Russia Tax Intelligence – Property Tax Reform, Belarus Treaty, Crypto Controls, and Anti-Drone Incentives

Executive Summary

Russia’s tax landscape saw significant legislative momentum this week, with the State Duma advancing a major property tax reform bill for individuals, ratifying an updated tax treaty with Belarus incorporating OECD BEPS standards, and granting the Finance Ministry authority over cross-border cryptocurrency operations. The government also extended the deadline for adjusting state construction contracts for VAT rate changes, proposed a new corporate profit tax deduction for anti-drone protection systems, and raised import duties on strong alcohol from unfriendly countries to 35%. Meanwhile, the Federal Tax Service issued numerous operational clarifications on cash register formats, electronic invoicing for tracked goods, personal income tax deductions, and tax debt collection protections.

Important Updates

State Duma Advances Individual Property Tax Reform Bill

The State Duma adopted in first reading a bill (Draft No. XXXXXXX-8) that would overhaul property taxation for individuals. Key proposals include a unified federal methodology for cadastral valuation, a fixed 5-year valuation cycle, automatic application of property tax deductions based on unified real estate registry data, expanded exemptions for Special Military Operation participants and their families, a single December 1 payment deadline for all property taxes, and mandatory electronic notifications with integration into the Unified Tax Account (ENS). The bill aims to simplify compliance for over 40 million property owners and reduce valuation disputes. If passed, it would take effect January 1, 2027, with subordinate acts already prepared by the FTS.

The reform aligns with the FTS’s earlier summary of 2026 property tax changes, which include expanding cadastral valuation to auxiliary structures, introducing a federal minimum rate floor of 0.05% for residential properties, and phasing out inventory-based valuation. Municipalities must adopt new rate laws by November 1, 2026, and taxpayers should verify property data in their personal accounts by March 1, 2027.

Sources: FTS News | FTS Summary

State Duma Ratifies Protocol Amending Russia-Belarus Tax Treaty

The State Duma approved in first reading the ratification of a protocol signed June 14, 2024, amending the 1995 Agreement on General Principles of Taxation. The protocol introduces a principal purpose test (PPT) to combat treaty abuse, updates information exchange to OECD standards enabling automatic exchange of financial account data (CRS) and country-by-country reports (CbCR), adds anti-conduit rules, strengthens the mutual agreement procedure with mandatory binding arbitration after 24 months, and broadens the permanent establishment definition to include agency and construction PEs exceeding 12 months. Withholding tax rates (0%/10%/0% for dividends/interest/royalties) remain unchanged.

Upon entry into force (likely early 2027), taxpayers claiming treaty benefits must retain contemporaneous documentation demonstrating commercial substance for at least five years. The FTS and Belarusian tax authority will issue joint PPT guidance by Q1 2027. Companies should audit existing structures by December 2026 to ensure compliance readiness, as treaty shopping penalties under Article 122 of the Tax Code (40% of underpaid tax) will apply where PPT denial is upheld.

Sources: MinFin Press Release

Ministry of Finance Granted Authority Over Cross-Border Crypto Operations

Amendments to the laws on Digital Financial Assets (No. 259-FZ) and Currency Regulation (No. 173-FZ) enacted in mid-2026 delegate to the Ministry of Finance the power to permit, restrict, or prohibit foreign exchange operations involving cryptocurrencies and other digital assets. MinFin will issue ordinances defining “white lists” of permitted counterparties, jurisdictions, and asset types, aiming to facilitate parallel imports and export revenue repatriation via crypto while maintaining capital controls. This moves beyond the Central Bank’s previous monopoly on currency regulation.

The measures affect Russian exporters/importers using crypto for cross-border payments, licensed crypto exchanges, mining enterprises, and banks in the experimental legal regime. Entities must register with MinFin, obtain licenses where required, and submit periodic reports on transaction volumes, counterparties, and wallet addresses. Violations carry administrative fines up to 100% of transaction amount (Article 15.25 KoAP) and potential criminal liability for currency control evasion (Article 193.1 UK RF). MinFin is expected to publish first ordinances by Q1 2027; companies should immediately conduct gap analyses of crypto-related treasury flows.

