December 1, 2025 18:05 Politics

      Under the chairmanship of the Governor of Murmansk Oblast Andrey Chibis, a meeting of the Commission of the State Council of the Russian Federation on the “Northern Sea Route and the Arctic” took place today. Participants discussed proposals to adjust planned changes to tax legislation regarding the simplified tax system (STS) for small and medium-sized enterprises (SMEs) operating in the Arctic zone of the Russian Federation (AZRF).

      Opening the meeting, the head of the commission proposed to soften tax conditions for small and medium businesses in the Arctic.

      “Entrepreneurs — small and medium-sized businesses operating in the Arctic — should have different, preferential tax conditions compared to those in force across the country. Working conditions here are tougher, costs are higher, and the threshold values that are currently set at the federal level undoubtedly require careful assessment and appropriate proposals for adjustment. We have expressed this position before,” Andrey Chibis emphasized.

      Marta Govor, the region’s Minister of Tourism and Entrepreneurship, presented an analytical report on the consequences of the proposed changes. The minister reported that the proposal to reduce, from 60 million to 10 million rubles starting in 2026, the annual revenue threshold for applying the STS — above which VAT becomes payable — creates significant risks for entrepreneurial activity in the Arctic regions. Given the specifics of northern territories, severe climate and remoteness from major markets, Arctic regions traditionally have high production costs for goods and services, as well as high logistical and social expenses. Therefore, the changes proposed by the new law may lead to price increases, reduced profitability for enterprises and the migration of part of the business to the shadow economy. The new conditions could be especially difficult for small businesses.

      “In Arctic entities, the share of revenue directed to tax payments already significantly exceeds the national average: in the Chukotka Autonomous Okrug it is over 7%, in the Republic of Sakha (Yakutia) — about 10%, in the Komi Republic — 11%, whereas the national average does not exceed 3.4%. According to the Commission’s office’s assessment, if the current draft law text is maintained, the additional tax burden on SMEs in Murmansk Oblast could exceed 5.7 billion rubles per year from 2028; this will lead to higher prices for goods and services and increased cost of living in the Arctic,” Marta Govor noted.

      In addition, the preservation of preferential rates for insurance contributions for SMEs was discussed. According to the federal draft law, it is planned to cancel benefits on insurance contributions and move to general conditions for their calculation. For Arctic regions, where wages are formed taking into account regional coefficients and allowances, this will lead to an additional rise in expenses and may cause job cuts.

      A number of mechanisms to adjust the situation were voiced. These include establishing a special approach to a phased increase of the annual revenue threshold for SMEs in the AZRF: a raised revenue threshold for VAT liability of 20 million rubles, with phased changes (40 million rubles from 2026, 30 million rubles from 2027, 20 million rubles from 2028). It was also proposed to include the activities of SMEs registered in the Arctic zone in the list of priority activities eligible for a reduced rate of insurance contributions and to consider introducing an additional preferential VAT rate for Arctic entrepreneurs with revenues from 20 to 60 million rubles.

      The proposals are aimed at preserving the stability of small and medium-sized businesses, increasing the investment attractiveness of the Arctic zone and preventing the growth of socio-economic imbalances in northern regions.

      Commission participants and representatives of Arctic regions unanimously supported the need for adjustments and easing of conditions. Their proposals, taking into account the specifics of each entity, will also be included in the protocol.

      “The Arctic zone is a territory with special working conditions. High production costs for goods and services, infrastructure limitations, difficulty of delivery. Without maintaining favorable business conditions, it will be difficult to achieve improvements in people’s quality of life and sustainable economic growth. We consider the adjustments extremely important, support the proposal and are ready to act at any level,” stressed the Governor of Arkhangelsk Oblast Alexander Tsybulsky.

      During the meeting, the position of the federal Ministry of Finance was also heard.

      “There is a specific situation in the Far North, in the Arctic, in the Far East. It is not easy to attract entrepreneurs here, to create conditions for business to operate. This is especially true for remote areas. The benefit mechanisms that subjects had — preferential taxation and social aspects — produced effects. We have no doubt that the adopted changes will worsen the position of entrepreneurship in the Arctic, this was voiced by representatives of all subjects. But to have truly convincing, concrete data on dynamics, let us, together with business, see how processes will develop. And taking into account the first quarter of next year, at the end of March — beginning of April, we will hold expert discussions at the commission and propose clear adjustments or additional support measures,” Andrey Chibis summarized.

      Recall that the Commission of the State Council of the Russian Federation on the “Northern Sea Route and the Arctic” was established by Presidential Decree in July 2024. The Chair of the Commission was appointed as the Governor of Murmansk Oblast Andrey Chibis.

      Note:

      According to AZRF entities, the most vulnerable category of entrepreneurs are companies with annual revenues from 10 to 20 million rubles — they make up about 47% of all SMEs with revenues from 10 to 60 million rubles. For such enterprises even slight fluctuations in revenue can lead to loss of tax benefits. The cancellation of benefits on insurance contributions and the lowering of the STS threshold could lead to an increase in the tax burden in the Arctic of more than twice the national average.

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