A baker from suburban Moscow who appealed directly to President Vladimir Putin over new tax reforms has become a symbol of the economic strain gripping Russia's small businesses. Denis Maksimov, owner of the Mashenka bakery chain, told Putin during a televised call-in show in December that the tax burden was forcing many enterprises to close.
Russia's economy is under mounting pressure as the full-scale invasion of Ukraine nears its four-year mark. Oil revenues are falling, the budget deficit has grown, and growth fuelled by military spending has levelled off. The Kremlin has responded by raising value-added tax by 2% and lowering revenue thresholds for businesses to pay it.
Business owners report declining demand, rising costs, and tax burdens tens of times higher. Darya Demchenko, who owns a chain of beauty salons in St. Petersburg, said she had to close one salon and sell another to stay afloat. “I’ve never felt so scared as this year, so unprotected, so anxious,” she said.
The tax reform lowered the threshold for requiring businesses to pay VAT from 60 million rubles ($783,000) in annual sales to 20 million rubles ($261,000) this year, and to 10 million rubles ($130,500) by 2028. Similar changes were made to the patent taxation system, which previously allowed fixed annual payments.
Maksimov's appeal prompted Putin to raise the case at a government meeting, and the economy minister proposed measures to exempt Mashenka from VAT and lower other taxes. Maksimov said he is no longer considering closing, but is still waiting for the measures to be adopted. An online campaign, “We Are Mashenka,” highlighted that most business owners lack such high-level support.