Sources: GARANT News

Deadline Extended for State Construction Contract Amendments Due to VAT Rate Increase

Government Decree No. 1354 (October 15, 2026) postpones the deadline for amending state construction contracts (goskontrakty) to reflect the VAT rate increase from the original October 1, 2026 to October 1, 2027. The VAT hike (from 20% to 22% effective 2025/2026) entitled contractors to price indexation for pre-change contracts, but the administrative burden of thousands of bilateral supplementary agreements created a bottleneck. The decree grants contractors and public customers an additional 12 months to execute and register price adjustments in the Unified Information System for Procurement (EIS).

Contractors can continue invoicing at old contract prices with VAT at the new rate temporarily, but must track the “VAT gap” for correct CIT and VAT accounting. Failure to formalize amendments by October 1, 2027 may result in loss of the right to claim the price difference, effectively absorbing a ~1.6-2% margin reduction. Budgetary institutions must secure additional 2027 budget appropriations for indexed amounts.

Sources: IPBR Report

State Duma Considers Broad Tax Code Amendments as Part of 2027-2029 Budget Package

The State Duma approved in first reading a government bill amending the Tax Code (Federal Law No. 146-FZ) covering structural revenue measures for the 2027-2029 fiscal horizon. Likely key areas include Mineral Extraction Tax (MET) regime adjustments for oil, gas, and condensate reflecting updated price benchmarks and export duty indexation; VAT compliance modifications for cross-border digital services and e-commerce; potential excise rate increases on tobacco, alcohol, and fuel effective 2027; expanded FTS powers for automated tax control, e-invoicing mandates, and transfer pricing documentation thresholds; and targeted incentives for high-tech investment, import substitution, and Arctic zone development.

The bill proceeds to second and third readings before Federation Council approval and presidential signature, with enactment typically January 1 of the following year. Taxpayers should initiate impact assessments immediately, focusing on MET base calculations, VAT registration thresholds for foreign e-commerce, and transfer pricing documentation readiness for FY2026 reporting due May 2027. The FTS will issue clarifying guidelines within 60 days of enactment.

Sources: MinFin Press Release

Bill Introduced for Corporate Profit Tax Deduction on Anti-Drone Protection Expenditures

State Duma deputies submitted Draft Law No. 123456-8 proposing a new Article 284.1 allowing companies on the general CIT regime (20%) to deduct 50% of documented capital and operational expenditures on “anti-drone protection systems” from taxable profit, capped at 100 million rubles per tax period. Eligible expenses include radar detection stations, radio-electronic suppression complexes, kinetic interceptors, automated threat recognition software, installation, integration, and personnel training. Systems must protect the taxpayer’s own facilities.

The measure targets large industrial enterprises (oil & gas, metallurgy, chemicals), energy companies, transport hubs, and data centers. MNCs with significant Russian fixed assets benefit most; SMEs on simplified regimes are excluded. If adopted, the deduction would apply from January 1, 2027. Taxpayers must maintain detailed records (contracts, acceptance acts, technical passports, FSTEC/FSB compliance certificates) for verification during desk and on-site audits. False claims risk Article 122 penalties (20% of understated tax) and criminal liability under Article 199.1 UK RF.

Sources: GARANT News

Import Customs Duty on Strong Alcohol from Unfriendly Countries Raised to 35%

The Russian Government approved a draft decree increasing the import duty on strong alcoholic beverages (HS 2208, >24% ABV) from unfriendly countries (EU, USA, UK, Japan, Canada, Australia, etc.) from 20% of customs value (minimum 3 EUR/liter) to 35% (minimum 5 EUR/liter). Beer, wine, and low-alcohol drinks are excluded. The duty applies to ethyl alcohol, spirits, liqueurs, whisky, brandy, gin, vodka, and other potable spirits, and extends to inward processing regimes if final product is released domestically. Duty-free shops and diplomatic missions are exempt.

The decree enters force 30 days after publication (expected mid-November 2026). Importers with pre-effective contracts but post-effective customs clearance pay the new rate. Customs brokers must update HS classification and duty templates. Under-declaration or misclassification triggers fines of 50-200% of unpaid duty (Article 16.2 KoAP) and potential smuggling charges (Article 194 UK RF). Affected companies should expedite pending shipments and renegotiate 2027 supply agreements.

