Russia business lobby seeks slower passive income tax rollout

For investors, the key issue is predictability. A phased approach would be less disruptive than an immediate change, but it still points to a tighter tax environment for savers, landlords and holders of financial assets, with potential knock-on effects for consumption, asset allocation and after-tax returns.

Shokhin also wants the authorities to revise the mechanism for taxing so-called excess business profits, index the income thresholds in the five-bracket personal income tax scale and postpone taxation of closed-end mutual funds. Taken together, the requests show business is not opposing tax reform outright, but is trying to reshape it to protect corporate cash flow and prevent bracket creep from biting into real incomes.

The backdrop is a still-tight Russian macro mix, with inflation running well above the central bank’s 4% target and the labor market near full employment, conditions that give the government room to lean more heavily on tax policy. That makes any change to the income tax system more than an accounting exercise: it is part of the state’s broader effort to secure revenue without destabilizing growth.

If adopted, the package would likely favor larger firms and wealthier households if implementation is delayed or thresholds are indexed, while leaving the finance ministry with a narrower immediate gain. The next focus is whether the Cabinet accepts the business lobby’s argument for gradualism or pushes ahead with a faster expansion of the tax base.