain times. She argued against discriminatory discounts that would favor only certain SME segments, contending that genuine reform should apply to all non-primary non-state enterprises to support broad economic resilience, including sectors involved in import substitution. Tatulova warned that partial or temporary approaches could distort incentives and undermine entrepreneurship, recalling similar proposals from 2020 and the risk of leaving key policy details unsettled.
Alexander Borisov, president of the International Businessmen’s Association in Moscow and a member of the Chamber of Commerce and Industry, agreed that reducing wages for SMEs can provide real relief, especially for organizations with large workforces and modest pay scales. He warned, however, that tax authorities might misread temporary relief as a permanent change, leading to penalties once grace periods end. The central question remains whether the relief will be permanent or temporary, as guidance and enforcement would shape long-term business planning.
Encouraging Tax Minimization and Compliance
Tatyana Mineeva, Moscow’s business ombudsperson, affirmed that any reduction in tax or financial burdens is a positive development given its potential to move many firms toward profitability and transparency. She advocated for sector-specific tax burden arrangements to help SMEs achieve profitability in the near term, emphasizing that the immediate effect could catalyze broader compliance and formalization of wages. Alexey Sharov, managing director of Averta Group, estimated that lower insurance premiums could save SMEs around 250 billion rubles annually, a sum that the state budget would forgo. While recognizing the immediate fiscal impact, he suggested that the government might hold sufficient liquidity to accommodate the shift without seeking a corresponding revenue replacement.
The overall discussion highlights a pivotal moment for Russia’s SME landscape. If successful, the reform could alter the cost structure of employment, influence hiring strategies, and potentially encourage a broader push toward formal employment and investment in productive capacity. The path forward will hinge on legislative clarity, administrative implementation, and the ability of policymakers to align incentives with long-term business growth. [Citation: Kremlin press release; Institute for Comprehensive Strategic Studies; industry experts]