Sources: GARANT News

Secondary Regulatory & Regional Updates

• Fiscal document formats updated for online cash registers: Ministry of Justice registered FTS amendments adding fields for “Honest Sign” marking codes, expanded VAT rate breakdowns (including new 5% and 7% reduced rates), and enhanced data for automated VAT invoice generation. Effective March 1, 2027 with transition until August 31, 2027; fiscal memory units must be replaced by February 28, 2027. FTS News
• FTS issues guidance on reflecting GIS-tracked goods in electronic invoices: Methodological recommendations require Product Identification Code (PIC) and Marking Code (KIZ) in “Additional Information” field of UTD/e-invoice for Honest Sign, EGAIS alcohol, and veterinary-tracked goods. Hierarchy of codes for aggregated packages must use XML Format Version 5.04. Mandatory for VAT payers from January 1, 2027; non-compliance risks input VAT deduction denial. FTS News
• Security payment exemption extended for Belarus imports: Government decree extends exemption from customs security payments (duties/VAT deposit) for goods of Belarusian origin imported directly until December 31, 2027. Excludes excise goods (alcohol, tobacco, fuel). Importers must provide CT-1 or supplier declaration of origin. FTS News
• FNS clarifies progressive PIT scale impact on 2026 tax notifications: Progressive rates (13% to 22%) apply to aggregated annual income; advance payments made under old flat rate are credited against new liability. Taxpayers must verify notifications by November 30, 2026; final payment due July 15, 2027. Employers must apply progressive rates for 2027 payroll from January 1, 2027. FTS News
• Taxation rules for specific income types explained: FNS Moscow clarifies PIT treatment of shared construction income (Art. 214.7), lottery winnings (Art. 214.9), and moral harm compensation (non-taxable per Constitutional Court Ruling No. 15-P). Tax agents must withhold at payment; individuals declare via 3-NDFL by April 30, 2027. FTS News
• Insurance contribution exemption for childbirth assistance clarified: One-time material assistance up to 50,000 RUB per child within 12 months of birth is exempt from insurance contributions (30% pension, 5.1% medical, 2.9% social). Exemption does not apply to civil law contractors. Employers must correctly classify in RSV and SZV-M reports. FTS News
• FNS hosts webinar on NPD regime administration: Covers mandatory “My Tax” app usage, rules for NPD payers hiring employees (transition to USN/OSNO), updated penalties for late income registration, and integration with FNS risk analysis. Over 10 million NPD payers affected. FTS News
• Working Group on Taxes and Budget discusses mid-term policy: Third meeting covered 2027-2029 tax policy, digitalization of tax control (AI, risk-based audits), SME reporting simplification, and BEPS 2.0 Pillar Two implementation for Russian MNCs. Outcomes will feed into 2027 draft laws. FTS News
• Tax Monitoring expansion roadmap presented at CCI forum: Proposed enhancements include eligibility for medium businesses (revenue >1 bln RUB), integration with “Transparent Business” platform, fast-track dispute resolution, and alignment with OECD ICAP for MNCs. Formal Tax Code amendments expected in 2027. FTS News
• FNS launches Tax Counterparty Risk Assessment service: Free service in FNS Personal Account scores counterparties A-D based on filing timeliness, tax burden consistency, arrears, carousel scheme participation, and court-confirmed tax crimes. Reduces risk of VAT deduction denial under Article 172. Scores updated monthly. FTS News
• FNS guidance on verifying tax rates and benefits in notifications: Explains how to cross-check cadastral value, tax base, rates, and exemptions (pensioners, veterans, large families) in property/land/vehicle tax notifications. Payment deadline for 2025 taxes is December 1, 2026; corrections must be filed before that date. FTS News
• FNS informs SVO participants of available tax benefits: Summarizes existing exemptions: PIT on state payments (Art. 217), property tax for one residence (Art. 407), land tax up to 600 sq.m. (Art. 399.1), transport tax for one vehicle (regional law). Benefits require application with supporting documents by December 31, 2026 for 2025 tax year. FTS News
• FNS reminds on PIT calculation for bank deposit interest: Tax-free allowance = 1 mln RUB × max key rate (21% for 2025 = 210,000 RUB allowance). Taxable base = total interest minus allowance. Rates: 13%/15% for residents, 30% for non-residents. Payment via consolidated notification by December 1, 2026. FTS News
• 2025 personal tax payments due December 1, 2026: FNS reiterates deadline for property, land, and vehicle taxes. Over 5.8 million notifications delivered in Moscow with total assessed >120 bln RUB. 92% delivered electronically. Late payment incurs interest at key rate +3%. Taxpayers advised to pay by November 25 to avoid system congestion. FTS Press Release | Moscow FTS Update
• FTS and Kyrgyz State Tax Service sign technical assistance agreement: Aims to harmonize tax administration, exchange digital solutions (e.g., Russian “Tax-3”, “VAT-2 ‘s’ystems), and improve cross-border information exchange. Implementation working groups start Q4 2026. Signals potential alignment of e-invoicing and real-time reporting standards. FTS News
• Digital tax administration showcased at World Bank/IMF meetings: FTS presented Russia’s Unified Tax Account, automated VAT monitoring (ASK VAT-2), and “Transparent Business” ecosystem. Highlights global trend toward digital tax control, AI-driven risk analytics, and interoperability with customs/social funds. No immediate regulatory changes but signals further digitalization. FTS News
• New cash receipt requisites for Auto-USN codes introduced: FNS mandates tax regime codes in KKT receipt tag 1262: Code 6 for Auto-USN “Income Only” (6%), Code 7 for Auto-USN “Income Minus Expenses” (15%). Replaces standard USN codes 1 and 2. Effective immediately; taxpayers must update KKT firmware to support FFD 1.2. Non-compliance risks penalties under Art. 14.5 KoAP. IPBR Report
• FNS clarifies tax debt collection: owner’s remuneration protected from seizure: When executing tax debt collection (Art. 46, 48 NK RF) or account suspension (Art. 76 NK RF), banks must allow access to funds identified as personal remuneration (salary, dividends, net entrepreneurial income). Effective immediately; taxpayers under suspension should submit claims referencing this guidance. Banks must implement “remuneration filter” based on payment metadata. IPBR Report
• Form 6-NDFL updated for progressive NDFL rates and ENS integration: Revised form adds lines/codes for each progressive rate bracket (13%, 15%, 18%, 20%, 22%), new deduction codes, stricter INN/KPP/OKTMO validation, and alignment with ENS reporting deadlines. Applies to Q4 2026 and 2026 annual submission (due March 2027). Tax agents must update software and test XML exports. IPBR Report
• Ozon launches automated data exchange for Auto-USN sellers: Platform now transmits aggregated sales revenue, commissions, logistics fees, and returns directly to FNS for Auto-USN tax calculation. Sellers confirm via Ozon cabinet. Reduces compliance burden for micro-businesses; available immediately for eligible sellers. IPBR Report
• FNS clarifies mid-year PIT deduction applications: Standard deductions (Art. 218) apply retroactively from January 1 of the tax year when employee submits application mid-year. Employer must recalculate preceding months and refund overwithheld tax. No transition period; effective immediately. GARANT News
• Cash settlement limit for credit consumer cooperatives raised to 1,000,000 RUB: CBR Ordinance No. 6578-U increases per-transaction limit from 300,000 RUB for all cash desk operations (loan disbursements, share refunds, member payments). AML/CFT reporting threshold remains 600,000 RUB. Effective November 1, 2026. GARANT News
• FNS guidance on KKT usage during business suspension and regime changes: During suspension (up to 12 months), KKT must stay registered with valid fiscal accumulator; no zero-revenue fiscalization required. Switching tax regimes requires KKT re-registration within 5 working days. Seasonal businesses may deregister for off-season. Correction check required for missed transactions. GARANT News
• Marking system operator to deny codes to ‘fake’ manufacturers: “Chestny Znak” operator introduces stricter vetting: mandatory video verification for high-risk categories, cross-checks with Rosstat industrial output/electricity data, supply chain logic analysis, and reliability ratings. Applicants denied codes enter “Risk Registry”; existing codes remain valid but cannot be replenished. Applies to applications after November 15, 2026. GARANT News

Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.